The Chattanooga Miracle Leaves Out the Working Class

Companies like Amazon and Volkswagen have flocked to the city — but they offer seasonal, temporary, unsteady work.

This article is part of a weeklong America 360 series on Chattanooga.

CHATTANOOGA, Tenn. — The suits in blue dry-cleaning bags sat in heaps on the conference room table — there for the taking, provided the young men could unearth ones that fit.

Justin Smith's blazer fit well in the shoulders but fell 2 inches too short in the sleeves — not that it mattered too much to him. He wasn't sure he would need to wear a jacket to any job or even to interview as a truck driver. Driving a big rig, forklift, or bus had become the 37-year-old's most recent career plan; it was an idea born in a free job-training program in downtown Chattanooga that also offers donated dress suits to its enrollees.

Already, Smith had run through the gamut of local employment options for someone without a college degree. In the late 1990s, he worked as a supervisor in at a yarn-dying factory, until it shipped those jobs to China. Then he worked at a DuPont plant, where he manufactured nylon for bulletproof vests and earned as much as $22 per hour. For three years, he tried to make it as a small-business owner by opening a retail store to sell midcentury modern furniture, a passion of his.

When the recession forced Chattanoogans to pull back on spending and his business stumbled, Smith found work at the newly opened Volkswagen plant. He delivered parts on the factory floor for $13.50 an hour for a year, until he got laid off in May with hundreds of other Volkswagen employees, he says.

Now, Smith would be thrilled to earn $15 to $16 an hour, or the equivalent of $33,000 annually. That's a huge comedown from the $65,000 he made one year in manufacturing.

For him, Chattanooga isn't primarily a tech hub or a city whose economy is on the upswing. Smith just sees a dead-end. "If someone paid my moving expenses, I would move now," he says. His friend at the job-training workshop, 20-year-old Dylan Wade, interrupts. "I don't want to be a truck driver, but it pays a lot. It's not what I want. It's what my wallet wants," Wade says. He'd prefer to work as a landscaper or gardener but doesn't see opportunities in that field.

Chattanooga government officials, economic-development gurus, and well-educated locals are keen on the idea that the Chattanooga economy is at a turning point thanks to its revitalized downtown; its super-speed Internet, one of the fastest in the country; and the city's ability to lure new companies to the area, including Volkswagen, Amazon, and a handful of call centers such as HomeServe USA or Convergys.

But this narrative does not ring true to those living on the city's lower economic rungs. For them, the past decade has been marked by struggle and a decline in wages, with fewer steady, stable job prospects, and the ongoing loss of manufacturing jobs. The unemployment rate in Chattanooga remains at 8.5 percent, compared with the national rate of 7.4 percent. About 23 percent of Chattanooga residents live below the poverty line, according to the most recent census figures; statewide, the average is 17 percent.

Anecdotally, food-bank workers say they're seeing more and more families depending on the food pantries. These are working people, not destitute enough to qualify for federally funded food stamps but who nonetheless remain hungry. "Before the recession, we used to see primarily disabled people who couldn't work, or the unemployed," says Holly Ashley, a spokesperson for the Chattanooga Area Food Bank. "Now, we're seeing more people who are underemployed."

When those without college degrees do find work, they say there's little job security, even at the new Volkswagen or Amazon plants, arguably two of the brightest stars of the Chattanooga economy. Smith got laid off after one year at Volkswagen. His friend, James Massey, 21, worked a seasonal job at Amazon with no hope of it leading to a full-time position. Residents say that's the way both plants hire most of their workers: through temporary agencies where people can be hired and fired based on the companies' supply and demand.

"When business goes down, they lay off people. In peak seasons, they'll hire 500 to 600 people and then lay most of them off later," says Duane Parks, a 29-year-old Chattanooga native. "I want to have some stability in my career."

This divergent Chattanooga economy — with its separate tracks for high-skilled versus low-skilled workers — is indicative of the nationwide trend of a disappearing middle class. From 1999 until 2011, the real median household income in the United States dropped by 8.9 percent, according to the Census Bureau. Data like this support Smith, Wade, and Massey's view of the Chattanooga economy as lackluster, at least for them. Still, they're trying to improve their lives by gaining new skills or applying for a wider array of jobs.

Meanwhile, highly educated workers see the Chattanooga economy as on the cusp of something big, a small-sized city full of opportunity for those who are eager and ambitious. "We want six-figure jobs to come to Chattanooga," says 30-year-old Jack Studer, an entrepreneur who returned here after working at an investment bank and software company. "Frankly, those 2,000 or so jobs at Volkswagen pay barely above the poverty line. That's part of the old Chattanooga economy — where things were 10 years ago."

But, Chattanooga's "old" economy worked much better for those with less education. It gave workers like Smith jobs that paid over $20 an hour. The new mayor, Andy Berke, says he wants to improve the educational system to give less-skilled workers more opportunities. Yet there is no grand city plan to accomplish that. Many of the city's elite and economic-development officials suggest that a knowledge-based economy will create wealth, which will trickle down to a greater swath of residents. So far, that has failed to happen, even with a spurt of development that began in the early 1990s.

This economic divide remains one of Chattanooga's biggest challenges, according a 2008 case study by the Brookings Institution. Much of the growth of downtown and the ensuing development has not linked to or helped Chattanooga's poorest neighborhoods, the report says.

"Chattanooga as a technology hub? That is b.s.," says Massey at the job-training workshop. "There are not many tech jobs here." For less-educated, lower-skilled workers, it just seems that the city has fewer jobs overall to offer them. "Chattanooga historically has been very focused on manufacturing," says David Penn, an associate professor of economics at Middle Tennessee State University. "It has made some gains in manufacturing with the Volkswagen plant, but it's still down in manufacturing jobs and still down in the total number of jobs."

Penn commends the city for trying to diversify its economy by encouraging growth in tech companies and manufacturing, alongside more traditional companies such as Chattanooga Bakery or the insurance company Unum. But many of Chattanooga's residents are still waiting for that diversification to translate into the good life for them.