Thursday, November 10, 2011

Changing the Economic Development Paradigm in Maryland

By Oz Bengur

With the federal government and states scrambling to figure out ways to jump-start the economy, creating jobs seems like a politician's main job these days.

One tried (if not true) method has been for states to offer incentives to businesses to relocate from another state; or as an ode to our dismal economic times, offer incentives so a company doesn't take its jobs and leave. That's what happened recently when the O'Malley Administration offered about $9.5 million to keep Bechtel Corporation​ from moving its Frederick, Maryland manufacturing facility to Virginia and saving about 1,250 jobs.

No doubt the administration had nightmares of another company like Northrup Grumman​ choosing Northern Virginia over Maryland. Grumman, if you remember, was looking for a site for its corporate headquarters that would have brought 300 high paying executive jobs to the state. No matter that the deal cost Virginia about $40 million dollars of taxpayers' money or $133,000 for each job.

At just $7,600 a job, the Bechtel deal was a comparative bargain.

The state Economic Development chief and others argue that in the economic development equivalent of an arms race, the state has to ante up cash and incentives to attract companies and jobs - or worse, keep them from moving. These deals have become an accepted way of promoting economic development. But should that continue? The state will never have enough money to provide incentives to all the companies that may be looking around for another headquarters or manufacturing facility.

More here.

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