Firms get rich job subsidies with poor oversight

Reuters News
Posted: Dec 14, 2011 1:58 PM

NEW YORK - By Joan Gralla

(Reuters) - States, counties, cities and towns give employers $70 billion a year to help create jobs and train or retain workers but the programs often fail to set job-related requirements, a new study said on Wednesday.

The study by the advocacy group, Good Jobs First, analyzed 238 programs run by the states and the District of Columbia that spent $11 billion this year to boost their economies.

More than half of the programs, 135, had job-related performance standards, while 103 did not. The latter spent $7 billion this year, the study said.

Nevada, North Carolina and Vermont were the top performers in setting job requirements for major taxpayer subsidies. The District of Columbia, Alaska and Wyoming were the worst, the study said.

"With unemployment still so high, taxpayers have a right to expect that economic development investments create significant numbers of quality jobs," said Greg LeRoy, Good Jobs first executive director, in a statement.

"The days of 'no strings attached' are largely gone, but the fine print in many states is still full of gaps and loopholes," he added.

The Washington, D.C.-based advocacy group, which aims to make public subsidy programs more accountable, said that less than half of the 238 programs require employers to pay a set wage. This standard can run from just above the federal minimum wage to more than $40 an hour for a handful of programs.

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Only 51 of the programs require the employer to provide healthcare coverage and only 31 require the company to pay part of the cost.

Good Jobs First recommended that economic development programs require employers to pay set wages tied to labor market averages and oblige them to hire, retain or train workers and bar them from shifting positions between locations.

The study cautioned that "decent" job requirements might not be enough to make a subsidy program worthwhile. "Sometimes the only sensible course of action is to eliminate a program altogether," it said.

(Editing by Dan Grebler)