Crowdsourcing works! In my last post on $100+ million incentive packages, I asked for your help in identifying any projects I had missed either in the US or European Union. Readers came up with several suggestions, which led to me discovering even more mega-incentives. I also checked the Good Jobs First blog Dirt Diggers Digest, where I found four projects listed, only one of which had been in my original 13 post-early-2008 packages. Then I went to the accumulated results of Google Alerts, where I found even more. In all, I found a total of 12 more projects in the US, bringing the score to US 25, EU 5. I have identified one possible additional case in the EU, but have yet to confirm it.
Here is my original list of $100 million incentives from September 29:
Company State Minimum nominal incentive package
AREVA ID $276.6 million present value
Nucor LA $373 million
Hemlock MI $358.4 million
Spirit Aero NC $250.9 million
Cerner/OnGoal KS $230 million
Hemlock TN $200 million
Electrolux TN $188.3 million present value
Ford KY $180 million
Boeing SC $900 million
Apple NC $320.7 million
Xtreme MI $100 million
Schott NM $130 million
Panasonic NJ $102 million
Here are the additions:
LG Chem MI $276 million (thanks to Dean Whittaker for this and the next one)
Johnson Controls MI $467.5 million
Motorola IL $113.7 million (thanks to Dirt Diggers Digest for this and the next two)
American Greetings OH $104.5 million
Diebold OH $96 million (DDD expects this to top $100 million when all is tallied)
Yahoo NY $200 million (David Cay Johnston has reported on this and the next one)
Verizon NY $614 million
Xanadu NJ $200 million
Gaylord Entertain. CO $300 million
A123 Systems MI $100 million
Dow Kokam MI $100 million
fortu PowerCell MI $100 million
We now have five times as many $100+ million packages in the US than the EU in the last three years, seven of which exceed the largest package in the EU, at least in nominal value. This continues to underscore my contention that the EU state aid rules successfully reduce the size of incentives there and we need to adapt their rules to our political institutions.
I have heard rumors that there may still be mega-packages still to uncover. Let me know if you hear about them!
Wednesday, October 5, 2011
Sunday, October 2, 2011
Job piracy in Canada, Australia, and the United States
As I mentioned in August, my article "Regulating Investment Attraction: Canada's Code of Conduct in Comparative Perspective," has just appeared in the September issue of the journal Canadian Public Policy.
Job piracy (using subsidies to induce the relocation of an existing facility) is a big problem in the United States. New York City and Kansas City have been subject to repeated raids by neighboring states, and a Good Jobs First study this summer documented extensive job piracy in the Cincinnati and Cleveland metropolitan areas. Two voluntary anti-poaching agreements among groups of states were complete failures.
In the early to mid-1990s, Canada was seeing large-scale job piracy as well. Crown Life Insurance moved 1200 jobs from Toronto to Regina, Saskatchewan, in 1991, receiving a C$250 million loan guarantee to do so. New Brunswick was handing out millions of dollars to call centers to relocate there, including C$11 million to get United Parcel Service to consolidate 870 jobs from three other provinces in Canada. With this background, British Columbia insisted that a ban on job piracy be placed in the 1994 Agreement on Internal Trade signed by the Canadian federal government, all 10 provinces, and the Yukon and Northwest Territories. Though there were other provisions in the Code of Conduct on Incentives, the piracy ban was the only one that was legally binding. But it turned out to be not binding enough.
The United Parcel Service subsidy was subject to a complaint by British Columbia against New Brunswick in 1995. But weak dispute resolution rules in the larger Agreement meant there was no true enforcement mechanism. New Brunswick suffered no consequences, although it eventually got out of the poaching game when Premier Frank McKenna retired. However, since 1995, there have been at least eight other instances where various provinces (Nova Scotia, Prince Edward Island, Quebec, and Ontario) all gave subsidies to companies to move existing operations. One of them, Clarke, Inc., has been featured for years on the website of Nova Scotia Business, Inc., even though it is a prima facie violation of the Code of Conduct. But without a complaint from Ontario, nothing can happen -- and Ontario tried to raid Nova Scotia unsuccessfully to obtain the headquarters of grocery chain Sobeys.
The Code of Conduct does not appear to have had much success. The best that can be said about it is that the relocations subsidized were much smaller than those of the 1990s. Clarke, at 95 jobs, was the largest; the others were significantly smaller than that. In the meantime, the Agreement on Internal Trade has strengthened its dispute resolution process to make violators subject to fines up to C$5 million. It seems possible that a large-scale subsidized relocation would provoke a complaint under the Code.
