Awesome $175 Million Tax Break Creates 15 Awesome Jobs In Detroit!
So here's a nice bit of synchronicity: Last night,The Daily Show did a beautifully ragey takedown of Fox News's outrage at lazy welfare bums who get food stamps, while dismissing far more costly corporate tax breaks as just the necessary incentive needed to create jobs. And this morning, we find a tipline link (thanks, anonymous tipster!) to this Detroit Free Press story about the stunning effectiveness of tax incentives to attract industry and jerbs: In 2007, Marathon Oil was given a package of tax breaks -- mostly through a property tax abatement, the largest in Detroit history -- totaling about $175 million to encourage it to expand a refinery. Along with the expansion, the company promised jobs for local residents. And indeed, the number of workers at the plant expanded from 320 in 2007 to 514 full-time workers. The only hitch is that almost none of those jobs went to Detroit residents:
Of the 514 employees, 30 are listed as Detroit residents as of January. In 2007, before the expansion, the company employed 15 Detroit residents. That means fewer than 6% of Marathon’s workers at the refinery live in the city.
Yay for the prospering suburbs!
Silly Detroit City Council members say that the dismal hiring figures highlight the need to include guarantees that companies will hire locally when they get huge tax breaks, which sounds suspiciously like socialism. Marathon Oil says it really wishes it could hire people from Detroit, but it turns out that despite the city's high unemployment, there just weren't many qualified applicants. At a February 13 meeting with the council's planning and economic development committee, refinery manager Tracy Case explained,
“We would like nothing better than to have a higher percentage of Detroit residents in our workforce ... We are aligned in that desire, but there are certain difficulties and challenges and obligations we have to our company to find the best people to work for us."
Still, Case added, given two equally qualified applicants, they'd definitely go with the Detroit resident, you bet.
Councilwoman Saunteel Jenkins noted that the huge tax break and lousy hiring rate were accompanied with an additional refining capacity, with increased air pollution -- talk about a huge win for the city. Council President Brenda Jones was a bit more of a Debbie Downer, acting as if giving tax breaks to attract job creators should actually result in them creating some jobs:
“I want to give everybody the benefit of the doubt, but also I want Detroit residents to see where their tax dollars are going when you’re talking about tax abatements ... I want them to have the same fair chance that anybody else has, and I want you to live up to the agreement that you came to this table and said you would live up to. And the agreement was that you would hire Detroit residents.”
Doesn't this lady understand how the free market works? You give companies tax breaks in the hope that they'll create jobs in your city. Actually telling them they have to create those jobs is a hell of a burden to place on them. Maybe they'll just take their oil refinery to South Carolina, which promises no unions ever, and how would you like that, huh?
Besides, Marathon has tried real hard to hire locally. It created a scholarship program at a local community college, which fulfilled its commitment to job training, and it's certainly not Marathon's fault that only 5 internships resulted, or that the one scholarship recipient who applied for a job didn't meet their testing requirements. It's not like they could possibly do any more than the absolute minimum, right?
But Detroit has totally learned its lesson, and any new tax breaks will include concrete local-hiring requirements, right? Maybe next time: in early February, the package of incentives for a new stadium passed, but measures that would have required the builders to hire Detroit residents were rejected. But the next big project will almost certainly include a little more discussion of such provisions before they're stripped out and the city goes back to hoping for the best. Gotta stay competitive, after all.
[Detroit Free Press via the Wonket Tipline]
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