Monday, February 4, 2019

JS had already answered "did we overpay?" for Foxconn

What a strange headline after a deal was signed in 2017:
Wisconsin gave Foxconn a rich subsidy package. Did we overpay? Some experts say we did.
The paper interviewed an expert who said Wisconsin was paying a hefty premium.
Timothy Bartik would answer the question this way:"It's unclear if the benefits would ever be as great as the incentive costs," said Bartik, senior economist at the Michigan-based Upjohn Institute for Employment Research who studies subsidies. "It was a very unusual deal."
And while Foxconn is adjusting the proposed mix of jobs, it doesn't seem as if that has changed the bottom line conclusion:
Counting all state and local subsidies, Wisconsin will pay Foxconn many times more than the average incentive offered in the U.S., according to Bartik's analysis.
I think the Journal Sentinel had basically answered the question a year ago, tomorrow - - with the same economist's assistance:

Tim Bartik, an independent economist who studies economic development, said Wisconsin is paying many times more per job than he typically sees in other projects nationally and is even shelling out more than some states were willing to pay per job for the much-hyped Amazon headquarters. 
And in November I had collected enough published data to write this:
So NY, for Amazon HQ, gets 2X the Foxconn jobs for half the cost
Updated. You make the call:
New York State: 
Amazon Is Getting $1.5 Billion to Come to Queens. Now Begins the Fight Over if It’s Worth It.
“Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City,” the company wrote in a blog post formally announcing the deal, most of which come from a state tax credit. “Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year.”
The state also offered a capital grant to the company that could total as much as $500 million that Amazon can use to build new offices. 
'It's a huge subsidy': the $4.8bn gamble to lure Foxconn to America
Foxconn itself has been more circumspect on the number of jobs it will create, saying in a press release it will “create 3,000 jobs with the potential to grow to 13,000 new jobs”. Even if 13,000 new jobs are created, Wisconsin would be paying $346,153 per job at a subsidy of $4.5bn. An astronomical sum, but nothing compared to the $1.5m per job cost if the deal ends up creating just 3,000 new positions. 
Updated, 12:00 p.m. Not to mention Virginia, which gets 25,000 Amazon jobs at the company's other new HQ locale for $819 million!
And all the Amazon jobs are supposed to average $150,000 annually, while Foxconn's have to hit about $54,000.
So which state got a better bang for its public bucks?
Final observation: At some point the number of jobs projected will fall from 13,000, the estimated total subsidy will shrink and the Walker-Vos-Fitzgerald-spin for Foxconn Light will be 'look at the money we saved you.'

These links and 275 more are in this Foxconn blog archive.

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