An interesting contrast is Australia, which has a voluntary anti-piracy agreement that includes five of the country's six states (Queensland is the non-participant). Besides banning job piracy, the Interstate Investment Cooperation Agreement also encourages states to consult with each other when a company tries to play them off against each other. Whereas the National Governors Association says U.S. states have the right to do this, in Australia the states really do consult with each other to reduce what I describe as an information asymmetry in bargaining between governments and companies. Even though there is no enforcement mechanism at all, there have only been a couple of violations since the Agreement was first adopted in 2003. The reason for its relative success seems to be that the five states' politicians genuinely believe that job piracy is bad policy, a view that has been promoted by a federal government research body, the Productivity Commission, for at least 15 years.
The lesson for the United States is that we should try to ban job piracy because it obviously has no benefit for the country as a whole. In the U.S., of course, we have a stronger dispute resolution process than Canada's Code of Conduct does: If Congress passed a law against interstate job piracy, it could be enforced in federal court. The problem is that too many state politicians don't agree that poaching is a bad policy; they need to be educated or replaced.
Job piracy (using subsidies to induce the relocation of an existing facility) is a big problem in the United States. New York City and Kansas City have been subject to repeated raids by neighboring states, and a Good Jobs First study this summer documented extensive job piracy in the Cincinnati and Cleveland metropolitan areas. Two voluntary anti-poaching agreements among groups of states were complete failures.
In the early to mid-1990s, Canada was seeing large-scale job piracy as well. Crown Life Insurance moved 1200 jobs from Toronto to Regina, Saskatchewan, in 1991, receiving a C$250 million loan guarantee to do so. New Brunswick was handing out millions of dollars to call centers to relocate there, including C$11 million to get United Parcel Service to consolidate 870 jobs from three other provinces in Canada. With this background, British Columbia insisted that a ban on job piracy be placed in the 1994 Agreement on Internal Trade signed by the Canadian federal government, all 10 provinces, and the Yukon and Northwest Territories. Though there were other provisions in the Code of Conduct on Incentives, the piracy ban was the only one that was legally binding. But it turned out to be not binding enough.
The United Parcel Service subsidy was subject to a complaint by British Columbia against New Brunswick in 1995. But weak dispute resolution rules in the larger Agreement meant there was no true enforcement mechanism. New Brunswick suffered no consequences, although it eventually got out of the poaching game when Premier Frank McKenna retired. However, since 1995, there have been at least eight other instances where various provinces (Nova Scotia, Prince Edward Island, Quebec, and Ontario) all gave subsidies to companies to move existing operations. One of them, Clarke, Inc., has been featured for years on the website of Nova Scotia Business, Inc., even though it is a prima facie violation of the Code of Conduct. But without a complaint from Ontario, nothing can happen -- and Ontario tried to raid Nova Scotia unsuccessfully to obtain the headquarters of grocery chain Sobeys.
The Code of Conduct does not appear to have had much success. The best that can be said about it is that the relocations subsidized were much smaller than those of the 1990s. Clarke, at 95 jobs, was the largest; the others were significantly smaller than that. In the meantime, the Agreement on Internal Trade has strengthened its dispute resolution process to make violators subject to fines up to C$5 million. It seems possible that a large-scale subsidized relocation would provoke a complaint under the Code.
An interesting contrast is Australia, which has a voluntary anti-piracy agreement that includes five of the country's six states (Queensland is the non-participant). Besides banning job piracy, the Interstate Investment Cooperation Agreement also encourages states to consult with each other when a company tries to play them off against each other. Whereas the National Governors Association says U.S. states have the right to do this, in Australia the states really do consult with each other to reduce what I describe as an information asymmetry in bargaining between governments and companies. Even though there is no enforcement mechanism at all, there have only been a couple of violations since the Agreement was first adopted in 2003. The reason for its relative success seems to be that the five states' politicians genuinely believe that job piracy is bad policy, a view that has been promoted by a federal government research body, the Productivity Commission, for at least 15 years.
The lesson for the United States is that we should try to ban job piracy because it obviously has no benefit for the country as a whole. In the U.S., of course, we have a stronger dispute resolution process than Canada's Code of Conduct does: If Congress passed a law against interstate job piracy, it could be enforced in federal court. The problem is that too many state politicians don't agree that poaching is a bad policy; they need to be educated or replaced.
Thursday, September 29, 2011
$100 million Incentive Packages: US 13, EU 5. Have I Missed Any?
