A new report from the Mackinac Center for Public Policy has determined that the eight largest corporate subsidy deals during the past eight years of Governor Gretchen Whitmer’s administration created only a tiny fraction of the expected jobs.
The state offered eight corporations a total of $2.8 billion in subsidies, with officials saying they'd create more than 20,000 jobs and be "generational," and "transformational," the report said.
Instead, some projects were abandoned, and others have created only 600-some jobs so far, amounting to 3% of the expected number, according to the report. And of the original approved sum of $2.8 billion in major subsidies over $100 million, $1.7 billion has actually been disbursed.
The report acknowledges that more jobs attributable to the subsidies are likely to be created in future years, but "whatever becomes of them, they will not make good on their original promises."
James Hohman is director of fiscal policy for the libertarian-leaning Mackinac Center and the author of the study. He said previous administrations, whether Republican or Democratic, fared little better over the years with the economic success rate of corporate subsidies.
The Mackinac Center for Public Policy has tracked jobs attributable to the largest corporate subsidies since the year 2000, and found only 9% of the expected jobs were actually created, Hohman said.
"They promise the moon but we never hear about what happens afterwards," he said. "Most of the time you'd be better off spending this money on anything else. They fundamentally don't deliver on their expected outcomes."
Hohman said there are much better ways to boost the economy.
"There is an underappreciated amount of turnover that happens in the state economy. That is small businesses, large businesses, medium businesses in Michigan, they create and lose over 800,000 jobs in Michigan every single year. And so I don't think the appropriate thing to do is to try and find a handful of businesses, either small or large, and then offer them taxpayer money. I think a better thing is to improve the business climate for everyone."
"The outcomes they report, while brutal, are unsurprising," said Michael Hicks, a professor of economics at Ball State University in Indiana. Hicks co-authored a report in 2005 for the Mackinac Center examining the results of large tax breaks and other incentives on employment.
Hicks said what makes the results of corporate subsidies even less impressive is that the jobs counted are "gross," jobs, rather than "net" jobs — meaning the workers may be merely shifting from one company to another as a result of a subsidy.
The Michigan Economic Development Corporation called Hohman's study "false and misleading," pointing out that Ford Motor Company, one of the recipients of the subsidies in question, is currently hiring for its Blue Oval battery plant in Marshall, and has until spring 2028 to create the expected 1,700 jobs. The MEDC said that another recipient, Our Next Energy, has until 2029 to create the expected jobs.
MEDC also said that the report failed to including the temporary hire of "thousands" of construction workers to build the Marshall facility, or that local businesses in Marshall are seeing an increase in foot traffic as an indirect impact of the subsidies.
