Everyone, including Deval Patrick, knows that these give-aways don’t influence business decisions; he told me so himself, he said so in the newspapers. Even Ranch Kimball, who presided over the corporate feast under Romney, is quoted as saying that “Fidelity never told him of a single factor that would make a difference in their job-location decisions. There was nothing we found that was the key. Obviously, keeping a healthy, vibrant city matters a lot. But other than that, there was no magic bullet.”
These corporate bonanzas do the opposite: they starve budgets for the services that make cities and states attractive to businesses — as well as to residents, which we are losing. I know that Patrick knows that. Why is he even considering this boondoggle? This is very alarming.
The “business incentive” pit is the first place to look for the $700 million of misspent money he promised to find for his programs.
He should say, “Note to Fidelity: The big Massachusetts give-away is over. Take your package in Westlake, Texas; have a good time out there. When you want to be in a vibrant environment, with plenty of decent housing and good public schools and public transit and well-cared-for natural and cultural resources, with an educated labor force and good markets for your products, where everyone plays by fair rules and everyone pays their fair share, we’ll be creating exactly such a place, right here, and your business will be welcome.”
I hope the BMG community, having helped elect him, will take on responsibility for keeping our Governor true to the values he professed, and we ascribed to him, during the campaign. So far, I see that we’ll have a full-time job doing so.
This is what I hoped he’d do. I want him to talk with the business community, and I think telling Fidelity to scram, as you seem to suggest, would be counterproductive.
but I wouldn’t give them a penny more in benefits. Racing to the bottom doesn’t help anybody.
I didn’t say to “say scram.” I said to tell them that they won’t extort money by threatening to move. Dont’ worry: Fidelity, I assure you, isn’t waiting for Deval’s polite invitation to stay if staying helps their bottom line. And they won’t bother with us even if we beg and pay if that’s not good for their bottom line. Look what Ranch Kimball said.
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The big corporations have figured out that they can shop around their “packages” — sure, an extra billion free dollars are always nice — but it’s not how viable businesses make their decisions. Read Leroy’s book, where you’ll see that even the business-location consultants say this same thing.
…you will have built it there.
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Ms. Kressel – Please explain why it is all right to poke a major Mass. employer in the eye with a sharp stick, who generate paying jobs and whose employees pay taxes, and NOT OK to chide Deval for offering an amount almost equivalent at the end of the day (factoring in pensions, longevity, etc.) to the Lege leadership to vote his way?
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(Full disclosure – my child designed their LAN and other computer programs, and was well paid by them, but does not work there now and has not for over 6 years. I have never received a penny, as I am not even an investor.).
with corporate welfare is poking Fidelity in the eye with a stick? An odd view of entitlement, I must say. If Fidelity can’t compete without government handouts–it has been losing market share and its innovative edge for a long time–it really should look in the mirror. Whatever happened to personal responsibility?
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Also, it’s not just about a “vibrant environment.” It’s about a labor pool with skills that make them worth hiring. Fidelity was long spoiled by its location in Boston, where candidates could walk in off the street knowing what a form ADV or Monte Carlo simulation is. They have not had such luck in New Hampshire.
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Good luck finding top-flight portfolio managers and analysts in Texas.
but the reasoning doesn’t hold water:
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A Some people have left Mass. for New Hampshire
B Fidelity is in New Hampshire
C Fidelity must be able to fill its New Hampshire staffing needs with people who have left Mass.
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Yes, such things could be true. Sadly, that doesn’t mean they are true.
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In fact, Fidelity has been quite open at its all hands meetings about its inability to find all the talent it needs in New Hampshire. And its first move to RI resulted in an attrition rate of nearly 50 percent from a key unit.
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The reality is, there are only a few cities in North America with large pool of financial services talent. Smithfield isn’t one of them, and neither is Dallas.
In reality, they are boats, able to float where the cash sea takes them. If it’s to Dallas, so be it.
