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June 2014

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Messin' With Texas

Corporate welfare takes many shapes, but few are as wasteful and counterproductive as state and local incentives to lure companies to relocate from another state.

The latest, but by no means the worst example, was Toyota North America's April announcement that it was moving its headquarters to a suburb of Dallas. Texas Gov. Rick Perry said it was a combination of "employer-friendly" laws and $47 million in state and local incentives that lead to his state's "victory."

What do taxpayers get for their generosity? Some jobs will be lost in California, some will be gained in Texas, but even when construction jobs at the new sit are accounted for, economists have found that no new net jobs are created when companies move.

Last year, Toyota made $18 billion in profit, up 200 percent from five years ago. Profitable companies do not need this kind of money, but the people of Texas sure could use some help. According to the Texas Legislative Study Group's 2013 report "Texas on the Brink," the state ranks 50th in high school graduation rate and first in percentage of people without health insurance.

Creating jobs should be the No. 1 job of lawmakers, but strategies like Perry's that focus on shuffling around jobs from other parts of the country using a race-to-the-bottom model is flat-out wrong.

Our communities don't just need jobs — they need good jobs, the kind that give working people a solid spot in the middle class. Instead of spending money on TV ads and lobbyists to steal jobs from other states, Perry should be focusing on improving the jobs Texas already has.

Economists are in agreement that there is no evidence that tax breaks and subsidies create jobs or even influence where a company locates. But as you can read in this issue, investing in workers through training, good wages, benefits and a voice at work is a proven road to creating jobs and growing the middle class.


Also: Hill: IBEW-Made, IBEW Proud Read Hill's Column

Salvatore J. Chilia

Salvatore J. Chilia
International Secretary-Treasurer