This column originally appeared in The Detroit News.
Last month, Ford Motor Co.’s announcement that it planned to build massive new electric vehicle plants in Tennessee and Kentucky — not Michigan — sent a jolt through a scorned Motor City. Still, it wasn’t nearly as shocking as the admission that followed. Gov. Gretchen Whitmer and her administration were not actively involved in any effort at all to bring the 11,000 new EV jobs to Michigan.
No offers. No presentations. No “real opportunity,” Whitmer claimed.
It’s a damning admission that set off a fit of hand wringing across the state about what Whitmer could have done differently (literally almost anything), the reasons Ford never even bothered to ask the governor to compete (we can guess), and — predictably — whether the state should start handing out giant bags filled with taxpayer cash to big corporations.
While the governor’s catastrophic aloofness with Ford is certainly galling, economic development gaffes aren’t restricted to one political party. Today, for instance, just about everyone in Lansing wants to spend your money paying off the uber-rich just to cut a ribbon and stick a gold-painted shovel in Michigan soil.
Even as you read this, Republican lawmakers in Lansing are considering new legislation — Senate Bill 615 — to do the same failed thing all over again.
The bill dubbed the “Michigan Employment Opportunity Program” is a $300 million rehash of the failed “Good Jobs for Michigan” corporate welfare scheme that expired at the end of 2019. It’ll spend income tax dollars for the promise of a few new jobs.
It’s a particularly insidious scheme that tells working-class moms and dads that instead of investing in local roads, infrastructure or public services, they’ll be sending their tax dollars to their bosses — provided their companies are cozy enough with the politicians, lobbyists and bureaucrats in Lansing.
Here’s the thing. These kinds of corporate welfare schemes don’t even work.
The Mackinac Center for Public Policy tracked down and reviewed six scholarly analyses of nine incentive programs like the Employment Opportunity Program. Five of the six found that such a program was either a wash or hurt job creation.
Research shows that one previous iteration of the corporate handout cost taxpayers $125,000 for every job created. At that rate, securing the new Ford electric vehicle jobs with corporate handouts alone would have cost taxpayers up to $1.375 billion. That’s billion with a “b.”
Hardly an adequate return on investment.
The list of handout failures is long and growing longer.
Michigan’s giveaway to Hollywood studios lost almost 90 cents on the dollar. One study showed that for every $500,000 in subsidies paid out to corporations, there was a corresponding loss of 600 jobs in the county where the target project was located.
A study commissioned by the state’s economic development corporation even found that among roughly 1,400 companies paid with tax incentives to create jobs, some 400 of them weren’t even located in Michigan only a few years later, if they even existed at all.
To their credit, most employers aren’t looking for a handout. They’re looking at workforce, infrastructure, transportation, quality education and the cost of energy. Ford was.
The Blue Oval’s new plants, for instance, will use dramatically more juice than a standard assembly-line operation, and electricity costs in Tennessee and Kentucky are lower than here in Michigan, where two major utilities have a state-protected monopoly. Monopolies kill jobs.
The only thing corporate welfare schemes like Senate Bill 615 deliver are fancy dinners and special business meetings between politicians and the high-powered lobbyists ponying up to the taxpayer trough.
Maybe this time, lawmakers can surprise us. The next time politicians take a ceremonial spade to the ground somewhere in Michigan, they can dig a hole six feet deep and bury corporate welfare once and for all.
Greg McNeilly is chairman of the Michigan Freedom Fund.