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I admit, most of my friends/contemporaries are moving to the Carolinas, but the reason is the same – good salary and lower cost of living all around than here.
And you keep confusing things that might be true with things that are true.
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In the latter category: Fidelity has had proven difficulty filling its knowledge-intensive jobs–which are critical jobs for that industry-in its out-of-state locations.
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It doesn’t get as many people to move as it expected. And it doesn’t find the people it needs in its new locations.
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Period. End of story.
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Stop with the endless hypothetical speculation. Those are the facts. Deal.
Have they moved operations back from Smithfield, or NH, to Boston? Have they ceased some operations?
is not complete. They are still trying to figure out a strategy for replacing the lost talent. They haven’t yet.
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In New Hampshire, they’ve left jobs unfilled, though at some levels have taken to adopting high school students and teaching them basic skills instead. Hardly a long-term economically viable strategy.
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All of this is very well known on the street among people who work in this sector.
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In any case, people who think anything a corporation does automatically makes good business sense clearly do not know many corporate executives.
In my line of work, I almost exclusively see bad business deceisions, so no need to convince me there.
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But I also know that the badness of business decisions can be exaggerated by employees or ex-employees negatively affected thereby. Just because, in the end, Worker A is replaced by Worker B, and Worker B has nowhere near the credentials of Worker A doesn’t alone make it a bad decision, no matter how much A may insist.
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If Fidelity can’t fill its spots in NH, eventually salaries for those spots will rise to the point where they will. This may mean that it wasn’t worth the candle for Fidelity, which winds up saving not so much, and suffers from the attendant disruptions. Bur in the end, NH will have those jobs and Boston will not.
It definitely IS appropriate to chide, indeed, to castigate, Deval for offering an out-right payoff to legislators to vote his way. I meant to blog that, too, when I first read about it. I couldn’t believe Deval was considering such a thing. I thought I’d see an avalanche of protest to that on BMG, but…I didn’t (did I miss it?), which worries me.
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Fidelity is a major Massachusetts employer because it suits their business needs, not as a favor to us. They don’t “generate jobs”– they just hire people they need to keep their business going profitably. Their employees pay taxes, and so do all other companies’ employees, but the corporation must also pay its fair share. All corporations must do so, and fairly, not with unfair competitive advantages to a few. Requiring them to do this is not a poke in the eye; calling it that just indicates a false sense of entitlement to public subsidies.
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I have no grudge against Fidelity as a company, and use their services happily. But they don’t have a right to our public money, period. And it will have absolutely no effect on their business decisions; it will simply create unjust enrichment.
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If we want to give subsidies, we should be helping small start-ups by low-income people in disadvantaged neighborhoods. That would be the only justifiable government intervention in the private markets — to level a long-uneven playing field.
Seems to me the article says they are talking. Panic is not in order here (I’d say “don’t make it into an Aqua Teen situation but maybe some people wouldn’t find me funny if I did).
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I certainly DO want Patrick to talk to big employers and address their needs, and although the race-to-the-bottom negotiations states and cities have invoked have been detrimental not only to places corporations leave, but even to places corporations relocate to (leaving them revenue-strapped despite the new jobs), I don’t believe you should go into a negotiation with a hand tied behind your back, either.
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Right now, until I know otherwise, I trust Deval to come up with a decent solution that doesn’t screw the state and its citizens. Why? Because I think he’s smart enough and good enough at sailing tricky waters to do so. Let’s see what comes out of this before we jump all over everyone.
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Let’s look at it a different way: if Patrick ignored Fidelity, and they left, wouldn’t THAT screw Massachusetts and its citizens pretty badly, by losing those jobs?
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I wasn’t aware that the Governor has offered “an out-right payoff to legislators to vote his way.” Could you point to that story?
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The one I saw stated simply that some people potentially were talking about a possible deal (lots of “possibly” there) where Deval would take the political heat for signing a stipend bill into law. Quite a bit different, but I’m interested in where you saw this new story you’re talking about.
