by Jon Styf
While billion-dollar economic development incentives are heavily expanding across the country, the agencies in charge of handing out those incentives claim to create or retain 625,000 jobs in their most recent fiscal years, according to a new report.
The Center for Economic Accountability tallied up the jobs claimed as part of incentive packages in the 50 states and Washington, D.C. and found job total would be less than 5% of the 15 million to 17 million jobs naturally created in the United States economy each year.
“In a nation of more than 330 million people and an economy with 164 million workers, the 625,000 new jobs a year claimed by economic development agencies are a tiny drop in a massively expensive bucket,” said CEA President John C. Mozena. “For all of the claims that states’ economic development agencies are critical to economic competitiveness, their own data shows that their results are a rounding error at best for the economy as a whole.”
Economists across the country have studied and found economic incentives give politicians political gain but the incentives are not worth it for states.
The CEA report also said economic studies have shown job creation numbers sent by economic development departments are inflated four times what they should be. That would mean the number of new jobs is closer to 156,000 across the country.
A study from Dr. Timothy Bartik of the W.E. Upjohn Institute for Employment Research showed “for at least 75 percent of incented firms, the firm would have made a similar decision location/expansion/retention decision without the incentive.”
Last year, 12 different billion-dollar incentive deals were announced in the U.S. and a pre-COVID analysis showed economic development departments handed out roughly $95 billion nationwide, a number equal to the combined budget of the 11 smallest states in the U.S.
“That return on investment is so bad it makes Sam Bankman-Fried look like Warren Buffett,” Mozena said. “If private-sector investment professionals were delivering results like this to their customers they’d be fired, in jail or both.”
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Jon Styf is an award-winning editor and reporter of The Center Square who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies.
Photo “U.S. Capitol” by Andy Feliciotti.