I am reworking my list of the top 25 subsidy packages in the U.S. for a new article I'm working on. In my book, Investment Incentives and the Global Competition for Capital, I used the top 25 projects from 1999 to early 2008. For the article, the table will cover 2001 to the present. In addition, I am interested in uncovering all incentive packages of $100 million or more since early 2008. In the European Union, there are only five $100+ million incentive packages in the last three years. (Source: European Commission, search for cases with decision date after 1/1/2008 and Primary Objective of Regional Development.)
In the United States, by contrast, state and local governments have given at least 13 packages with a nominal subsidy value of $100 million or more since early 2008. (As with the book, I will be calculating their present value, because that is what the European Union does; this allows for better comparability of subsidies and, besides, present value is the more meaningful figure.) Before I send this article off, I want to make sure I haven't missed any, which is why I am asking for your help. Please let me know if there are any projects I've missed. I will, naturally, acknowledge you in the article.
First, here is a corrected version of the table that appeared in the book. In the course of writing a report, not yet published, for the North Carolina Budget and Tax Center, I discovered that our estimate of Google's subsidy in North Carolina was too low. It is corrected here.
Source: Investment Incentives and the Global Competition for Capital and author's calculations
While researching this new article, it occurred to me that Kansas City, MO, has given several tax increment financing (TIF) subsidies that exceed the lowest value in this table. In fact, four Kansas City TIFs should have appeared in the table: KC Live, H&R Block, Pershing Road, and Three Trails (source). KC Live, the smallest of these, had a nominal subsidy of $167.9 million. To the best of my knowledge, the EU does not approve subsidies for retail, and I know for a fact that it does not approve them in the steel industry (ThyssenKrupp in the table above, Nucor in the table below).
The following list was begun by identifying the "top projects of the year" for 2008-10 according to Site Selection magazine. Pursuing news stories to determine the incentive package details led to the discovery of several other projects of at least $100 million in nominal subsidy value.
Company State Minimum nominal incentive package
AREVA ID $276.6 million present value
Nucor LA $373 million
Hemlock MI $358.4 million
Spirit Aero NC $250.9 million
Cerner/OnGoal KS $230 million
Hemlock TN $200 million
Electrolux TN $188.3 million present value
Ford KY $180 million
Boeing SC $900 million
Apple NC $320.7 million
Xtreme MI $100 million
Schott NM $130 million
Panasonic NJ $102 million
Thus, in the last three years, there have been at least 13 deals for $100 million or more in the U.S. (though the last three may fall below $100 million in present value) compared to just five in the European Union. The deals in the U.S. are larger, too: the largest deal in the EU is for Global Foundries (formerly Advanced Micro Devices) in Dresden, Germany, where EU state aid rules allowed it to receive 211.0 million euros, about $284.9 million. Not only is this dwarfed by what South Carolina gave Boeing, Global Foundries is asking New York State for $1 billion for a new wafer fabrication plant there. As I will argue in the article, new evidence continues to demonstrate that the EU is successful in reducing the investment incentives granted to mobile investors there, compared to what they get for similar projects in the U.S.
Again, these results are preliminary, but striking. Because of the EU's centralized register of cases, it is more likely that I may have missed 9-figure subsidies in the U.S. than in the EU. Of course, please let me know if I've missed any in either place. Thanks!
In the United States, by contrast, state and local governments have given at least 13 packages with a nominal subsidy value of $100 million or more since early 2008. (As with the book, I will be calculating their present value, because that is what the European Union does; this allows for better comparability of subsidies and, besides, present value is the more meaningful figure.) Before I send this article off, I want to make sure I haven't missed any, which is why I am asking for your help. Please let me know if there are any projects I've missed. I will, naturally, acknowledge you in the article.
First, here is a corrected version of the table that appeared in the book. In the course of writing a report, not yet published, for the North Carolina Budget and Tax Center, I discovered that our estimate of Google's subsidy in North Carolina was too low. It is corrected here.