The Boston Globe
Sunday, January 28, 2007
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Governor weighing deal on pay hikes
Lawmakers’ raises tied to support, sources say
By Frank Phillips, Globe Staff
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Governor Deval Patrick, in a significant departure from former governor Mitt Romney, is contemplating a deal with Democratic legislative leaders that would grant significant pay raises to their top lieutenants in return for their support in implementing his plans for sweeping government changes, according to sources involved in the discussions.
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No agreement has been struck, but in behind-the-scenes conversations, sources said, Patrick has signaled that he may be willing to take the inevitable public criticism about the pay raises, but he wants significant payback: broad cooperation on his proposals to overhaul the state’s quasi-public authorities and boards.
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House Speaker Salvatore F. DiMasi, the driving force in the Legislature for pay raises, has not been persuaded that that is a fair deal, sources say. The pay raises would cost about $40,000 for each branch, while Patrick is asking for a far more expansive and complex change in government operations and philosophy….
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Exactly like I said in my post. Thanks for helping.
You forgot in your cut-and-paste selection to include a few words (aside from the title of the story):
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He may not do it in the end, especially if there’s public criticism — but that he is even considering it as a real possiblity — and rather proudly — is what’s alarming. He’s not agonizing over the ethics, only posturing over how much he could get back.
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The governor bribing the legislators for votes — don’t you think that undermines the checks-and-balances essential to democracy?
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We don’t do Deval a favor by giving him a free pass. We want him to be a role model for good government, as he promised. Is this the model you want?
So taking the political heat for a pay raise that would happen with or without the consent of the Governor is “bribery”? Can’t agree with you on that one.
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Source: Boston Globe
I think Kressel is right on target.
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The economic myth that jobs are created by giveaways to big corporations is pretty thoroughly exploded in the book The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation by Greg LeRoy.
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State Senator Susan Fargo, noting that big giveaways to Raytheon were followed by job losses, called the corporate tax giveaways “Payoffs for layoffs”.
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At least one Massachusetts public interest organization is trying to resist the corporatization of our budget and our democracy: See articles posted on the MCHC website.
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Remember that Deval Patrick is, at his core, a corporate apologist. He knows how to talk about how we’re all together. But he doesn’t really get why it might be wrong to allow corporate power to sweep aside local democratic institutions or to take over our economic resources. That’s why he is pushing “expedited permitting” over strengthening local community boards. Progressives have to be willing to fight Patrick and the legislative leadership on these issues if we want to preserve democracy and make our economy serve everyone.
If you are going to give incentives, they have to be real incentives, with both sides getting something out of it. If a deal says, “here’s some tax breaks and stuff, please please please stay with us” that doesn’t cut it. If there’s concrete incentives and consequences – “here’s tax breaks and stuff and if you don’t live up to your promise to create x number of jobs within x years, then you will owe us all the tax savings back with interest” – that’s an entirely different animal, don’t you think?
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“Corporate apologist”? Where the hell do you get that? People like you are just as black-and-white as the “other side,” in my opinion. Most people work for corporations and their job depends on them. Just saying “corporations are totally bad, end of story” is missing the entire middle, and it’s why the Green party, which attracts such authoritarian views at its fringes, will never appeal to the majority of Americans.
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Good lord, corporations do bad things, but they are amoral. The choice we have as a society is figuring out how to steer them into using their power for good with regulations, worker laws, and smart incentives.
And these were mentioned in the original post. As one who worked on the Economic Development transition working group, I had the opportunity to interview many people working in the field, from politicians to corporate execs to Chamber of Commerce types. I also attended many of the public meetings and read lots of other interviews, etc.
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In all of this, nowhere did I see anyone advocating for ANY tax incentives. What we need in order to create high-quality jobs in this state are:
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1) workforce development
2) infrastructure improvements
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There was nearly universal agreement on these points.
