Now a new study from Governing magazine (h/t to Al at LinkedIn group Economic Development 2.0) exhaustively analyzes New Jersey’s five largest incentive programs and their growth since 2011. Governor Chris Christie has made aggressive use of incentives a centerpiece of his economic development strategy, but the magazine’s comparison of New Jersey’s job performance with than of surrounding states shows that it simply isn’t working. Not only that, according to the report, “at least 20 companies receiving incentives filed layoff notices” before fulfilling their job requirements.
But it is the sheer dollar value of incentives that makes the head spin. According to the magazine’s estimates, the state awarded $904 million in 2011 and $872 million in 2012. Adding in this year’s awards brings the total to $1,950 million which is, Governing notes, “more than the previous 15 years combined.” (Note: 15 years is the entire life of these programs.)
Moreover, some of the biggest incentive awards have been some of the most outrageous. The Urban Transit Hub Tax Credit awarded Panasonic $102.4 million to move nine miles, within the state, from Secaucus to Newark. As I have reported before, giving subsidies to move existing facilities is the most obviously wrong form of incentive use, because no new jobs are being created, but tax revenue is cut. Interstate job piracy is bad, but for the state to fund intra-state piracy is lunacy.
Meanwhile, New Jersey’s July unemployment rate came in at 8.6%, 43rd worst of the 50 states.
Kudos to Governing and reporter Mike Maciag for a great piece of reporting, providing a well-documented case study of what out-of-control subsidies look like as the country tries to recover from its ongoing jobs depression.
Cross-posted at Middle Class Political Economist.