PUBLIC SUBSIDIES These studies document the massive public subsidies that have overwhelmingly favor big businesses and have financed their expansion, and how this subsidized development has failed to produce real economic benefits for communities.

Shortchanging Small Business: How Big Businesses Dominate State Economic Development Incentives.” Greg LeRoy, Carolyn Fryberger, et. al., Good Jobs First, Oct. 2015.

Giving strong empirical support to long-time fairness arguments, this report looks at state economic development programs that purport to be open to businesses of any size, and finds that they in fact overwhelmingly favor large companies. For the study, Good Jobs First examined 4,200 economic development incentives awarded through programs in 14 states, and found that of a $3.2 billion total pot, 90 percent went to large firms, defined as those with 100 or more employees or 10 or more locations. In some states, that figure climbed as high as 96 percent. In its recommendations for reform, Good Jobs First urges states not to simply reallocate subsidy dollars to small businesses, and instead to tighten their rules to exclude the largest companies from these giveaways and institute dollar caps per deal and per company. With the savings, the recommendations continue, states should invest in expanding credit access for small businesses and in the types of broad public goods, like transportation and job training, that benefit all employers. The report is the second in a series of three on economic development subsidies, and builds on an earlier report, “In Search of a Level Playing Field,” that surveyed leaders of small business organizations and found that they overwhelmingly agree that their states’ economic development incentives favor big businesses at the expense of small firms looking to grow.

Tax Breaks and Inequality: Enriching Billionaires and Low-Road Employers in the Name of Economic Development.” Philip Mattera, Kasia Tarczynska, and Greg LeRoy, Good Jobs First, Dec. 2014.

This report analyzes the subsidies awarded to companies linked to Forbes 400 billionaires, as well as the subsidies awarded to firms that pay low wages, and finds that cumulatively, local and state governments across the country have given these companies $21.4 billion. Both categories include Walmart, which pays low wages, has catapulted four members of the Walton family to the top 10 of the Forbes list, and has received 284 subsidies with a total worth of $161 million (a conservative estimate, as the report’s methodology notes). Both also include Amazon, which pays low wages at its distribution and data centers, has supplied founder Jeff Bezos’s $30.5 billion fortune, and has won $419 million in subsidies. When so much local and state funding that purports to fuel economic development is going to companies that do not need tax breaks and other awards in order to finance a project, the report explains, the subsidies serve mainly to increase those companies’ profit. When they go to companies with billionaire owners or a low-road employment model, they also intensify income inequality, by using taxpayer funds to enlarge private fortunes and concentrate wealth, by expanding low-wage employment, and by sticking working families with a larger share of the bill for essential public services—among other effects. What’s more, they disadvantage small, locally owned businesses—the kinds of enterprises that subsidies like training grants, credit access, or infrastructure improvements are supposed to help—by tipping the scales even further in favor of big corporations. As the report concludes, “The preservation of the middle class is a frequently invoked justification for economic development subsidies. But when one reads the fine print and digs into actual outcomes, that justification is routinely undermined.”

Subsidizing the Corporate One Percent: Subsidy Tracker 2.0 Reveals Big-Business Dominance of State and Local Development Incentives.” Philip Mattera, Good Jobs First, Feb. 2014.

This analysis of Good Jobs First’s Subsidy Tracker database examines the share of total state and local economic development awards that have been granted to major corporations, and finds that the subsidies are heavily concentrated among big business. “We estimate that at least 75 percent of cumulative disclosed subsidy dollars have gone to just 965 large corporations,” the report states. It also finds that Walmart is near the top of the list for companies that have received the largest number of awards, with 261 individual subsidies.

An Assessment of the Effectiveness and Fiscal Impacts of the Use of Local Development Incentives in the St. Louis Region.” East-West Gateway Council of Governments, January 2011.

This study finds that over the last 20 years local governments in the metropolitan St. Louis region have diverted more than $5.8 billion in public tax dollars to subsidize private development. About 80 percent of these subsidies supported the construction of big-box stores and shopping malls, mostly in affluent suburbs. Despite this large public expenditure, the region has seen virtually no economic growth. “The number of retail jobs has increased only slightly and, in real dollars, retail sales or per capita have not increased in years,” the authors conclude. The subsidies have almost exclusively benefitted large chains, the study finds, and the region’s retail sector has grown increasingly concentrated. More than 600 small retailers (under 10 employees) have closed in the last ten years. “Both municipal finance and quality of life suffer when a city loses its base of small retail establishments,” the study notes. While some municipalities have seen gains in revenue as a result of luring retail development, these gains have come entirely at the expense of neighboring municipalities. Today, most of the region’s local governments are in financial trouble. “A significant number of municipalities faced budget deficits, lay-offs and service cuts between 2000 and 2007, even though that was a period of time when the economy had generally fared well,” the study finds.

Fishing for Taxpayer Cash” [PDF]. Andrew Stecker and Kevin Conner, Public Accountability Initiative, June 2010.

This report documents how Bass Pro, an outdoor sporting goods chain, has won over $500 million dollars in taxpayer subsidies from cities and states by promising jobs, tourism and growth. But as this report shows, in city after city, Bass Pro has failed to deliver on its promises. In Mesa, AZ, for example, taxpayers put up $84 million for a development anchored by Bass Pro, but a year after opening the project was described as a “ghost town” that had done little more than undermine the viability of other retail areas. A taxpayer-subsidized Bass Pro in Harrisburg, PA, meanwhile, created only one-third of the jobs promised.