North Carolina and other states across the country are spending billions of dollars on economic incentives. A new study released Dec. 14 by Good Jobs First finds that many tax credits, grants and subsidies require little job creation and lack wage and benefit standards.
The study by the nonprofit research organization comes amid heated local debate over the effectiveness and fairness of such deals, with the Hendersonville County Board of Commissioners voting just a couple of days ago to approve a massive incentives package for a company rumored to be Sierra Nevada Brewing Co.
The deal calls for giving the business up to $3.75 million in tax breaks in exchange for creating 125 new jobs, and investing $45 million in real estate improvements and $70 million in equipment. Earlier that day, the Mills River Town Council approved $86,000 in incentives for the business. And commissioners at the meeting also revealed that those incentives were part of a larger package involving state funds and money from the Golden Leaf Foundation, although the specifics have yet to be announced.
Such deals are a result of cities, counties and states competing with each other to lure growing companies to expand in their areas. And they’ve become increasingly common in the last few years as the economy has struggled to recover from recession, according to the Good Jobs study. But overall, the results have been far from successful at creating jobs, the study found.
Of the nearly 238 state incentives programs studied across the country, about 135 required quantifiable job creation, job-retention or -training programs in order to receive the perks. However, rankings from the organization found that North Carolina had more requirements and safeguards in place pertaining to its economic incentive programs than most other states.
Nevada, North Carolina and Vermont were found “to do the best job in applying job standards to their major subsidy programs,” according to the study. The District of Columbia, Alaska and Wyoming rated worst. “If subsidies do not result in real public benefits, they are no better than corporate giveaways,” said Good Jobs First Research Director Philip Mattera, principal author of the report. “States should be using these programs to reduce unemployment and raise living standards, not simply to increase corporate profits.”
In the months leading up the Dec. 12 vote by the Henderson Commissioners, local brewers had argued that it wouldn’t be fair to offer bigger breweries economic incentives to encourage them to compete on their home turf. Although none of them attended the meeting, other residents engaged in a lively debate on the issue, with some arguing such incentives go against free market principles, while others defended them as a useful tool to create jobs.
Meanwhile, further details related to the economic incentive package being offered to the unnamed company are still being negotiated, reported Henderson County Commissioner Larry Young.