Rooting out Fake Job Creators

Without serious accountability, the rallying cry for more "job creation" is likely to amount to nothing more than empty rhetoric.

By Amy Dean

Ed Gillespie, a senior adviser to Mitt Romney, recently declared on Face the Nation that that President Barack Obama "is hostile to job creators," reciting a standard Republican canard.

Especially since movements such as Occupy Wall Street began shining a spotlight on inequality, right-wingers have tried to rhetorically position the rich as engines of economic progress. However, the tired policies of trickle-down tax cuts don't boost jobs.

For their part, liberals are advocating a new wave of spending to stimulate the economy. Yet, given a hostile Congress deep into election-year politicking, a jobs plan reliant on expanding government outlays is dead in the water. To bring much-needed relief to an ailing job market, we need a different solution.

Here's one step we can take immediately that should command broad support across the political spectrum. Why not demand accountability for the public support we're already doling out to companies large and small?

The watchdog group Good Jobs First recently reported that taxpayers currently spend $70 billion per year on business incentives. In return for tax breaks and other subsidies, companies routinely make big promises about the number of jobs they will create.

Sounds great. But there's rarely any follow-up. We don't know if these companies are keeping their promises, and they have few incentives to do so.

"Many states fail to even verify that companies receiving subsidies are meeting their job-creation goals and other commitments, and many more have weak penalty policies for addressing non-compliance," wrote Michelle Lee of Good Jobs First upon the report's release.

Many people argue that government should be run more like a business. But what company would enact policies that hugely affected its revenue stream without making sure it was getting a worthwhile return on its investment?

Any spending that's supposed to generate new jobs should hinge on accountability. If a business promises to generate 1,000 new jobs in return for a public subsidy, our states and localities should demand that money back if the jobs never materialize.

Fortunately, we're seeing some progress in this direction. In its $15-million program providing cash grants to companies that create jobs, Vermont included measures to get its money back from supported businesses if promised jobs don't materialize. The state will publish online the names and penalties incurred by any companies failing to meet their obligations.

North Carolina and Virginia both have subsidy programs that carefully track grants, and companies must return tax dollars if they don't prove that the public benefitted from them. Iowa, Oklahoma, and Maryland are also taking commendable steps to ensure accountability.

In other cases, investigative journalists and public interest activists are picking up the slack. They're holding companies accountable on the public stage for job promises not kept.

One hopeful example has emerged over the past year in Chicago. There, diligent reporters at the Chicago Reader, along with advocates at the Illinois Public Interest Research Group, worked to expose a program known as tax increment financing. Half a billion dollars raised through property taxes were sent annually to fund this program, originally designed to help struggling neighborhoods attract investment that would spur economic development. But in practice, the program became an unaccountable slush fund.

Shamed by the exposé, three businesses — Bank of America, the insurance company CNA Group, and a financial exchange company called the CME Group — announced that they would give back a total of $34 million that the city of Chicago had paid in subsidies. In the case of the first two groups, the businesses had promised — and failed to deliver — a total of 2,700 jobs as a condition for public support.

Additionally, the uproar compelled Mayor Rahm Emanuel to announce reforms to that program, including outside auditing of whether businesses receiving public subsidies were actually meeting job-creation pledges.

Republicans can call for corporate tax breaks and Democrats for public funding to generate jobs. But unless we're all calling for serious accountability, the rallying cry for more "job creation" is likely to amount to nothing more than empty rhetoric.

Amy Dean is a fellow of The Century Foundation and principal of ABD Ventures, LLC, an organizational development consulting firm that works to develop new and innovative organizing strategies for social change organizations. www.amybdean.com
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