Stupid Corporate Welfare Tricks

corp welfareGood Jobs First has released a new study which shows most state's corporate tax incentives and subsidies don't work to create jobs and pay living wages. Corporations are getting subsidies and tax breaks and instead of requirements to support the State's labor force, 43% of these subsidies are glorified corporate welfare. State corporate subsidies cost $11 billion a year and $7 billion worth of them do not require job creation and living wages. From the report, Job Creation and Job Quality Standards in State Economic Development Subsidy Programs:

  • Fewer than half (98) of the 238 programs impose a wage requirement on subsidized employers, and only 53 of those wage standards are tied to labor market rates, which are a more effective benchmark for economic development than fixed amounts that can stagnate in the manner of the federal minimum wage.
  • Only 11 of the wage requirements serve to raise overall wage levels by mandating rates that are somewhat above existing market averages for the geographic area or industry sector.
  • Wage requirements, which can be found in 42 states, vary enormously—from just above the federal minimum wage to more than $40 an hour in certain circumstances for a handful of programs. Using the lower end for those with ranges, the average of the hourly wage requirements is $14.76; the median is $11.82.
  • Those programs without any wage requirement which together cost more than $8 billion a year—can potentially result in jobs that pay so little that workers must rely on social safety net programs such as food stamps, Medicaid, State Children’s Health Insurance and the Earned Income Tax Credit. These hidden taxpayer costs may also occur from wage requirements that are sometimes set below market levels.
  • Only 51 programs (in 28 states) require that a subsidized employer make available healthcare coverage of some kind, and only 31 of these require that the employer contribute to the cost of the premium.

Good Jobs First has interactive tools and corporate subsidy databases on their website for more digging. Here's a table that caught my eye from the report. A list of programs with no qualifying requirements at all and their costs tallying up to $1.3 billion bucks.

corporate subsidies list no job requirement

One thing that is missing from the report is a mention workers should be U.S. citizens or permanent residents. If a foreign guest worker or illegal immigrant is being hired and trained with taxpayer money, which has happened many times in the past, that does nothing to help create jobs for Americans or State residents.(Regardless of whatever corporate lobbyist economic fiction propaganda one might have seen, displacing U.S. workers is a job loss, not a gain).

The New York Times gives a typical example of what happens when corporations threaten to leave a state...or else if they don't get their tax subsidy candy:

States’ desperation to hold on to jobs was vividly illustrated this week in Illinois, which is so short of money that it has been unable to pay its bills on time in recent years. After Sears and the Chicago Mercantile Exchange were courted by other states, the Illinois Legislature passed large tax breaks to keep them where they are, over the objections of protesters who unfurled a “Stop Corporate Extortion” banner in the Illinois House chamber on Monday.

The new tax breaks will save Sears — which got a big retention package just over 20 years ago, when it left the Sears Tower in Chicago for suburban Hoffman Estates — an estimated $15 million a year. They will save the state’s financial exchanges an estimated $85 million a year.

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. The report quotes one study which found each job created through subsidies cost $100,000.

The role of site location consultants in pushing states and localities to bid against one another, especially for big projects, routinely resulting in subsidy packages of more than $100,000 per job.