by Don Washington on 2012/08/18
Remember when Mayor Rahm Emanuel was running around the city holding toy press conferences where he and some guy in a suit that cost more than say, your first four months of mortgage payments would shake hands and say that they were creating jobs in Chicago? Well no so long ago we woke up to the reality that Motorola is not even transferring the 3,000 jobs they promised they’d be sending downtown. Welcome to job creation 1% style. Some notes, by the way on the differences between job creation and job transference as they, like wealth creation and wealth transfer are radically different endeavors… hence the two different words; creation and transference.
Job creation is the point in the world where a new job, meaning someone who did not have a job gets one. When this happens this has the capacity to add a participant to the economy. The trick is that their income has to meet a threshold that allows them disposable income. If the new job is at Wal-Mart or McDonald’s they still do not make enough money to escape poverty and may still be on the public dole. So instead of creating wealth they are merely transferring it and we, the taxpayers are subsidizing their employers. This is a great deal for the corporate employer; lousy public policy for everyone else involved and is not helping at all.
Job transference is when a job travels from one place to the next. It has two salient features. One, it is often preceded by a revenue/asset stripping/externalization of corporate costs by the receiving entity. These would be tax breaks, like doing in the Corporate Head Tax, TIFs what Motorola and CME Group just did to the all of us that will net them close to a $100 million… in tax breaks… which is $100 million school kids, pensions, roads, firefighters, cops and what not will not be getting… meaning that the receiving entity is harming its long-term tax base. Two, the other governmental entity loses money out of its tax base. We call this effect the “race to the bottom” and the only people who win are the corporate sojourners who will likely do a lot more damage to the tax, environmental and other laws during their stay in whatever state they happen to reside.
By any measure of job creation a deal where a company fires seven hundred people is not job creation. In fact, if Tom Alexander is to be believed Mayor Rahm Emanuel knew when he announced this deal that Motorola was never intending to live up to terms of the tax breaks Mayor Emanuel went downstate to fight for them and CME to receive. receiving instead of working to secure funding for our schools or public pensions. Hell of guy our little marmoset.
So what we have then is the transference of less jobs than expected and though certainly there will be some near-term benefits in that they will have to eat somewhere and maybe they will generate some smaller jobs near the point of employment in the Merchandise Mart we all know those jobs don’t meet the above mentioned threshold. So let’s review. Mayor Rahm Emanuel eliminates the corporate head tax to draw corporations like Motorola to Chicago then went downstate to fight for nearly a trillion dollars in tax breaks for them over the next decade in return for them making $600 in investments and hopefully one day hiring Chicagoans to fill these particular jobs and if Motorola expands they will hire more people.
The net result has been a loss of seven hundred jobs and $10 million less dollars for common public good that this year… for now Motorola has deigned; not to take advantage of at this point. So all the machinations have resulted in a suburb getting poorer, a Mayor fighting for future subsidies for a corporation that cut costs by firing people in a year where it made $162 million dollars in profit. Ah, I can feel neighborhoods all over Chicago humming with economic revitalization… not those are hymns from gunfire… it’s almost like the Mayor doesn’t care about them. That could be taken as harsh but since Motorola Mobility has already reneged on the number of jobs it is transferring here and our Mayor knew they were going to do so at some point while he was luring them here and going to bat for them instead of the city in Springfield, you might have some questions… I know I do.
What else are we going to discover about Motorola’s $300 million dollar commitment in build out, lease and construction costs are not going to happen? How did the City of Chicago ever come up with the idea that Motorola will be creating thousands of jobs when they seem to be getting leaner and meaner? You will grow old and die before you get an answer to either of these questions or before one of our media friends finds the time to ask one of these questions. But if you are keeping score on the day when Motorola hires one person over 3,000 people it will have created one job on its own. So far all its’ managed to do is deprive the state coffers of a tax subsidy it didn’t use, a city out a head tax it eliminated to bring companies like this to the city and send seven hundred people into unemployment. Hurrah, it’s job creation 1% style.