The good people over at
Good Jobs First have published the
second in their two-study series on corporate tax subsidies and incentives,
"MONEY FOR SOMETHING: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs." The justification frequently put forth when a company comes asking for these tax breaks is that it creates jobs. Not just jobs, but jobs that pay better. The study shows that, as Robert Oak
writes, 43 percent of these breaks are not job creators but "glorified corporate welfare."
Translate that into cash and it comes out to $8 billion a year.
Good Jobs First looked at 238 programs in the 50 states and the District of Columbia.
Included in these programs are corporate income tax credits (for job creation, capital investment, research and development), cash grants, low‐cost or forgivable loans, enterprise zones, reimbursement for worker-training expenses and other company-specific state assistance. Each program was rated (1 to 100) on three primary criteria (and some derivative qualities): whether they require recipient companies to meet job quantifiable performance standards; whether the subsidized companies pay their workers above a certain wage level; and whether the companies provide their workers health-care coverage or other benefits.
Some of the conclusions:
• Of the 238 programs, 103, totaling $7 billion in annual incentives/subsidies, had no job-performance standards.
• Only 98 of the programs impose a wage requirement on subsidized employers and only 53 of those are tied to labor market rates.
• Only 11 (5 percent) of those wage requirements raise wage levels by mandating rates that are slightly above existing market average in a region or industrial sector.
• The average of the wage requirements is $14.76 an hour; the median is $11.82. In some cases, wage requirements are set below market levels.
• The programs without wage requirements—$8 billion a year—pay so little in some cases that workers hired by these taxpayer-subsidized companies must depend on food stamps, Medicaid and other public assistance to survive.
• Only 51 of the programs require the subsidized companies to make some kind of health-care benefit available, and only 31 require that the company pay part of the premium.
• Grades for the states with these programs vary widely. The average nationwide was 40. The best were Nevada (82), North Carolina (79), Vermont (77), Iowa (70), Maryland (68) and Oklahoma (66). The worst were the District of Columbia (4), Alaska (5), Wyoming (10), Oregon (13), Washington (18) and Hawai'i (19). If you click on the link, you'll find a score for each state.
Good Jobs First makes sensible recommendations. Programs should all have quantifiable job-creation standards. They should have wage requirements designed to lift prevailing wages, not tied to a fixed level or the poverty rate. Companies should not be allowed to shift existing jobs from other facilities to qualify for the subsidies/incentives. The programs should require the companies to provide a package of benefits, including health-care coverage. Wages and benefits should apply to part-time and temporary as well as full-time, permanent workers.
But that's only part of what needs to be done in the current economic climate.
As Oak says:
One has to wonder why is it legislators these days can give subsidies, corporate welfare, outsource major functions of government, privatize everything not nailed down (and that too), and no one blinks an eye. Yet if governments attempt to run their own direct job programs, plain create jobs directly, all alarm bells ring as if the nation is on fire. Perhaps that too is due to corporate lobbyists. Last thing they want is to be shut out as the great middle men to the economic and job flood gates. Surely a government run direct jobs program is more efficient than this.
In fact, government-run direct jobs programs ought to have been set up long ago. Good luck with that one. That's pouring money down the rat hole, while giveaways to companies who don't do squat to provide decent-paying jobs is good for business.
