Don't Drink the Tea. Think With the WE.
Dec
2011
14

Less Than 1/2 of US Subsidy Programs Provide Wage Standards, Less Than 1/4 Provide Healthcare



Yesterday we covered briefly the U.S.’s addiction to corporate incentive packages highlighted by Clawback, the blog of Good Jobs First, “the nation’s leading resource for grass roots groups and public officials seeking to make economic development subsidies more accountable and effective.”

Today, GJF has released a telling study, Money for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs. It asserts the sad reality that “many subsidy programs require little if any job creation. Fewer than half provide any kind of wage standard for the workers at subsidized companies, and fewer than a fourth require any sort of healthcare coverage.”

Below is their executive summary (PDF) which paints the picture of a subsidy culture largely devoid of the checks and balances needed to ensure that investments are delivering the American dream of opportunity-creating, living wage jobs. Highlights (or lowlights, rather) include…

– Only 51 programs (in 28 states) require that a subsidized employer make available healthcare coverage of some kind, and only 31 of these require that the employer contribute to the cost of the premium.

– Fewer than half (98) of the 238 programs impose a wage requirement on subsidized employers, and only 53 of those wage standards are tied to labor market rates, which are a more effective benchmark for economic development than fixed amounts that can stagnate in the manner of the federal minimum wage.

– Those programs without any wage requirement—which together cost more than $8 billion a year—can potentially result in jobs that pay so little that workers must rely on social safety net programs such as food stamps, Medicaid, State Children’s Health Insurance and the Earned Income Tax Credit. These hidden taxpayer costs may also occur from wage requirements that are sometimes set below market levels.

– Those programs without a job‐related performance requirement cost taxpayers more than $7 billion per year.

Money for Something Executive Summary

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