| Company | Year | City | State | Present Value |
| Boeing | 2003 | Everett | WA | $1,984,400,000 |
| Advanced Micro Devices | 2006 | Malta | NY | $1,118,000,000 |
| ThyssenKrupp | 2007 | Mount Vernon | AL | $734,304,000 |
| Scripps Research Institute | 2003 | Palm Beach County | FL | $566,500,000 |
| IBM | 2000 | East Fishkill | NY | $533,083,333 |
| Volkswagen | 2008 | Chattanooga | TN | $450,139,048 |
| Kia | 2006 | West Point | GA | $353,083,333 |
| Toyota | 2006 | Blue Springs | MS | $291,634,000 |
| Nissan | 2000 | Canton | MS | $289,666,667 |
| Sematech | 2007 | Albany | NY | $269,444,444 |
| Hyundai | 2002 | Montgomery | AL | $233,936,363 |
| Ford | 2006 | Detroit | MI | $219,780,000 |
| Toyota | 2003 | San Antonio | TX | $218,100,000 |
| International Sematech | 2002 | Albany | NY | $175,636,364 |
| Dell | 2004 | Winston-Salem | NC | $174,230,401 |
| Goodyear | 2004 | Akron | OH | $173,099,088 |
| Samsung Austin Semiconductor | 2006 | Austin | TX | $171,244,444 |
| Eli Lilly | 1999 | Indianapolis | IN | $150,916,667 |
| Marathon Oil | 2007 | Detroit | MI | $148,800,000 |
| Honda | 1999 | Lincoln | AL | $144,221,818 |
| 2007 | Lenoir | NC | $140,592,593 | |
| General Motors | 2000 | Lansing | MI | $138,844,542 |
| Alenia/Vought | 2004 | Charleston | SC | $133,133,333 |
| Dell | 1999 | Nashville | TN | $132,373,334 |
| Hemlock Semiconductor | 2007 | Hemlock | MI | $124,226,666 |
Source: Investment Incentives and the Global Competition for Capital and author's calculations
While researching this new article, it occurred to me that Kansas City, MO, has given several tax increment financing (TIF) subsidies that exceed the lowest value in this table. In fact, four Kansas City TIFs should have appeared in the table: KC Live, H&R Block, Pershing Road, and Three Trails (source). KC Live, the smallest of these, had a nominal subsidy of $167.9 million. To the best of my knowledge, the EU does not approve subsidies for retail, and I know for a fact that it does not approve them in the steel industry (ThyssenKrupp in the table above, Nucor in the table below).
The following list was begun by identifying the "top projects of the year" for 2008-10 according to Site Selection magazine. Pursuing news stories to determine the incentive package details led to the discovery of several other projects of at least $100 million in nominal subsidy value.
Company State Minimum nominal incentive package
AREVA ID $276.6 million present value
Nucor LA $373 million
Hemlock MI $358.4 million
Spirit Aero NC $250.9 million
Cerner/OnGoal KS $230 million
Hemlock TN $200 million
Electrolux TN $188.3 million present value
Ford KY $180 million
Boeing SC $900 million
Apple NC $320.7 million
Xtreme MI $100 million
Schott NM $130 million
Panasonic NJ $102 million
Thus, in the last three years, there have been at least 13 deals for $100 million or more in the U.S. (though the last three may fall below $100 million in present value) compared to just five in the European Union. The deals in the U.S. are larger, too: the largest deal in the EU is for Global Foundries (formerly Advanced Micro Devices) in Dresden, Germany, where EU state aid rules allowed it to receive 211.0 million euros, about $284.9 million. Not only is this dwarfed by what South Carolina gave Boeing, Global Foundries is asking New York State for $1 billion for a new wafer fabrication plant there. As I will argue in the article, new evidence continues to demonstrate that the EU is successful in reducing the investment incentives granted to mobile investors there, compared to what they get for similar projects in the U.S.
Again, these results are preliminary, but striking. Because of the EU's centralized register of cases, it is more likely that I may have missed 9-figure subsidies in the U.S. than in the EU. Of course, please let me know if I've missed any in either place. Thanks!
Wednesday, September 28, 2011
What's Up with Political Math?
Matthias Shapiro at Political Math made a big splash on August 16 with a post purporting to show that Texas had had the best employment record since the official start of the recession in December 2007. How big a splash? Well, Ross Douthat endorsed it in his New York Times column and Zach Pandl at Goldman Sachs (no link, but thanks to Pandl for sending more detail on the analysis) used the raw jobs numbers as the dependent variable for explaining why some states had better employment outcomes than others (energy industry, low exposure to housing bubble, and high tech employment, he concluded).
Shapiro was deluged with responses, including 452 comments on his blog post and no telling how many emails, including a couple from me. Shapiro had made a serious error in what he called "My Personal Favorite Chart," which was that he looked at labor force data and acted like it was population data. Since December 2007, "739,000 people fled into Texas," he said. In fact, he had no data on interstate migration at all, and was misinterpreting the change in the size of the labor force to be the same thing as interstate migration. One commenter, "delaustin," pointed him to a link for interstate migration data (http://www.census.gov/hhes/migration/), where we see, for example, that net interstate (including DC and PR) immigration into Texas in 2009 was 130,234. This, of course, was all migrants, not just members of the labor force, and less than half of Texas' total population is employed. As a result, his "Personal Favorite Chart" was GIGO.
