Job Blackmail Pays


According to the FBI, the typical bank robber escapes with about $7,600. It would take more than 13,000 such capers to reach the amount that some individual corporations are netting in their own holdups, though of a legal variety.

This year has seen a series of cases in which large companies secure big subsidy packages by hinting that they may move their corporate headquarters to another state, and in several instances those packages have turned out to be worth an eye-popping $100 million.

The fact that state and local governments around the country continue to face severe budgetary shortfalls has not prevented them from offering—and companies from taking—these huge payoffs. Here are some new members of the $100 Million Club:

Motorola Mobility Holdings—one of the two spinoffs from the split-up of the old Motorola Inc. earlier this year—recently extracted $100 million in EDGE tax credits from Illinois as the price for keeping its headquarters and approximately 3,000 employees in the Chicago suburb of Libertyville. EDGE credits normally apply to corporate income tax payments, but the state legislature allowed the smart-phone company to keep employee income tax withholding payments instead. Motorola Mobility was awarded several million dollars more in job training and other grants.

When Panasonic Corporation of America let it be known it was considering moving its headquarters out of New Jersey, the state offered the company a tax credit worth just over $100 million to stay. But it couldn’t remain at its existing site in Secaucus. The Urban Transit Tax Credit required a relocation, so the state’s Economic Development Authority got the Japanese electronics firm to agree to move a few miles down the road to Newark. The arrangement was expected to provide a big boost in tax revenue for Newark (money in effect poached from Secaucus), but the struggling city for some reason decided it was necessary to give back a portion of that to Panasonic in the form of more subsidies, the amount of which has not yet been determined.

After raising the possibility of moving out of state in response to an increase of one half of one percent in local income taxes, American Greetings agreed in March to keep its corporate headquarters in northeast Ohio. All it took was a state package of grants, tax credits and low-interest loans worth an estimated $93 million over 15 years. Once the greeting card company settles on the exact site, it is likely to get additional local assistance that will put its total subsidies above $100 million.

A few weeks after the American Greetings deal, ATM manufacturer Diebold, which had made similar noises about a possible move to another state, was also induced to keep its headquarters in northeast Ohio. It, too, is slated to get total subsidies of about $100 million—$56 million in refundable tax credits from the state and anticipated local “incentives” of more than $40 million.

Sears Holdings could soon join the club as well. Actually, Sears is already a leader in it. Back in 1989 it got a subsidy package of $178 million for moving its headquarters from downtown Chicago to exurban Hoffman Estates, 29 miles away. The state and local tax subsidies from that deal are set to expire next year. Playing the we-might-move-out-of-state game, Sears has set off a frantic effort by Illinois officials to extend the company’s subsidies for another 15 years. No deal has yet been announced.

It is frustrating to see one company after another get away with job blackmail. If only we could get the FBI to take an interest in this kind of stickup.

Reposted from the Dirt Diggers Digest.

3 Responses to “Job Blackmail Pays”

  1. Raymond Says:

    This is a neoliberal dreamworld come true. The Netherlands is considering a bill that would ban poor people and the homeless from the cities because it makes a bad impression on the corporations that they may want to do business with. I say, if the Constitution can regulate Commerce among the states, then they should be able to stop this hostage taking mentality. Desperation should not be an incentive to screw the states and their populations and allow these companies to do their dirty dealings. If it is up to the TprtyRethugnuts, all human actions will be privatized, in spite of the greater cost to the taxpayers. Neoliberalism at its heart is that individuals, cities, counties, states, regions, countries, all will be based on free market transactions in which everyone will be in competition with everyone else each to their own advantage. Democracy has no place in this system. The corporation will be what gov’ts used to be, except it won’t be for the most people, instead it will be for the wealthy few. An informative link on Neoliberalism.:

    Privatization is closer to Fascism.
    “Fascism should more appropriately called corporatism, for it is th merger of the corporations and the state.” Benito Mussolini

  2. Sears and “Job Blackmail:” an Early Warning Sign of Job Loss? « Says:

    […] jobs from a Chicago suburb to Virginia or Massachusetts. (Three large companies have extracted subsidies of $100 million or more this year by threatening to leave New Jersey, Ohio and […]

  3. The Apoplectic States of America | Says:

    […] get 22 states to rapidly assemble bids for its third public auction in 10 years. That’s why “job blackmail” for eight and nine figures at a pop is rampant in states like Ohio and New Jersey and […]

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