When state and local governments give tax breaks and other financial incentives to private corporations as a way to induce them to locate their facilities nearby, the intent is to create new jobs for local residents. Too often, however, companies either create far fewer jobs than they promised or simply relocate from one American locale to another, creating no new jobs at all. Although federal regulations are in place to prevent the use of federal funds merely to move jobs from one place to another, the recent example of Visalia, California’s use of federal grant money to steal jobs from Brisbane, California, demonstrates that they are ineffective.

 

In Brisbane, 183 union workers will lose their jobs at the VWR International warehouse at the end of 2012, not because the facility is losing money but because the town of Visalia, California, about 230 miles away, is using $2 million in federal Department of Commerce grants to do infrastructure improvements to the industrial park where the new warehouse will be located. VWR will also get $30,000 in tax credits from the state of California for every worker hired over a five-year period, and intends to run the new facility as a non-union shop and to pay the employees there about half of what their predecessors in Brisbane earned.

 

Commerce Department regulations prohibit the use of the grant money for the mere relocation of jobs, and press reports show that Visalia specifically touted the infrastructure work to VWR as “big selling points.” When the Teamsters Union, which represents the Brisbane workers, pointed out the contradiction between the law and Visalia’s conduct, the Commerce Department claimed that its hands were tied because “the City advises us that it had no knowledge of VWR’s interest when it applied for EDA [Economic Development Administration] funds and that it did not solicit or court the company to relocate.”

 

Union President James Hoffa, Jr., replied by expressing his disgust at Commerce’s willful blindness: “Just as VWR is dealing in bad faith with employees and the City of Brisbane by refusing to explore viable alternatives, VWR and the City of Visalia are dealing in bad faith with the U.S. Department of Commerce…and U.S. taxpayer about who will benefit from this public financing.” As Brisbane employee John Thomas put it, “They aren’t creating new jobs, all they are doing is union busting…It’s a shame they are getting our tax dollars to destroy good middle-class jobs.”

 

VWR has done this before, as it recently got tax credits from Monroe County, New York, to move jobs from a warehouse in Tonowanda, N.Y., to another warehouse in Henrietta, New York, resulting in layoffs for 41 warehouse workers in Tonowanda, and no net gain in jobs.

-Matt Bewig

 

Tax Credits for New Jobs, but Really for Union Busting? (by Mike Elk, In These Times) Employees Plead for Congress, State to Help Save Their Jobs (by Aaron Glantz, Bay Citizen)

No More Candy Store: States and Cities Making Job Subsidies Accountable (by Greg LeRoy et al., Institute on Taxation and Economic Policy) (pdf)