It seems newsworthy when lawmakers make deals to give out taxpayer cash in order to persuade a company to open an office or a factory in the state. People care about jobs, and these stories create the impression that elected officials are bringing employment to the state.
But there’s something missing from coverage of job deals. It’s rare to see a story about whether the company does what it announces. Administrators send out press releases when deals are made. They are silent about what happens after.
I looked at all of the major deals made in my state, Michigan, from 2000 to 2020 to find stories about companies getting deals for taxpayer support. Then I looked for evidence of what happened after. It wasn’t pretty.
There were 41 stories about companies getting a deal to bring jobs to the state, around two per year. Half of those stories led to nothing. Just six met or beat expectations. The deals made in that 20-year period promised to create a total of 123,060 jobs, but the projects created just 10,889 jobs. That is one actual job for every 11 that were announced.
Scan the list of major subsidy recipients and you won’t find a state that turned around its economy by making a smart deal to bring in new industry. You’ll find broken promises.
Yet the glowing coverage of business subsidy deals continues. Reporters do not raise the possibility that the jobs won’t happen. Why would they? No one involved mentions any reservations.
The ability to get headlines about jobs makes the politics of corporate welfare compelling. Jobs tend to be the issue people care most about. Elected officials get to deliver their message about bringing good things to the state. And what they say is incontrovertible; no one can say that the people involved intend to do anything other than what they say.
Lawmakers themselves have likely been deceived about the success of business subsidy deals. There aren’t press releases when deals fail to produce results. It’s news to them, as it is to everyone else, that companies rarely meet the stated expectations.
If lawmakers looked at results, maybe they wouldn’t spend so much on business subsidies. Instead of spending billions on favoritism, the money can be better spent on schools or roads or left with taxpayers. Any of these would be a better use than spending it on the illusion of jobs.
There are political reasons why administrators trumpet job announcements while being silent when deals fail. The boy who cried wolf was ignored after just two false alarms. People should be more skeptical of job claims the next time around.