Hundreds of thousands of dollars, but no new jobs

The incentives game really has turned into a race to the bottom.  It used to be that state and local governments would put together a package to help lure a large company for a major project bringing significant numbers of new jobs to an area.  That sort of incentive package is problematic, as we’ve written time after time after time here at the Locke Foundation.

But bad as those deals are, we’re increasingly seeing deals that are even worse.  Just such a deal passed in Alamance County this month – as much as $262,000 to Honda to expand a plant that already operates in the county, bringing precisely zero new jobs.  That’s right, none.

Let’s recap.  Honda already has a plant in Swepsonville.  This is not a large place.  The latest estimates from the Census Bureau put the entire population of Swepsonville at a little over 1300 people.  Which makes it particularly remarkable that the Honda plant alone employs about 1200 people.  No doubt this is THE major employer not only for Swepsonville itself, but for surrounding communities.  I absolutely understand why the town and county are eager to keep Honda, and to see them expand.

Honda’s talking about a $10.5 million expansion of the plant, adding 116,000 sq ft.  The county will give $157,000 in incentives for that.  And then they’ve agreed to another $105,000 if Honda spends at least $10.5 million on equipment.  We’re talking about incentives worth 1.5% of the investment in the plant space, and no more than 1% of equipment cost.  Does anyone really believe that Honda’s decision to expand the plant and buy equipment, or not, is dependent on that 1-1.5%?  Sure, Honda will take it if it’s on offer.  They’d be crazy not to ask.  But is that money make or break for the expansion?  I have a really hard time believing that it is.

And it won’t bring new jobs.  No one’s claiming that it will.  It’s just about trying to make sure the county doesn’t lose any of those jobs.  Which means we’ve moved from an environment where governments used incentives to lure new, major economic players, to one in which they’re essentially paying bribes to get existing employers to stay.  This is not real economic growth, and it’s a terrible deal for taxpayers.

Julie Tisdale / City and County Policy Analyst

Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. Before coming to the Locke Foundation as the research publications coordinator, she worked at the...

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