An even more serious problem is that the concept of "employment performance" is extremely sensitive to the way it is measured. Shapiro asserted without argument that population growth is, at worst, "a good problem to have." Of course, since what he was actually measuring was labor force growth, I argued earlier that there was no clear reason to think that adding two unemployed people to the labor force for every new employed person was "a good problem to have."
Shapiro did argue that unemployment rates were not the best measure of employment performance because interstate migration meant that states were rewarded for having their labor force fall in size. Thus, his preferred measure was the ratio of employed persons in June 2011 to that of December 2007, i.e. raw job numbers. By this measure, it turns out from Pandl's study of every state that Texas came in fourth, after North Dakota, Alaska, and DC. (Shapiro says Texas did better than North Dakota; I can't account for their different findings without seeing more of Pandl's methodology.)
If we do use unemployment rates, however, we find that Texas' unemployment rate has deteriorated relative to the national average, rising from 88% of the national average in January 2008 to 92.3% of the national average in July 2008 (and it rose again in August). I showed that by an alternate measure of employment performance, ratio of unemployment rate in July 2011 to that of December 2007, Texas was slightly below the median, with the July 2011 unemployment rate 187% of the December 2007 rate. By this measure, North Dakota and Alaska held the top two spots, just as they did with raw employment numbers. DC, however, is right below the median, at 177%.
As I wrote a couple of weeks ago, the employment/population ratio is often used in place of the unemployment rate to measure employment performance. Since population is a component, it would seem that Shapiro would have less to object to with this metric. Felix Salmon showed that by this measure, Texas has performed worse than the U.S. average during the Perry administration.
Source: Felix Salmon
Two caveats are necessary here. First, Salmon uses a non-standard definition of the population denominator, including all persons regardless of age or institutionalized status. Second, even with this measure, we can see that since the recession began, Texas has performed better than the national average (compare the slopes of the two lines after 2007).
To find out much better, I used the standard Bureau of Labor Statistics definition of the employment population ratio, where population is the civilian, non-institutionalized population aged 16 and older, and took the ratio of that ratio for August 2011 (P for preliminary) to December 2007 (R for revised). As we can see, no state has gotten back to its December 2007 employment/population ratio, but North Dakota has gotten the closest.
Employment/Population Ratios by State (%)
Source: http://www.bls.gov/lau/ststdsadata.txt
Here we find that Texas comes in 11th place. As noted, North Dakota retains the top spot; Alaska is 6th by this measure and does well on all three measures. DC, however, comes in 50th by this measure, rather than third or 27th. This underscores the difficulty in measuring "employment performance." Clearly, more analysis is needed.
Meanwhile, Shapiro promised on August 23 "to try to do a follow-up in the coming week that addresses more of the data." Since then, he managed to publish a long, multi-chart post on an unrelated topic on August 31, but has not delivered any follow-up. Here we are, more than a month later, and it is unclear if any will be forthcoming. I'm sure I'm not the only person curious as to what points Shapiro thinks still hold up.
Shapiro was deluged with responses, including 452 comments on his blog post and no telling how many emails, including a couple from me. Shapiro had made a serious error in what he called "My Personal Favorite Chart," which was that he looked at labor force data and acted like it was population data. Since December 2007, "739,000 people fled into Texas," he said. In fact, he had no data on interstate migration at all, and was misinterpreting the change in the size of the labor force to be the same thing as interstate migration. One commenter, "delaustin," pointed him to a link for interstate migration data (http://www.census.gov/hhes/migration/), where we see, for example, that net interstate (including DC and PR) immigration into Texas in 2009 was 130,234. This, of course, was all migrants, not just members of the labor force, and less than half of Texas' total population is employed. As a result, his "Personal Favorite Chart" was GIGO.
An even more serious problem is that the concept of "employment performance" is extremely sensitive to the way it is measured. Shapiro asserted without argument that population growth is, at worst, "a good problem to have." Of course, since what he was actually measuring was labor force growth, I argued earlier that there was no clear reason to think that adding two unemployed people to the labor force for every new employed person was "a good problem to have."
Shapiro did argue that unemployment rates were not the best measure of employment performance because interstate migration meant that states were rewarded for having their labor force fall in size. Thus, his preferred measure was the ratio of employed persons in June 2011 to that of December 2007, i.e. raw job numbers. By this measure, it turns out from Pandl's study of every state that Texas came in fourth, after North Dakota, Alaska, and DC. (Shapiro says Texas did better than North Dakota; I can't account for their different findings without seeing more of Pandl's methodology.)
