Morning Must Reads: A Bittersweet Investment By Hershey

The Hershey Company today unveils plans for a new $300 million investment in a state of the art manufacturing facility here in the midstate. This is sweet news or, as David Wenner explains, bittersweet news.

In fact, even preserving chocolate-making in Hershey was a bittersweet transaction for the people who formerly worked inside a 107-year-old plant making Hershey’s Kisses and Hershey’s bars.

Before the expansion, Hershey made it known it was considering sites in other states.

“There’s no question it was held over our heads,” said Dennis Bomberger, business manager for the Chocolate Workers Local 464.

In recent years, Hershey has shifted production to Mexico and carried out a global restructuring that eliminated about 1,500 North American jobs, including about 800 in the midstate.

Hershey workers were also acutely conscious of how close Harley-Davidson came to sending York County production to a new plant elsewhere.

They gave up about 500 jobs — fewer people are needed at the more efficient plant — and made wage concessions that mostly impact new workers. Several hundred left by way of a voluntary severance package.

As it stands, the expanded West Hershey has a workforce of about 1,000, plus about 100 temporary employees who work as needed. The pay scale for union workers begins at $18.59 and rises to $28.14, with some maintenance workers earning slightly more.

Job loss and wage concessions at a profitable company is another sign that high unemployment promises to depress wage and income growth for much of the decade ahead. As we argue in the State of Working Pennsylvania (PDF):

Pennsylvania job growth in 2012 has been negative so far. Consensus economic forecasts predict continued high unemployment in the nation and in Pennsylvania for the next several years. Indeed, the Economic Policy Institute’s forthcoming State of Working America projects that the incomes of the middle fifth of families will be lower in 2018 than in 2007 and 2000. Similar to the last decade, robust income growth is likely to return for only a tiny sliver at the very top. Already in 2010, the first full year of economic recovery, Pennsylvania’s top 1% saw its average incomes grow by 11%. This 1% of Pennsylvania taxpayers captured 76% of all income growth in the state in 2010. The top 1% of this top 1% (an estimated 620 taxpayers) enjoyed an average income increase, adjusted for inflation, of $1.75 million in 2010. (This is a conservative estimate of the 2010 increase for Pennsylvania’s 1%.) In sum, polarized growth and another lost decade for most families is a predictable result of a continued failure to address the short‐term problems of insufficient economic demand and job creation, and the long‐term problem of stagnant wages and incomes.


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