Commentary

Extension of Mislabeled Good Jobs for Michigan Program Would Be Added to the Business Subsidy Scorecard

Corporate handouts continue to be ineffective

Corporate handouts are ineffective, unfair and also transfer money from taxpayers to wealthy business owners. But they get also strong bipartisan support. They are also the subject of a scorecard the Mackinac Center compiles, which shows how state politicians vote on business subsidies and how much they have voted for. There have been no additions to the scorecard so far in the first eight months of the Whitmer administration. But there may be by year’s end as lawmakers consider extending one subsidy program before it expires.

The Good Jobs for Michigan program transfers state money to select businesses. Lawmakers authorized it to hand out $200 million, with a directive to stop awarding new deals in 2020.

So far, state administrators have made four deals to companies, and they have just $37.6 million left to disburse.

It is too soon to find out whether the deals will result in the number of new jobs promised or whether a careful cost-benefit analysis would determine whether the effort is worth the cost. Even without those assessments, legislators will be tempted to reauthorize it.

They should fight that temptation because such programs don’t work. Lawmakers may intend for the programs to promote economic growth, but the spending might harm the economy instead. If so, it just wastes taxpayer money.

And there is good reason to believe that programs like the audaciously named Good Jobs for Michigan don’t produce good jobs in the state. An economist reviewed a similar program in a different state and found that they had little impact on jobs.

It could be that supporters want to make deals with companies so they can get concrete examples that they are working to create jobs. Perhaps they want those groundbreaking ceremonies to be enough evidence that they ought to keep awarding taxpayer money to select firms.

Lawmakers should have higher standards, however. The state is not required to award taxpayer money for economic development purposes. Any attempt to do so should clearly show that the programs develop the economy, and justify the costs of the subsidies. There are plenty of other uses for state money, after all, and anything spent on job creation programs that aren’t worth their costs ought to be used elsewhere.

When originally approved in 2017, the program was approved 63-45 in the House and 29-5 in the Senate. There was bipartisan support and opposition in the House, with dissent in the Senate coming from a handful of Republicans. The $200 million authorized for the program was included as part of each legislator’s score on the Mackinac Center tally.

These programs are transfers from some taxpayers to businesses and are included in our scorecard of business subsidies. If the program again has sufficient support from lawmakers to extend its deadline, it would be the first so far approved during the Whitmer administration.