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We can’t accomplish these things by giving away tax revenues.
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Jobs are not “created” or “lost” — everyone in Massachusetts who wants to work has a job, for all practical purposes. In fact, there are many job vacancies that go unfilled because employers can’t find qualified workers. When a company such as Fidelity decides to relocate certain operations out of state, some of their employees may decide to relocate, of course, but those who choose to stay here find something else to do. A job hasn’t been “lost” — it has been transformed from a Fidelity job to something else.
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This is a hugely complex issue, and a short note like this can’t do it justice, but please stop even thinking about giving away our tax revenues to corporations — we need the money for education, telecommunications, and all the other things that provide true business incentives.
Here’s a great piece (though it’s old) on the Raytheon and Fidelity corporate welfare and how it’s hammering us, from the Mass. Budget & Policy Center: http://www.massbudge…
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In 1995, lawmakers granted phenomenal relief to Raytheon and Fidelity by changing their tax formulas. Rather than charging them like any other business – based on their Massachusetts sales, property, and payroll figures – legislators set up a special formula for manufacturing and mutual-fund companies, which now have to pay taxes only on sales. The tax break was supposed to give Raytheon and Fidelity a competitive edge and economic stability. But those hoped-for improvements haven’t come about. In Massachusetts, manufacturing jobs like those at Raytheon have disappeared at a rate three times faster than they have in the nation overall since 1995. And last year, Fidelity laid off 1695 employees – or 5.4 percent of its workforce. Eleven hundred of those jobs were in New England. The company also transferred employees who worked in downtown Boston to its facility in Smithfield, Rhode Island – a move that seems to violate the agreement made with the state in exchange for a tax break.
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Meanwhile, the state lost a considerable amount of money because of these breaks. In 2002 alone, the Department of Revenue (DOR) estimated that the Raytheon and Fidelity relief cost as much as $200 million combined.
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It may be early to say that Deval is offering tax incentives, but he sure as heck ain’t doing anything to close these loopholes. And so far I’d say he’s leaning the wrong way… “One thing I learned in the course of the campaign is there’s too little love companies here feel from the government”…
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There’s also an economist, Michael Shuman, who has studied economic development policies that pursue big corporations versus investing in locally-owned small businesses… and the money-per-job that governments have thrown away at these companies is astounding.
Here’s a great piece (though it’s old) on the Raytheon and Fidelity corporate welfare and how it’s hammering us, from the Mass. Budget & Policy Center: http://www.massbudge…
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It may be early to say that Deval is offering tax incentives, but he sure as heck ain’t doing anything to close these loopholes. And so far I’d say he’s leaning the wrong way… “One thing I learned in the course of the campaign is there’s too little love companies here feel from the government”…
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There’s also an economist, Michael Shuman, who has studied economic development policies that pursue big corporations versus investing in locally-owned small businesses… and the money-per-job that governments have thrown away at these companies is astounding.
Bill Richardson did that when he first became governor in New Mexico, Arizona was getting the jobs so he cut the tax rate and grew their economy. We need to do something to keep/grow jobs here. Fidelity is just looking for the best deal. They have been growing in RI for quite a while, we’ve lost many of our southcoast people to them over the past few years. It works there as we have highly qualified people in that area and not enough investment. It’s an untapped resource right now and housing costs are lower than Boston or the 128 belt.
Couldn’t Deval just offer the top Fidelity deputies $40,000 in increased salary to go along with his plan of keeping them in Boston?
We had a Republican Governor who actually didn’t talk much to the business community, our current Governor can and should reach out and can do so without giving away the store. I’d like to see him do some “selling” of our state at biotech conferences, on the international level and so on.
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Give the Governor credit for saying that he would revisit the telecom property tax break that was enacted in the 1930’s, I believe, to help the telephone company install infrastructure. Tom Menino and Tim Murray have been trying to get this eliminated for a while now.