New York Times Reporter Calls for More Transparency on Incentives
January 31, 2013
Most economic developers hated reading the three-part series on incentives that The New York Times ran on its front page in December 2012 under the banner “The United States of Subsidies.” They found the articles lopsided, inaccurate and downright damning.
But when Louise Story, the investigative reporter who wrote the series, addressed the International Economic Development Council Leadership Summit in Orlando this week, she saw “no bad guys” in the audience – only an industry in need of more transparency and better data collection on a national scale.
After polling “hundreds of state agencies” because there was no central source for information on incentives and painstakingly building her own database, she made a “conservative” estimate that U.S. states and communities award more than $80 billion in incentives each year, yet there is little hard evidence available of what that really yields in terms of job creation and investment. She asserted that there is no way to “truth squad” what companies are telling states and communities.
She called for more reporting rigor within the states – noting that different agencies were often counting the same jobs over and over – and for the Federal government or another national organization to collect data for better analysis of the costs and benefits of giving companies incentives. She suggested that adapting existing tools such as CAFR reports to gather data on incentives and creating a nationwide database for job creation/loss using WARN and other notices could help paint a much clearer big picture about whether or not incentives are worth it.
When asked point blank if incentives should be eliminated, she didn’t take the bait. She simply reiterated her message that it’s a “systemic problem” and our industry needs more “thorough information” in order to question the efficacy of incentives. The good news is that she said she has heard from a number of researchers from Duke, Stanford and at the Federal level who are interested in tackling the issue.
Although most economic development organizations will contend that they carefully measure the inputs and outputs of an incentives package, the question of needing national standards for data collection is a provocative one. It will be interesting to see how this plays out in the years ahead.