Government-Subsidized Job Creation Preservation Elimination in Massachusetts
A Boston Globe investigation finds that Massachusetts' Economic Development Incentive Program, which during the last 16 years has dispensed hundreds of millions of dollars in state and local tax breaks to businesses that promised to create jobs, often has little or nothing to show for its efforts:
Hundreds of the projects delivered fewer jobs than promised, and some companies actually slashed employment. Many firms won subsidies for projects they were set to build without state assistance; in some cases, incentives were approved long after the projects were underway or complete. And many got generous packages though they agreed to create only a handful of low-paying jobs.
A review of state records found that more than 40 percent of the companies that received tax breaks pledged to create 10 full-time jobs or fewer, including nearly four dozen that promised only to add one full-time job. Often, the companies planned to pay new workers little more than minimum wage.
The Globe's examples of questionable projects range from a tiny pizzeria in Ware that got tax breaks when it relocated, even though the owner had already settled on a new site and no jobs were created as a result of the subsidy, to a telecommunications equipment manufacturer that promised to add 800 jobs at its campus in Billerica, for a total of 3,000, but actually whittled its work force there down to 145. Its tax breaks continue through 2014. Although the article allows that "often the incentives work and new jobs result," even companies that follow through on plans to hire more people in a particular jurisdiction might have done so without the tax breaks. Since the government is not very good at foreseeing the future, let alone peering into alternate universes where it chose not to grant tax breaks, creating a tax and regulatory environment that is hospitable to businesses in general seems like a better economic development strategy than picking favorites, many of which will turn out to be duds.
[Thanks to Michael Graham for the tip.]