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NJ Policy Perspective: State Gets Low Grade for Corporate Subsidy Oversight

Simple policy changes could help create more high-quality jobs.


Many of New Jersey’s economic development programs, which spend millions of tax dollars each year, require little – if any – job creation and lack proper wage and benefit standards. Overall, New Jersey gets a grade of D+ for five of its major subsidy programs, scoring only 39 on a scale of 100, according to a new study of enticements states to use to lure new businesses and encourage existing ones to stay or expand.


The national report card, Money for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs, was published today by Good Jobs First, a nonprofit, non-partisan research center based in Washington, D.C. 


“With unemployment still so high, taxpayers have a right to expect that economic development investments create significant numbers of quality jobs,” says Good Jobs First executive director Greg LeRoy. “The days of ‘no strings attached’ are largely gone, but the fine print in many states is still full of gaps and loopholes.”


New Jersey’s program with the most stringent job-creation standards, the Business Employment Incentive Program, ranks the best of the five, with a grade of C+ and a score of 63. If the state’s other subsidy programs had the same safeguards, New Jersey would be among the top ten states in the country in terms of subsidy accountability. Instead, it ranks 24th.


“Over the past two years, New Jersey has thrown subsidies at companies, but the plan hasn’t succeeded in creating many new jobs. As a result, our state is lagging behind the rest of the country,” New Jersey Policy Perspective president Deborah Howlett says. “We need to hold these programs to a higher standard to help ensure subsidy programs actually do what they are designed to do: create jobs and improve our state economy.”


The report recommends:


·      Every subsidy should contain job creation, retention or training requirements. Most of New Jersey’s programs do have these requirements.


·      Employers should be barred from shifting existing jobs from other facilities and be required to retain newly created jobs for a minimum period. Most of New Jersey’s programs do not include job-shifting bans, but do have duration standards.

·      Every job or training position in a subsidized facility should meet minimum standards for wages. Wage standards should preferably be tied to labor market averages and structured in a way that raises pay above market levels. Only two of New Jersey’s programs have any sort of wage standard, and none has a requirement to raise pay above average wages.


·      Subsidized positions should offer health care coverage in which the employer contributes to the cost of the premium. While the majority of New Jersey’s programs do have health coverage requirements, none requires the employer to contribute to the premium.