By Steve Levy
What Would it Take to Get Tech Companies to Move Jobs Out of the Region and Is This a Good Idea?Uploaded: May 18, 2019
This is a very popular idea on many Town Square blogs.
Personally I do not support this proposal and I will explain why below.
But the main point of the blog is for posters to explain how they expect to pull this off.
Here are three pieces of background information.
1) Companies are free to move now and other locations are already free to provide incentives. Obviously this is not working to the satisfaction of posters so something more is needed.
2) Most large cities in the region are trying to attract jobs. Count in San Jose, Oakland, San Francisco, Mountain View, Fremont, Menlo park Sunnyvale and Santa Clara to name a few. So residents who want companies to move jobs away are fighting strong headwinds already.
3) Many large tech companies are planning Bay Area expansions even though they are free to move to less expensive locations. That would seem also to be a major obstacle.
To their credit many of the “get them to move” crowd recognize that incentives would be needed.
Okay, we know a bit about how incentives work. Wisconsin offered Foxcomm a package of tax incentives worth $4.5 billion for 13,000+ direct jobs and there would be some additional indirect jobs. New York offered Amazon upwards of $2 billion for a similar number of jobs. In both these cases the companies were initially interested, which seems not to be the case here.
So in 2018 there were 4.3 million jobs in the region of which a generous count for tech jobs gets to around 750,000.
So posters who want tech companies to move jobs out of the region, what is your plan? Probably moving 25,000 jobs would not be noticeable given that we have 4.3 million jobs now. Even moving 100,000 jobs hardly changes the picture.
If Wisconsin laid out $4.5 billion of taxpayer funds for 13,000 + jobs, what do you expect the tab to be for 100,000 jobs? 300,000 jobs?
So posters who want this, how much are you willing to put up yourselves? Do you want Palo Alto to chip in taxpayer dollars to give incentives for Facebook to move those jobs to Tracy? How is this supposed to work? Where are these $billions in incentives supposed to come from?
I personally do not support deals like the Foxcomm or Amazon deals. I think they rip off taxpayers.
So the first job for posters who want companies to move jobs out of the region is to tell us where you propose to get the $billions in “incentives”.
I do understand that the rapid job growth of the past five years has increased traffic and put pressure on rents given that housing has not kept pace. It is also true that Bay Area and peninsula job growth since 2000 has averaged 0.6% per year equal to the national growth rate hardly a "massive" growth rate.
I know also that the job growth has brought major positives and that there are solutions to the challenges that are less costly and better than bribing companies to move even if that were possible in sufficient numbers to make a noticeable difference.
Since 2010 the unemployment rate has declined from 10.3% to 2.5% in April 2019. The number of unemployed residents has declined by 300,000. In addition 100,000 to 200,000 residents who had dropped out of the workforce rejoined and found jobs. Much of these gains were related to the tech surge.
Much of the added traffic at commute time was existing residents getting jobs again.
These gains supported large property tax increases in the region and were a large part of surging state revenues, which by the way allowed state K-12 funding to increase faster than in any other state in recent years. Local school and city revenues have seen strong growth though surging retirement costs have kept much of the funds from going into services.
If you want to blame companies for creating jobs that put 400,000 to 500,000 existing residents back to work, I am not with you.
If you want to blame these companies or workers for commuting to work and making your traffic more troublesome, I am not with you.
If you do not want to take any personal responsibility for helping to solve the challenges of growth, I am not with you. I think this only works if residents and businesses and the public sector work together on “we are all in it” solutions.