Corporate subsidies are just super-expensive taxpayer handouts
The hustlers claim that corporate subsidies to pay for job incentives are a sound investment of our tax dollars, because those new jobs create new taxpayers, meaning investments soon pay for themselves. Hmm … not quite. In fact, not even close.
Last year, Good Jobs First tracked the 386 incentive deals since 1976 that gave at least $50 million to a corporation, and then it tallied the number of jobs created. The average cost per job was $658,427. Each! That’s likely far more than cities and states can recover through sales, property, income and all other taxes those jobholders would pay in their lifetimes. Worse, the rise of megadeals in the past 10 years has made the job-incentive argument mega-ridiculous:
- New York gave a $258-million subsidy to Yahoo and got 125 jobs — costing taxpayers $2 million per job.
- Oregon awarded $2 billion to Nike and got 500 jobs — $4 million per job.
- North Carolina shelled out $321 million to Apple and got 50 jobs — $6.4 million per job.
- Louisiana handed $234 million to Valero Energy and got 15 jobs — $15.6 million per job.
The rosy jobs-creation claims by incentive boosters also tend to be bogus, for they don’t subtract the number of jobs lost as a result of these deals. Jeff Bezos, Amazon’s founder and CEO, for example, has leaned on officials in every major metro area to subsidize its creation of a nationwide network of warehouses, data centers, and other facilities. This web forms Amazon’s all-encompassing business structure, giving it the reach to achieve near monopoly power in industry after industry.
In its 2016 report Amazon’s Stranglehold, the Institute for Local Self-Reliance found that more than half of Amazon’s facilities had been built with government subsidies. The “Amazon Tracker,” a continuously updated web page produced by Good Jobs First, reports that since 2005, the retailer has been showered with $1.1 billion in local and state subsidies to build their private business.
Each of those taxpayer handouts (given to the world’s third-largest retailer) was made in the name of local workers. And, yes, the Amazon warehouses do employ thousands, but their subsidized network enables the giant to undercut local competitors, causing devastating job losses that greatly outnumber jobs gained. The ILSR report notes that at the end of 2015 Bezos did indeed employ 146,000 people in his U.S. operations, but — oops — they calculated that his taxpayer-supported behemoth had meanwhile eliminated some 295,000 U.S. retail jobs.
Plus, there’s an ugly blotch on Amazon’s ballyhooed job-creation numbers: Working conditions in those sprawling, windowless warehouses are grim, and 40 percent of the employees are low-wage, temporary hires with no benefits and no job security. While warehouse wages everywhere are low, an ILSR survey documented that Amazon’s average 15 percent lower than what other corporations pay.
Almost every city/state giveaway program ignores smaller and locally owned businesses (which really do create jobs), and instead tries to land brand name corporations with blockbuster deals. This emphasis — subsidizing big outfits to come from afar to compete unfairly against local, unsubsidized firms — is spreading an epidemic of vacant storefronts across America. It’s also altering the very essence of our communities. Rather than each having its own diverse, unique commercial character, our towns are being transformed into corporatized, homogenized versions of Everywhere, USA.
Beyond local business, our larger society also pays a substantial cost for these subsidies. Most of the deals woo the giants by granting 10-year, 20-year, or even longer exemptions from paying property taxes — the chief source of funding for local schools, roads, fire departments, water systems, parks and other essential public services. To cover the loss of revenue, school districts, cities and counties respond both by cutting services and by hiking the property taxes of homeowners, renters, and hometown businesses. As a result, the community gets more inequality, gentrification, homelessness, and divisiveness. The corporate favor-seekers, however, fail to see (or care about) the connection between this result and their grab for the public’s money.
Institute for Local Self Reliance is an excellent resource on how to support all things local.
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