That’s how North Carolina’s economic incentives strategy for industrial recruitment is described in this Civitas Institute article written by guest commentator Thomas E. Vass of Regional Innovation Systems, Inc. Here’s a sample:
The much ballyhooed job creation prospects of Dell in 2004 was touted falsely at over 2,000 jobs. And, the much ballyhooed loss of 920 jobs in 2009 is also misleading. Neither statistic takes account of all the jobs destroyed in a local community when a Dell arrives, or when a Dell leaves.
Recent economic evidence from Michigan indicates a perverse effect of industrial recruitment. It tends to destroy more small business jobs in a community than it creates, leaving the economy more vulnerable to the wild swings in the global markets. The Wall Street Journal (WSJ) reported the economic evidence in their story, “The Michigan Example” (September 4, 2009).
As the WSJ noted, the study by the Midland- based Mackinac Center for Public Policy was “one of the largest experiments in smokestack chasing in American history.” They concluded that the “one thing it hasn’t done is create jobs.”
The Mackinac research found that for every 100 jobs that were promised with the use of government industrial recruitment incentives over a 14-year period of study, that only 29 jobs were actually created. However, the location of those 29 jobs destroyed other existing jobs in Michigan.
They cited economist Michael Hicks, a business school professor at Ball State University, who calculated the rate of return on the corporate tax credits. He found that for every $1 million in tax credits awarded, there were 95 manufacturing jobs lost in the counties where the companies were located. In North Carolina, the incredible job destruction machine of industrial recruitment has succeeded in destroying about 250,000 jobs a year since 2000.