Wisconsin shows how job incentives are handed out -- in Bizarro world

[Scuba]

http://www.latimes.com/business/hiltzik/la-fi-mh-the-bizarro-world-20140825-column.html

Via the Wisconsin State Journal of Madison, we learn of the zany way that political officials in that state are handing out job-creation funds. Long story short, they've voted to hand over $6 million in taxpayer cash to a company that's planning to cut its Wisconsin work force in half.

The company is Ashley Furniture, which has had its snout in the taxpayer trough before. But the new grant is more than all those others combined, the Journal says. The $6-million grant, which has been voted by the state Economic Development Corp. but not yet finalized, won't require Ashley to create any new jobs. Instead, it will allow the manufacturer to "lay off half of its current 3,848 Wisconsin-based workers," the newspaper says.

The chairman of the incentive-awarding body is Republican Gov. Scott Walker. A few weeks after the WEDC approved the grant to Ashley, its owners donated $20,000 to Walker's re-election campaign.

...

That's not what the terms of the deal reportedly say. According to a WEDC memo reviewed by the Journal, the company agrees to retain 70% percent of its work force this year, 60% next year, and 50% percent in 2016-18. The memo also observes that Ashley doesn't provide a lot of high-grade jobs--56% of the workers make less than $10.88 per hour.

[ewagner]

1. So this is what it has come to....

Now we hand out millions in "economic development grants" not to create new jobs but as a reward for laying off FEWER people...

Really?

a couple of basic truths to deal with here...

"Economic Development" is a crock (insert your choice of what fills that crock here). The cowardly answer to lowering taxes is always "create more tax base" and everybody will pay less!!!! Hallelujah and pass the grant money!!!"

True. We need to have somebody promoting our state to attract businesses but it has now become a game of which state is going to offer the best deal to the business/industry. The winner will pay less in taxes; less in wages and absorb more public $$$$ than they will bring in. In the case of Tax Increment Financing (TIF) the government entity romancing the industry will pass bond issues to pay for the improvements and/or incentives to bring the industry to their town and recover the $$$ over a course of 10-15 years through the differential in the value of the old property versus the value of the new property. The community will not receive the precious and sought-after boost in equalized valuation for the time it takes to pay off the bond issue...oh yes...the local school board, the VTAE district, county and state revenues will be frozen at the old level and they won't receive the benefit until the TIF expires.

The argument is of course that you "provided jobs"...what kind of jobs? Some are good-paying jobs but there's a lot of retail in there too paying minimum wage.

The ugly truth is that every community in the state is chasing this dream scenario and only a few will find it.