Jun 23 2021
The Jobs Are Back In Town
(1:40) Mitch introduces Greg LeRoy, Executive Director of Good Jobs First. (3:13) Greg notes that America's state and city governments spend roughly $70B/yr in economic development incentives to corporations, who often use those incentives in turn to pay no taxes on property or income over the course of their local operation, thus failing to deliver returns on the public's investment. He cites a depression-era Mississippi scheme as the origin of America's "tax break industrial complex", coinciding with the birth of "site location consulting companies" like Fantus, as the building blocks of a "second war among states" which has since produced net losses as a rule rather than an exception. (5:20) Greg explains how these tax incentives regularly go to corporations who are bound for the region anyway, given how little a local tax code contributes to the cost structure of company operations. (7:50) Greg notes that the highly-publicized Amazon HQ2 site competition is simply a rare public glimpse into the kinds of self-defeating dog-and-pony shows that occur hundreds of times each year, in secret. (10:36) Good Jobs First maintains a database of "mega deals" -- incentive plans over $50MM for one project -- and the average cost per job across such deals is $658,000, borne entirely by taxpayers. His message here is that such deals are, if nothing else, programs designed to transfer wealth from taxpayers to shareholders. (18:38) We discuss a particularly preposterous case study in the second war among states, occurring over the course of a decade between Kansas and Missouri vying for Kansas City job growth. In the end, the two states had collectively spent $321 million to lure 6,000 jobs one way and 5,500 the other way, netting a per job tax incentive cost of $642,000. Greg makes the important note that government eventually learned its lesson, and has since created an interstate regulation prohibiting either state from using tax dollars to draw jobs across the border in the Kansas City region. (27:12) Mitch's hot take: Americans yearn so much for familiar identity (which manufacturing and other blue-collar jobs promise) that many would simply ignore or willingly dismiss the obvious math that says these tax incentives are hurting their communities. Greg recalls the early part of his career, researching the tax breaks that incentivized plants to close and companies to move, and agonizing over the loss of direction and purpose those victimized towns felt. His solution: make the community the source of familiarity and identity, not the employer. Invest in education, health & wellness, good transit, clean air, and the stickiness of the city will stand above any corporate temptation.