The reshuffling of America’s jobs, factories and corporate headquarters is back in the news, and Minnesota is caught up in the fray whether it wants to be or not.
On the positive side, it was announced Thursday, Jan. 24, that Pinnacle Airlines plans to move its operations from Memphis to Minneapolis-St. Paul International Airport this coming spring when it emerges from bankruptcy and becomes a wholly-owned regional subsidiary of Delta Airlines.
Hundreds of jobs are at stake. The story in the St. Paul Pioneer Press notes there are synergies to be attained with Mesaba Airlines, another regional carrier that was part of former Eagan-based Northwest Airlines that was taken over by Delta.
What wasn’t immediately announced was whether rationalizing corporate assets was the dealmaker or whether Minnesota and local government subsidies of loans, tax breaks or other incentives swayed the decision. The relevance of such incentives is clear because of two other developments of the past week.
Gov. Mark Dayton called on the Minnesota Legislature to retool state business incentive programs in his biennial budget proposal, capping how much companies can receive in public aid and making eligibility for public assistance more transparent and accountable. A key part of the governor’s proposal would replace the existing Job Opportunity Building Zones (JOBZ) program with a Minnesota Job Creation Fund. Going into a development deal, companies would know what they would qualify for in terms of state incentives, and public assistance would come only after the companies achieved prescribed job creation and investment goals.
This is in sharp contrast to what other states are going, the Good Jobs First nonprofit, nonpartisan research firm revealed in a report also released on Thursday.
It looks at some of the wildest and costliest job and business reshuffling schemes around the country, likening them to a “Second War Between the States” that only moves people and businesses and doesn’t stimulate job creation or business growth. “By pretending these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud,” said Greg LeRoy, the group’s executive director and principal author of the report.
This report is consistent with a New York Times series in December that looked at how states and local communities subsidize what is usually a race to the bottom by making education and school children, among others, the defacto subsidizers of corporate welfare. In fact, the Times articles and Good Jobs First use similar examples of the abuses of tax breaks and public giveaways.
Chris Newmarker in Finance & Commerce offers a good explanation of what the governor is proposing to keep Minnesota a player in the business reshuffling game. At the same time, LeRoy and colleagues at Good Jobs First offer suggestions on what states can do and why the federal government may need to intervene to end the counterproductive business subsidies.