If we do use unemployment rates, however, we find that Texas' unemployment rate has deteriorated relative to the national average, rising from 88% of the national average in January 2008 to 92.3% of the national average in July 2008 (and it rose again in August). I showed that by an alternate measure of employment performance, ratio of unemployment rate in July 2011 to that of December 2007, Texas was slightly below the median, with the July 2011 unemployment rate 187% of the December 2007 rate. By this measure, North Dakota and Alaska held the top two spots, just as they did with raw employment numbers. DC, however, is right below the median, at 177%.
As I wrote a couple of weeks ago, the employment/population ratio is often used in place of the unemployment rate to measure employment performance. Since population is a component, it would seem that Shapiro would have less to object to with this metric. Felix Salmon showed that by this measure, Texas has performed worse than the U.S. average during the Perry administration.
Source: Felix Salmon
Two caveats are necessary here. First, Salmon uses a non-standard definition of the population denominator, including all persons regardless of age or institutionalized status. Second, even with this measure, we can see that since the recession began, Texas has performed better than the national average (compare the slopes of the two lines after 2007).
To find out much better, I used the standard Bureau of Labor Statistics definition of the employment population ratio, where population is the civilian, non-institutionalized population aged 16 and older, and took the ratio of that ratio for August 2011 (P for preliminary) to December 2007 (R for revised). As we can see, no state has gotten back to its December 2007 employment/population ratio, but North Dakota has gotten the closest.
Employment/Population Ratios by State (%)
| State | August 2011 P | Dec 2007 R | Ratio of ratios | |
| North Dakota | 69.8 | 71.4 | 97.8 | |
| Vermont | 66.1 | 67.8 | 97.5 | |
| Mississippi | 54.2 | 55.8 | 97.1 | |
| Minnesota | 66.8 | 68.9 | 97.0 | |
| Kentucky | 56.1 | 58.1 | 96.6 | |
| Alaska | 64 | 66.6 | 96.1 | |
| New Hampshire | 65.6 | 68.6 | 95.6 | |
| Virginia | 64.1 | 67.1 | 95.5 | |
| Nebraska | 68.1 | 71.3 | 95.5 | |
| Maine | 60.1 | 63 | 95.4 | |
| Texas | 59.8 | 62.7 | 95.4 | |
| Kansas | 64.4 | 67.6 | 95.3 | |
| South Dakota | 67.3 | 71 | 94.8 | |
| Iowa | 66 | 69.7 | 94.7 | |
| Tennessee | 56.8 | 60.1 | 94.5 | |
| Massachusetts | 60.2 | 63.8 | 94.4 | |
| Oregon | 58.7 | 62.3 | 94.2 | |
| Oklahoma | 57.6 | 61.4 | 93.8 | |
| Connecticut | 61 | 65.1 | 93.7 | |
| New York | 56.3 | 60.1 | 93.7 | |
| Ohio | 59.1 | 63.1 | 93.7 | |
| Hawaii | 59.5 | 63.6 | 93.6 | |
| Pennsylvania | 57.6 | 61.7 | 93.4 | |
| Wisconsin | 63 | 67.6 | 93.2 | |
| New Jersey | 59.5 | 63.9 | 93.1 | |
| Missouri | 59 | 63.7 | 92.6 | |
| Arizona | 56.2 | 60.9 | 92.3 | |
| Arkansas | 55.1 | 59.8 | 92.1 | |
| Montana | 59.5 | 64.6 | 92.1 | |
| Louisiana | 54.5 | 59.2 | 92.1 | |
| Wyoming | 64.7 | 70.3 | 92.0 | |
| South Carolina | 54 | 58.9 | 91.7 | |
| Rhode Island | 59.1 | 64.5 | 91.6 | |
| New Mexico | 55.8 | 61 | 91.5 | |
| Illinois | 59.4 | 65 | 91.4 | |
| Florida | 55.2 | 60.5 | 91.2 | |
| Maryland | 61.4 | 67.3 | 91.2 | |
| Washington | 59.1 | 65 | 90.9 | |
| Alabama | 53.1 | 58.7 | 90.5 | |
| Idaho | 58.7 | 65.1 | 90.2 | |
| West Virginia | 48.5 | 53.9 | 90.0 | |
| Indiana | 57.1 | 63.6 | 89.8 | |
| Michigan | 53.5 | 59.9 | 89.3 | |
| California | 55.3 | 62.1 | 89.0 | |
| North Carolina | 55.3 | 62.4 | 88.6 | |
| Delaware | 55.7 | 63.1 | 88.3 | |
| Georgia | 56.5 | 64.1 | 88.1 | |
| Colorado | 61.7 | 70.2 | 87.9 | |
| Nevada | 56.2 | 64 | 87.8 | |
| DC | 58 | 66.2 | 87.6 | |
| Utah | 60.8 | 69.5 | 87.5 |
Source: http://www.bls.gov/lau/ststdsadata.txt
Here we find that Texas comes in 11th place. As noted, North Dakota retains the top spot; Alaska is 6th by this measure and does well on all three measures. DC, however, comes in 50th by this measure, rather than third or 27th. This underscores the difficulty in measuring "employment performance." Clearly, more analysis is needed.
