Kokomo Tribune; Kokomo, Indiana

Columns

March 19, 2014

Hicks: We should worry about real job creation

With the passage of House Bill 1020, Indiana is poised to perform a comprehensive and ongoing analysis of our state tax incentives. This comes on the heels of a broad effort by the Indiana Economic Development Corp. to become transparent and open to an evaluation of tax incentives. IEDC’s recent creation of a transparency portal and its commissioning of a study by my center to review incentives already make Indiana the most forward-thinking state on these issues.

Still, more is needed and a further review of state and local incentives is warranted. Before we get down to the business of evaluating economic development incentives, we probably ought to understand just what it means to “create a job” and how we can honestly evaluate tax incentive policies.

Over the course of a typical year, more than a half million new jobs are created by firms in Indiana through the opening of a new establishment or the expansion at an existing firm. Over the same year, perhaps a half million or so jobs are destroyed as businesses contract or close. In a good year there are more jobs created than destroyed, but in any year there is a lot of job churning.

At the state level, economic developers work with less than 5 percent of the employers of new jobs. At the local level, some economic development groups work with a higher share of employers, but rarely, if ever does it exceed 15 percent of new jobs. The simple fact is that nearly all new jobs are created without the helping hand of development officials, but this does not mean we should dismiss their efforts.

Economic development efforts are mostly targeted at footloose businesses that could choose to locate anywhere. These are typically headquarters, manufacturing and logistics firms, all of which are important employers. Still, how we count jobs from these efforts is important.

A new business relocating to or expanding in Indiana will usually predict some future job growth. Those predictions are unlikely to be exactly right. At the state level, we should not worry too much about these job predictions because the largest state development incentives are tied to actual jobs created, not predicted jobs. This is not so at the local level, where there is an incentive to “over-predict” job creation in order to secure property tax abatements or infrastructure help through a TIF. So, what should we do about it?

The success and failure of our economic development efforts should be measured simply by how much better our economy (state or local) becomes. One way to do so is to measure net job growth. Indiana’s Secretary of Commerce focuses on this job growth number, but I know of no local government that does. Such a simple approach would force local governments to weigh their economic development efforts (including abatements) against other things that really matter to growing an economy, like school performance and the quality of local parks and streets. Today they rarely do and this hurts, rather than helps, efforts to make Indiana a better place.

Michael Hicks is director of the Center for Business and Economic Research and professor of economics at Ball State University.

1
Text Only | Photo Reprints
Columns
  • DAN COATS: New Harmony marks its 200th anniversary Situated between St. Louis and Louisville, New Harmony is a small town in southwest Indiana smaller than 1 square mile in area. Fewer than 1,000 Hoosiers call this serene Posey County community home.Despite its size, the town has monumental significa

    July 31, 2014

  • Rob Burgess House of Burgess: Let's put lethal injection to sleep

    It was only a matter of time before this happened again; and I’m sad to say I’m not surprised at all.
    On July 22, the Supreme Court gave the go-ahead for the killing of Arizona death row inmate James R. Wood III, who had filed suit requesting a delay until the state revealed the details of the drugs that would be used to end his life.

    July 30, 2014 1 Photo

  • ANDREA NEAL: Fleeting canal era had lasting impact on state Editor’s note: This is one in a series of essays leading up to the celebration of the Indiana Bicentennial in December 2016. In 1825, the Erie Canal was completed to great fanfare. Cannon fire, parades, balls and speeches celebrated the speed and ski

    July 30, 2014

  • TOM LoBIANCO: Pence, Bayh crowd field with questions In the 2016 political landscape, a pair of the state's political big dogs -- Republican Gov. Mike Pence and former Democratic U.S. Sen. Evan Bayh -- have potential candidates holding their breath and waiting on them. Until Pence says otherwise, he's

    July 29, 2014

  • JEFFREY McCALL: All things Hillary are not news, just distractions This column has nothing to do with who should or will win the presidential election in 2016. It has nothing to do with partisan politics of any flavor. This column does, however, assess how television is oversaturating the "news" agenda with countles

    July 29, 2014

  • BRIAN HOWEY: World is rising up to meet Putin's thuggery Any illusions I had about the progressive nature of Vladimir Putin’s Russian regime quickly dissipated when I returned to my Moscow Grand Marriott room in August 2007. Upon opening the door, I was greeted with the spectacle of my papers and note pads

    July 28, 2014

  • DICK WOLFSIE: A trip to end all trips My wife is planning a very exciting vacation to celebrate our 35th wedding anniversary. This was a big surprise to me. Not the vacation part, but the 35 years. I thought it was 34. Right now she is on the back porch, the patio table stacked high with

    July 28, 2014

  • ED VASICEK: Happy marriages do not just happen My wife, Marylu, and I met through a mutual friend. My wife had been involved with Campus Crusade at her university, where my friend, Norman, also attended. One Christmas break, Norman invited his friends from church (including me) to a party — along

    July 27, 2014

  • MICHAEL HICKS: Truth about inflation Almost nothing in economics seems to confuse people as much as monetary inflation. That confusion leaves an intellectual void into which some of the least credible ideas of the modern world crawl.Goods and services typically have a price dictated in

    July 27, 2014

  • RAY DAY: Some laws will do us in In my opinion, we have made laws that are contrary to what they were intended. And this writer is going to let you in on his thoughts about them. One of the things that has been processed incorrectly is the child abuse law. When you tell the parent h

    July 26, 2014

Latest news
Featured Ads
Only on our website
AP Video
Fighting Blocks Access to Ukraine Crash Site Dangerous Bacteria Kills One in Florida Workers Dig for Survivors After India Landslide Texas Scientists Study Ebola Virus Smartphone Powered Paper Plane Debuts at Airshow Southern Accent Reduction Class Cancelled in TN Raw: Deadly Landslide Hits Indian Village Obama Chides House GOP for Pursuing Lawsuit New Bill Aims to Curb Sexual Assault on Campus Russia Counts Cost of New US, EU Sanctions 3Doodler Bring 3-D Printing to Your Hand Six PA Cops Indicted for Robbing Drug Dealers Britain Testing Driverless Cars on Roadways Raw: Thousands Flocking to German Crop Circle At Least 20 Chikungunya Cases in New Jersey Raw: Obama Eats Ribs in Kansas City In Virginia, the Rise of a New Space Coast Raw: Otters Enjoy Water Slides at Japan Zoo NCAA Settles Head-injury Suit, Will Change Rules Raw: Amphibious Landing Practice in Hawaii
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Obituaries
Poll
Kelly Lafferty's video on Tom Miller