Business Incentives Should Create Good Jobs

January 20, 2012 at 11:00 am

Economic development in North Carolina, and the nation as a whole, has been focused on creating more jobs, particularly in this climate of persistent high unemployment. But often, this has been at the price of creating quality, well-paying jobs; instead, more jobs are being created that pay less than what is required to meet an average worker’s needs, also called a living wage.  According to the Social Security Administration’s wage statistics, the recession saw broad-based collapse in wage levels and raises. These statistics further show that the new jobs created since the recession have not been the traditional middle-class jobs that pay individuals a living wage, but instead have been lower paying positions.

The NC Justice Center in early January presented a plan for how North Carolina’s Economic Development Incentive Programs could be leveraged to not only create more jobs, but also better jobs for our economy (available here).  This program would emphasize the creation of jobs that pay a living wage, allowing North Carolina families to meet their most basic needs.  Their plan includes:

1. Attracting and retaining high-growth industries to North Carolina such as manufacturing, boat building, and pharmaceuticals.  An emphasis would be on targeting higher-wage occupations.

2. Increasing the wage standard for all incentive programs to meet the North Carolina Living Income Standard.

3. Enforcing the current performance criteria for incentive deals.

4. Requiring all incentive firms to meet certain wage standards in exchange for the subsidies.

5. Publishing quarterly and annual reports on firm performance in a public, searchable database.

Public reporting and an emphasis on job creation might have led to different results in Maiden, NC, where Apple recently completed a $1 billion data center, as reported by the Washington Post.  According to the report, both the state and the local government awarded Apple huge financial incentives.  However, the facility created just 50 total new full-time jobs and 250 indirect contracting jobs.  “There is not an immediate payback – there’s no doubt about that,” Michelle Bailey of the International Data Corp. said, as quoted by the Washington Post article.  In the future, the economic development programs should make sure incentive dollars are used to create more and better jobs.

by Sarah Grimme, Development & Policy Associate

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Entry filed under: Economic Development. Tags: , .

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