States Competing for Jobs Spend Billions Wooing Companies

In its newest report, non-profit, non-partisan research center Good Jobs First reveals that state and local governments are spending billions of dollars annually on luring companies from one state to another instead of focusing on creating new positions. Greg LeRoy, executive director of Good Jobs First and principle author of the report, entitled The Job-Creation Shell Game, commented:

“What was long ago dubbed a Second War Between the States is, unfortunately, raging again in many parts of the country. The result is a vast waste of taxpayer funds, paying for the geographic reshuffling of existing jobs. By pretending that these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud.”

On the economically lucrative nature of such strategies LeRoy said, “The costs are high and the benefits low, given that a tiny number of companies get huge subsidies for moving a small number of jobs. Moreover, the availability of relocation subsidies allows companies that have no intention of moving to extract payoffs to stay put.”

The report investigates the history of the so-called “job piracy” and demonstrates the minimal effects it has on increasing jobs. After studying numerous metropolitan areas that subsidize companies to move across state borders, aggressive states that use relocation subsidies, and other states that give “job blackmail” packages to target companies, Good Jobs First recommends that company subsidization cease. The report goes on to also recommend states stop recruitment activities intended to pirate jobs existing and potential jobs from other states and sees a limited role for the federal government in amending incentive codes to make existing jobs ineligible for government subsidies.