A Report from the Community Economic Development Center (CEDC), New Bedford, MA

Contact: Corinn Williams, Executive Director, CEDC, 774-451-8687, corinncedc@gmail.com

A Report from the Community Economic Development Center (CEDC), New Bedford, MA

June 18, 2009

The Layoff Costs of Closing the ATK/Eagle - New Bedford Plant

The recently announced closure of the ATK/Eagle New Bedford, Massachusetts plant, which employs 350 workers, would have significant costs for taxpayers through unemployment payments and other programs. We estimate that the total potential costs through various taxpayer-supported programs could be greater than $4 million.

The New Bedford metropolitan area has a high unemployment rate of 13.1%, which is 299^th out of 372 metropolitan areas ranked by the Bureau of Labor Statistics. For this estimate, we assume that all of the Eagle workers find other jobs over time between 8 weeks and the full possible 72 weeks of unemployment benefits. Under this scenario, the average unemployment benefits time equals 40 weeks.

Unemployment Payments

Workers in Massachusetts are potentially eligible for 26 weeks of unemployment benefits, plus an additional 46 weeks of federal extensions, at 50% of their wages, with a maximum of $628/week. There is also a $25/week federal supplement passed as part of the American Reinvestment and Recovery Act stimulus package, and a possible $25/child/week supplement.
Assume that 350 Eagle workers have an average wage of $9.00, and that half of them have 1 chilld.
Total estimated unemployment payments = $3,045,000

Health Benefits Costs

Massachusetts workers who are on unemployment and who are not able to continue coverage with their old health plan through COBRA, are eligible for the Massachusetts Medical Security Program (MSP) Direct Coverage Plan.
Workers on unemployment qualify if they have earned less than 4 times the federal poverty line ($43,320 for family of 1). Numerous Eagle workers are already receiving health coverage through the state of Massachusetts, and so we assume only 25% of Eagle workers will become new participates in the MSP Direct Coverage Plan.
To estimate the costs of this program, we can use the reimbursement amounts for the Premium Assistance Plan (for reimbursements for workers who are on COBRA). Family plan reimbursements equal $ 1,080 per month, and individual plan reimbursements equal $440 per month.
Assume that half of the Eagle workers get the family coverage and half get the individual coverage.
Total MSP Costs = $617,354

Total estimated Massachusetts Unemployment Costs = $3,662,354

Other Program Costs

The extra costs associated with low wage military uniform work were calculated previously in the report Conduct Unbecoming, looking at six programs: Section 8 Housing Assistance, Low Income Home Energy Assistance, Federal Low-Income Tax Credits, State Children Health Insurance programs (CHIP), the National School Lunch Program, and the Federal Food Stamp Program. Our estimate at the time was that an average 100 worker factory had potential costs from these state and federal programs of $292,280, or nearly $3,000 per worker per year due to the low wage nature of the work.[i] Assuming that this is a close approximation for the extra costs associated with the Eagle plant closure, and removing the CHIP program, since children's health care is already covered under the Massachusetts health plan, and removing the Federal Low-Income Tax Credit, this results in about $1,323.56 per worker per year in potential program costs.
Assume all Eagle workers on unemployment qualify for these programs, and assume 40 weeks (0.77 years) of program costs.
Total Other Program Costs = $356,343

Total Estimated Eagle Layoff Costs = $4,018,697

[i]Conduct Unbecoming: Sweatshops and the U.S. Military Uniform Industry, 2006, p.22.