State and local governments spend billions of dollars annually on economic development subsidies given to companies for moving existing jobs from one state to another, according to a study released today by Good Jobs First, a nonprofit, nonpartisan research center based in Washington, D.C. The report is titled The Job-Creation Shell Game.
Greg LeRoy, executive director of Good Jobs First and principal author of the report, uses the term “interstate job piracy” to describe the transactions. “The costs are high and the benefits low, given that a tiny number of companies get huge subsidies for moving a small number of jobs.”
LeRoy adds, “Moreover, the availability of relocation subsidies allows companies that have no intention of moving to extract payoffs to stay put.”
Summarizing studies demonstrating that interstate relocations have microscopic job effects, the report also reviews the history of economic competition among the states and presents eight case studies.
The case studies cover metropolitan areas such as Kansas City, Charlotte, New York, and Memphis, where companies get subsidized to move short distances across state borders; states such as Texas, Tennessee, Georgia, New Jersey, and Rhode Island that are aggressive users of relocation subsidies; and states such as Illinois and Ohio, which have given big retention packages.
The report recommends that states stop subsidizing companies for relocating jobs from other states, noting that four-fifths of the states already refuse to pay for intrastate job relocations.