Another Hidden Problem With Corporate Incentives
Corporate incentives are the darling of the Chamber of Commerce Republican and the bane of the grassroots Republican. The very mention of such polarizes the Republican Party in North Carolina. Governor Pat is angry that the state doesn’t have more of our tax dollars set aside to lure companies to the Old North State, selling it to the general public that these companies produce jobs for North Carolinians. However, as we have seen with the failure of Chiquita in Charlotte, and with other companies leaving after being given incentives, these promises of jobs do not always work out.
What’s worse is where they do succeed in producing jobs, many times these jobs are actually paying salaries LESS than the market rate for comparable positions. For example, when a certain insurance giant was given millions upon millions of our money to move to Charlotte and to Cary, I was soft recruited by them for a Business Analyst position. I come to find out that the average salary for the position was around a whopping $59,000. The market rate in Charlotte for the same position with my level and experience is nearly 50% more than that. However, because these “new jobs” need local labor and people are still reeling from the Obama economy, the overall wage scale is depressed, AND, people already employed will not receive performance raises and or bonuses because the market rates have been depressed with what amounts to their own tax dollars.
The thing that makes corporate incentives somewhat palatable is if, say, a manufacturing company was given incentives to relocate to a rural, depressed location and they’d be paying an average wage significantly higher than the market. That could work out to be stimulative, and a win for everyone in the long run. That’s what’s happening in South Carolina now. Not that any state should be basing economic growth on buying off companies to relocate, but one or two could help.
However, giving incentives to companies to relocate to areas that are already economically viable could have the opposite effect. If employees find that their wage growth has been stagnated, they may decide to leave the market altogether for one with more wage growth opportunity. Charlotte is building apartments like they’re going out of style, trying to attract the young, single, recent college graduate professional. That’s wonderful, but what happens when this person hits 30 and finds that there’s no opportunity for career growth because the market has been saturated with incentivized companies who don’t offer the growth and opportunities available in a freer market structure?
It’s seriously time to re-evaluate the benefits of “jobs” created by these incentives. We might just find that they injure the average person more than they help.
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