Meanwhile, Shapiro promised on August 23 "to try to do a follow-up in the coming week that addresses more of the data." Since then, he managed to publish a long, multi-chart post on an unrelated topic on August 31, but has not delivered any follow-up. Here we are, more than a month later, and it is unclear if any will be forthcoming. I'm sure I'm not the only person curious as to what points Shapiro thinks still hold up.
Thursday, September 22, 2011
Poll Results on Electrolux in Memphis
Thanks to everyone who took part in the poll: How likely is it that Electrolux will be in Memphis in 15 years? Here are the results.
0-25%: 11 votes, 65%
26-50%: 5 votes, 29%
51-75%: 1 vote, 6%
76-100%: 0 votes, 0%
Personally, I don't think the likelihood of Electrolux sticking around is very high. Obviously, Memphis is a great distribution hub -- think FedEx -- but this is first and foremost a manufacturing operation. Electrolux has shown it disavows any responsibility to stand by its workers, even in Sweden, even in the CEO's home town. Therefore, my vote would have been 0-25%, and I think the chances are pretty close to 0.
0-25%: 11 votes, 65%
26-50%: 5 votes, 29%
51-75%: 1 vote, 6%
76-100%: 0 votes, 0%
Personally, I don't think the likelihood of Electrolux sticking around is very high. Obviously, Memphis is a great distribution hub -- think FedEx -- but this is first and foremost a manufacturing operation. Electrolux has shown it disavows any responsibility to stand by its workers, even in Sweden, even in the CEO's home town. Therefore, my vote would have been 0-25%, and I think the chances are pretty close to 0.
Wednesday, September 21, 2011
Yes, $11 million per job is possible, and a record
I posted on August 29 that it appeared that Sempra Energy had received $55 million in federal tax credits and Nevada incentives for a solar generation facility in Boulder City, Nevada, to just create five jobs. I wondered if this were even possible.
In the course of working to update a table of the largest incentives in the U.S. for an academic article, my research assistant found a website of Department of Energy loan and loan guarantee programs that shows how many jobs each recipient was expected to create. It turns out that solar generator Fotowatio Renewable Ventures, Inc., which received a $45.6 million loan guarantee, will create just four jobs. Granite Reliable's wind generation facility, which received a $135.8 million loan guarantee, will create just six jobs. Note that a loan guarantee does not have a subsidy value equal to its face value, but much less: essentially it is equivalent to what it would cost to obtain such a guarantee on the open market, but that is difficult to determine. I will not attempt this calculation here.
But these figures show that Sempra could indeed just create just five jobs for its Copper Mountain solar generation project, especially since it was adjacent to an existing facility. Thus, it appears that Sempra's subsidy package really does come to $11 million per job. To the best of my knowledge, this is the first time a project has cracked $10 million per job. Obviously, energy is the point of this subsidy, not jobs, but it is still an amazing number. Using a different measure called aid intensity, we find that the subsidy equaled 39% of the $141 million cost of the facility. That is a high intensity, but hardly off the charts. A comparison with aid intensities in the European Union would be useful, and I hope to be able to do that soon.
Update: Sempra Energy, the recipient of this subsidy, has one campaign contribution show up on the Open Secrets website for the 2008, 2010, or 2012 election cycles: $2500 to the San Diego County Republican Central Committee . Nevada Governor Sandoval was there for the ribbon cutting, since Nevada state and local governments contributed $12 million in subsidies for this project.
In the course of working to update a table of the largest incentives in the U.S. for an academic article, my research assistant found a website of Department of Energy loan and loan guarantee programs that shows how many jobs each recipient was expected to create. It turns out that solar generator Fotowatio Renewable Ventures, Inc., which received a $45.6 million loan guarantee, will create just four jobs. Granite Reliable's wind generation facility, which received a $135.8 million loan guarantee, will create just six jobs. Note that a loan guarantee does not have a subsidy value equal to its face value, but much less: essentially it is equivalent to what it would cost to obtain such a guarantee on the open market, but that is difficult to determine. I will not attempt this calculation here.
