Report: States Spend Billions on Economic Development Subsidies that Don't Require Job Creation or Decent Wages

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Dec 14, 2011, 09:45 ET

WASHINGTON, Dec. 14, 2011 /PRNewswire-USNewswire/ -- States are spending billions per year on corporate tax credits, grants and other economic development subsidies that often require little if any job creation and lack wage and benefit standards covering workers at subsidized companies. These are the key findings of Money for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs, a study published today by Good Jobs First, a non-profit research center based in Washington, D.C. It is available at www.goodjobsfirst.org.

"With unemployment still so high, taxpayers have a right to expect that economic development investments create significant numbers of quality jobs," said Good Jobs First Executive Director Greg LeRoy. "If subsidies do not result in real public benefits, they are no better than corporate giveaways," added Good Jobs First Research Director Philip Mattera, principal author of the report.

Money for Something rates the performance standards and job quality requirements of 238 key subsidy programs from the 50 states and the District of Columbia. Each is rated on a scale of 0-100. Findings:

* Only 135 programs have a performance standard relating to job creation, job retention or training of a certain number of workers.

* Fewer than half (98) of the 238 programs impose a wage requirement, and only 53 of those are tied to labor market rates. Only 11 of the wage requirements raise pay levels by mandating rates somewhat above existing market averages. Wage requirements vary from just above the federal minimum to more than $40/hour in limited cases.

* Only 51 programs require that a subsidized employer make available healthcare coverage, and only 31 require an employer contribution to premiums.

* The states with the best average scores among their programs: Nevada (82), North Carolina (79) and Vermont (77). The worst: the District of Columbia (4), Alaska (5) and Wyoming (10).

Policy recommendations:

* Every subsidy should contain job creation, job retention or training requirements strengthened by provisions barring employers from shifting existing jobs from other facilities and mandating that jobs be kept in place for a minimum period.

* Every job in a subsidized facility should be covered by a wage standard that raises pay above market levels. They should also offer health coverage in which the employer contributes to premium costs.

Contact: Michelle Lee, 202-232-1616 x 210 or [email protected]

SOURCE Good Jobs First