Wednesday, April 10, 2013

The Missouri Quality Jobs Program: Simply a waste of money

Back in late January I testified in front of the Missouri House Committee on Government Oversight and Accountability about the Missouri Quality Jobs Program.  The program provides tax credits to firms that promise to provide new jobs in Missouri, and has given out hundreds of millions of dollars in credits since 2006.  The Missouri Department of Economic Development claims that the program has directly created more than 11,000 jobs.  This claim is simply the sum of the new jobs associated with projects that received the credits.

The problem with the DED's claim is that it assumes that all of those jobs would not have been created were it not for the credits.  This is clearly incorrect, however, because many firms only apply for the credits after deciding on a project.  In addition, the claim ignores that the most of the workers filling these new jobs usually come from other jobs within Missouri. Thus, they are merely shuffled from one Missouri firm to another.

I presented some preliminary estimates that the overall effects of the program so far was a small decrease in employment.  The best-case would be if the program was simply a waste of money.  I'm waiting for new data so that I can do a complete analysis of the policy. 

Here are some summaries of the hearing:

Department of Economic Development's Forecasting Model Questioned, El Dorado Springs Sun, March 7.
Economist Casts Doubt on Mo. Business Incentives, BloombergBusinessweek, January 28.
House Committee Looks for Ways to Improve Quality Jobs Program, Missourinet, January 28.
Lawmakers Address Mamtek, abc17news, January 28.