But these figures show that Sempra could indeed just create just five jobs for its Copper Mountain solar generation project, especially since it was adjacent to an existing facility. Thus, it appears that Sempra's subsidy package really does come to $11 million per job. To the best of my knowledge, this is the first time a project has cracked $10 million per job. Obviously, energy is the point of this subsidy, not jobs, but it is still an amazing number. Using a different measure called aid intensity, we find that the subsidy equaled 39% of the $141 million cost of the facility. That is a high intensity, but hardly off the charts. A comparison with aid intensities in the European Union would be useful, and I hope to be able to do that soon.
Update: Sempra Energy, the recipient of this subsidy, has one campaign contribution show up on the Open Secrets website for the 2008, 2010, or 2012 election cycles: $2500 to the San Diego County Republican Central Committee . Nevada Governor Sandoval was there for the ribbon cutting, since Nevada state and local governments contributed $12 million in subsidies for this project.
Historical Notes on Class Warfare
"This is not class warfare. It's math," President Obama said on Monday. There is an important element of truth to this but, as Paul Krugman points out, there has been an "actual class war that has taken place over the past 30 years — namely class warfare for the rich against the middle class." He points to four major elements to this: tax cuts for the rich; a decline in the inflation-adjusted minimum wage (which peaked in 1968 at $10.04 in 2010 dollars); union-busting; and the deregulation of financial markets.
In fact, the war on the middle class goes back even further than that, before President Reagan's crushing of the air traffic controllers' strike, even before he came into office. Douglas Fraser, President of the United Auto Workers, identified a "one-sided class war" in 1978, when he resigned from the "Labor-Management Group" that unofficially advised President Carter. I want to quote at length from this letter, because many of the issues he pointed to then are still with us today.
This is, of course, a good description of the state of labor relations today. At the time, one major example Fraser had in mind was J.P. Stevens, a textile maker and serial National Labor Relations Act violator. The movie "Norma Rae," for which Sallie Field won "Best Actress" in 1979, depicts the struggle against Stevens.
Examples of the latter today are too numerous to mention them all. But we obviously have the Koch brothers financing conservatives all over the country, with restrictions on the right to vote proposed or passed in states like South Carolina, North Carolina, Maine, Wisconsin, and others. Class war from the right is alive and well, but now it challenges science and math as well as labor and the middle class.
In fact, the war on the middle class goes back even further than that, before President Reagan's crushing of the air traffic controllers' strike, even before he came into office. Douglas Fraser, President of the United Auto Workers, identified a "one-sided class war" in 1978, when he resigned from the "Labor-Management Group" that unofficially advised President Carter. I want to quote at length from this letter, because many of the issues he pointed to then are still with us today.
I believe leaders of the business community, with few exceptions, have chosen to wage a one-sided class war today in this country—a war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society. The leaders of industry, commerce and finance in the United States have broken and discarded the fragile, unwritten compact previously existing during a past period of growth and progress....
The latest breakdown in our relationship is also perhaps the most serious. The fight waged by the business community against that Labor Law Reform bill stands as the most vicious, unfair attack upon the labor movement in more than 30 years. Corporate leaders knew it was not the "power grab by Big Labor" that they portrayed it to be. Instead, it became an extremely moderate, fair piece of legislation that only corporate outlaws would have had need to fear. Labor law reform itself would not have organized a single worker. Rather, it would have begun to limit the ability of certain rogue employers to keep workers from choosing democratically to be represented by unions through employer delay and outright violation of existing labor law....
This is, of course, a good description of the state of labor relations today. At the time, one major example Fraser had in mind was J.P. Stevens, a textile maker and serial National Labor Relations Act violator. The movie "Norma Rae," for which Sallie Field won "Best Actress" in 1979, depicts the struggle against Stevens.
We are presently locked in battle with corporate interests on the Humphrey-Hawkins full employment bill. We were at odds on improvements in the minimum wage, on Social Security financing, and virtually every other piece of legislation presented to the Congress recently....Even the very foundations of America's democratic process are threatened by the new approach of the business elite. No democratic country in the world has lower rates of voter participation than the U.S., except Botswana. Moreover, our voting participation is class-skewed—about 50 percent more of the affluent vote than workers and 90 percent to 300 percent more of the rich vote than the poor, the black, the young and the Hispanic. Yet business groups regularly finance politicians, referenda and legislative battles to continue barriers to citizen participation in elections. In Ohio, for example, many corporations in the Fortune 500 furnished the money to repeal fair and democratic voter registration.
Examples of the latter today are too numerous to mention them all. But we obviously have the Koch brothers financing conservatives all over the country, with restrictions on the right to vote proposed or passed in states like South Carolina, North Carolina, Maine, Wisconsin, and others. Class war from the right is alive and well, but now it challenges science and math as well as labor and the middle class.
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