As the CHIPS Act Turns 2, Let’s Make Sure It Benefits Workers and Communities

It’s been two years since U.S. President Joe Biden signed the CHIPS and Science Act into law. The bipartisan industrial policy statute aims to bring semiconductor manufacturing back to the U.S., address supply chain shortages, compete with China, and create good jobs for American workers. Two years in, however, the law seems to be a better deal for the world’s most powerful companies than for working people.

By some metrics, the CHIPS Act is a roaring success. After awarding over $30 billion to 15 companies, the Commerce Department reports the incentives will create more than 115,000 jobs (78,000 construction jobs and 36,000 production jobs) and incentivize over $350 billion in private investment.

But a closer look suggests major challenges with the policy rollout.

The Commerce Department is still negotiating contracts with award recipients, so it’s not too late to place safeguards on these taxpayer billions to protect workers’ rights and guarantee environmental protections.

For a start, job creation has not been as advertised. Last week Intel Corporation, the U.S. chipmaker that was awarded the largest CHIPS Act subsidy, announced it was laying off 15% of its global workforce. That’s 15,000 jobs lost, far more than the 10,000 permanent jobs the company promised to create in exchange for $19.5 billion from taxpayers.

Intel is not alone in taking public cash and laying off workers. Two weeks after the government announced a $162 million award to Microchip Technology, the company announced furloughs for all employees for two weeks in March and another two weeks in June. This is standard practice in the semiconductor industry: Overwork technicians and machine operators to meet production deadlines, then shutter the factory for a few weeks, forcing employees to use vacation time or go into paid time off debt.

Even setting the furloughs aside, many jobs in the chip industry are hardly lucrative. Last month, workers at Analog Devices Inc. in Beaverton, Oregon began to speak publicly about their compensation. It’s a struggle to survive on their wages, they reported, which average about $21 an hour, and they go years without a raise, all while handling toxic chemicals that can cause cancer, miscarriage, and birth defects.

Unfortunately, the CHIPS Act seems to be subsidizing an industry that exacerbates economic inequality. At Micron Corporation, which expects to receive $6.1 billion federal dollars plus $6 billion from New York state, CEO Sanjay Mehrotra earned $25 million last year, 463 times the salary of the median Micron employee, half of whom earn less than $55,000 per year.

U.S. workers are increasingly interested in labor unions to raise wages and assert dignity, but the semiconductor industry remains staunchly anti-union. Several CHIPS Act recipients have signed agreements with construction unions, hiring union workers to build their new factories. But not one has agreed to remain neutral if permanent production workers decide to organize a union.

Instead of hiring workers or raising wages, some CHIPS Act recipients have other plans for their bundles of cash. A recent study by the Institute for Policy Studies and Americans for Financial Reform Education Fund found that the first 11 CHIPS Act award recipients spent over $41 billion on stock buybacks in the past five years. Stock buybacks artificially inflate the value of corporate shares, enriching executives and shareholders while taking money from payroll, innovation, and productive activity. Although the CHIPS Act explicitly prohibits applicants from using CHIPS funds for this purpose, four recipients plan to spend $14 billion on share repurchases in the coming years.

In short, far from creating jobs or spurring innovation, some of our CHIPS Act dollars seem to be going directly into the already fat pockets of corporate execs.

Communities with new CHIPS Act-funded factories have additional concerns about their new neighbors. Chip making requires vast quantities of water: TSMC in drought-stricken Phoenix, Arizona, expects to use over 17 million gallons a day. The anticipated energy demand of the four largest CHIPS Act recipients is also massive, more than twice the amount used annually in Seattle, though companies try to conceal this by purchasing bogus “renewable energy certificates” to inflate their green energy claims.

And chipmaking employs thousands of chemicals, many known to be poisonous, with no requirement that companies inform the public about the toxins emitted in their air and water. Santa Clara County, where the semiconductor industry was born in the last century, has more toxic Superfund sites than any other county nationwide, a distinction we should strive not to repeat as we restore chipmaking.

As the CHIPS Act reaches its terrible twos, then, it’s time to reconsider the path it’s toddling on. The Commerce Department is still negotiating contracts with award recipients, so it’s not too late to place safeguards on these taxpayer billions to protect workers’ rights and guarantee environmental protections. The coalition I work with, CHIPS Communities United, calls on the Biden-Harris administration to ensure the statute benefits workers and neighboring communities, not just CEOs and shareholders.