OKPOLICY.ORG
Contact:
Michelle Lee 202-232-1616 x 210 or mlee@goodjobsfirst.org
Gene Perry 918-794-3944 or gperry@okpolicy.org
December 14, 2011–States are spending billions of dollars per year on corporate tax credits, cash 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 ofMoney for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs, a 51-state “report card” study published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC. It is available at http://www.goodjobsfirst.org/moneyforsomething.
“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. “The days of ‘no strings attached’ are largely gone, but the fine print in many states is still full of gaps and loopholes.”
Oklahoma was found to do the 6th best job of applying job standards to major subsidy programs, coming behind only Nevada, North Carolina, Vermont, Iowa, and Maryland.
“Oklahoma performed relatively well because of the job creation requirements in our Quality Jobs Program,” said Oklahoma Policy Institute analyst Gene Perry. “But there’s room for improvement.”
Among Oklahoma’s individual subsidies, the Quality Jobs and 21st Century Quality Jobs Programs earned the highest marks, with 109/100 and 95/100 points respectively. The lowest performing Oklahoma program was the Investment/New Jobs Income Tax Credit, which received only 25/100 points. This credit was placed under a two-year moratorium in 2010 and is now under review by the Task Force for the Study of Tax Credits and Economic Incentives. At a meeting of the task force, Rep. David Dank called the lack of caps, controls, or transparency for the Investment/New Jobs credit a “disgrace for the state.” The program has an estimated $140 million in awarded but unused credits, with no limits on when companies can claim them.
“The high score for the Quality Jobs program shows we know how to provide the safeguards,” Perry said. “Now we need to extend them over all of the tax breaks offered by the state. And even the most well-designed subsidy should have a sunset provision and an annual cap so it doesn’t break the budget.”
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 that together cost more than $11 billion a year. Each program is rated on a scale of 0 to 100 (with extra credit for advanced features). The scores for the programs in each state are averaged to derive a state score. The report offers these policy recommendations:
- Every subsidy should contain job creation, job retention or training requirements. Those should be strengthened by provisions barring employers from shifting existing jobs from other facilities and mandating that the jobs be kept in place for a minimum period.
- Every job or training position in a subsidized facility should be covered by a wage standard, preferably tied to labor market averages and structured in a way that raises pay above market levels. They should also offer health coverage in which the employer contributes to the cost of the premium. These rules should also apply to part-time, temporary and contract workers.
- Decent job standards do not guarantee that a program’s benefits will outweigh its costs. Sometimes the only sensible course of action is to eliminate a program altogether.
Note: Standards such as those rated here mean little if they are not enforced. In a companion report to be issued soon, Good Jobs First will grade the states on their enforcement practices.
