The Carbondale Observer brings up a good point about the Intertape Polymer ordinance passed last night, giving a total of $246,500 in land and forgivable loans to the corporation, with the provision that the corporation retain its current number of employees and add a minimum of 37 to its payroll bringing the total to 105. As the Observer points out, this amounts to a one-time subsidy of $6662.12 per job.
Is paying a corporation for jobs a good use of tax dollars? In most cases, the research says "no" as they are usually accompanied by poor or no oversight. Assuming the city does provide oversight and the jobs do remain for the five year period covered by the agreement, this might be a worthwhile subsidy, though. I have no idea what type of jobs will come in, but assuming they meet last year's US average of $43,000 per year, they would bring in $7,955,000 to the local economy at a cost to the taxpayers of about 3.1% per job. Given that about 20% of the subsidy was in land that the city did not appear to have much chance of selling in the near future and that we are seeing approximately $1 billion in equipment transferred in or purchased for use at the expanded facility, again helping stimulate the economy, right now this seems a pretty good investment by the city.
Is paying a corporation for jobs a good use of tax dollars? In most cases, the research says "no" as they are usually accompanied by poor or no oversight. Assuming the city does provide oversight and the jobs do remain for the five year period covered by the agreement, this might be a worthwhile subsidy, though. I have no idea what type of jobs will come in, but assuming they meet last year's US average of $43,000 per year, they would bring in $7,955,000 to the local economy at a cost to the taxpayers of about 3.1% per job. Given that about 20% of the subsidy was in land that the city did not appear to have much chance of selling in the near future and that we are seeing approximately $1 billion in equipment transferred in or purchased for use at the expanded facility, again helping stimulate the economy, right now this seems a pretty good investment by the city.
Thanks for the link! I agree, this is probably a good investment. In general, I don't like these kind of subsidies, but I think your analysis is correct. The land wasn't going to be sold anyway and the forgivable loan will result in private investment and three dozen new jobs. That's worth doing.
ReplyDeleteCan I get this deal too? What is good for the goose...!
ReplyDeleteI also don't like these in general (see everything I wrote on the sales tax allocated to Saluki Way), but, assuming everything goes as planned, it should be a good deal.
ReplyDeletePeter, you might. Are you keeping 65 jobs in Carbondale and bringing 37 more? That appears the key point here.