Creating Employment Costs Local Communities

When considering incentives to pull large institutions, factories or businesses towards a city, one should take into consideration the boosts to the economy. When a company moves into a region they bring with them a demand for jobs that build up the community. As families move to fill these jobs the market for support services, such as daycares, shopping, and others will also grow. This boon to the market will overall boost the local economy and improve the lives of the citizens. The cost of an incentive to lure businesses into a region seems minuscule in comparison to the benefits the community gains in the long term. In most cases, the incentives pay for themselves with 3 years of starting operations.

However, a state should include a clause to any incentive program that a company be obligated to return all funds, property, or any other incentive should the company decide to renegade on their agreement. An example of public policies of incentives include, “Korean car maker Kia decided to build a $1.2 billion plant in West Point, Georgia. To land the project, the state offered a $420 million incentive package that included free land (bought from the previous owners at about 2.5 times the market value), tax-funded employee training, and a new $30 million interstate interchange. Altogether, the subsidies amounted to roughly $168,000 for each of the 2,500 jobs at the plant.” (Sugg, 2007)

Sugg, J. F. (2007, May). The Folly of Southern Hospitality:Government Incentives or Corporate Welfare? Retrieved June 4th, 2008, from T. Lee Horne, III: http://governor.ws/node/178

Sugg, J. (2007, June 28). The Folly of Southern Hospitality. Retrieved June 3, 2008, from Black and White: http://www.bwcitypaper.com/1editorialbody.lasso?-token.folder=2007-06-28&-token.story=196676.112112&-token.subpub=