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Report: Government “Megadeals” Fail to Produce Jobs

By German Lopez · June 26th, 2013 · City Desk
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Ohio is No. 3 in the nation for “megadeals” — massive government subsidies to corporations that are meant to encourage in-state job creation — but a new report found many of the deals rarely produce the kind of jobs initially touted by public officials. 

Good Jobs First, a policy group dedicated to corporate and government accountability, released a report June 19 that found Ohio tied with Texas at No. 3 for megadeals, which Good Jobs First defines as subsidies worth $75 million or more. Michigan topped the list with 29 deals, followed by New York with 23.

In the Cincinnati area, local and state agencies agreed to pay $196.4 million to Convergys in 2003 and $121 million to General Electric in 2009 to keep and create jobs in the area.

It’s no secret the deal with Convergys went sour for Cincinnati.

In December 2011, the company, which provides outsourced call center services, agreed to pay a $14 million reimbursement to the city because the company’s downtown employment fell below 1,450 — the number of jobs required under the initial deal. The reimbursement deal also calls for the company to pay another $5 million if its downtown employment falls below 500 before 2020.

According to the report, the number of megadeals per year has doubled since 2008, on top of getting more expensive in the past three decades. Ultimately, the report aims to increase transparency for such subsidies, reflecting an ongoing goal for Good Jobs First. To do this, the organization has set up a database (www.subsidytracker.org) that anyone can visit to track subsidy deals. 

 
 
 
 

 

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