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Let's Make A Deal: The Floor Is Open For A Debate About Incentives

Questionmark You should read Indianapolis Business Journal reporter Norm Heikens' blog. He takes up interesting issues and asks interesting questions. Like this one:

Gov. Mitch Daniels dished out $6.3 million in incentives as part of Defender Direct’s expansion announcement yesterday. But was the carrot a good deal for us taxpayers?

Defender Direct, which sells home security and satellite dish systems, plans to add 1,100 people, many of them at its Indianapolis headquarters and the rest elsewhere in the state.

The company promises the new jobs will pay an average of at least $18 an hour, not including benefits. Some of the jobs are for call centers, while others are higher-level positions.

A consultant in Cleveland who wrote Ohio’s economic development plan thinks the incentives, which amount to about $5,700 per job, are worth the price. “Those are very high wages, those are very good jobs,” says the consultant, Don Iannone.

Iannone reminds that in Ohio a low-income job is defined as paying $9.71 an hour or less. That makes up the bottom quarter of all jobs in Ohio. So $18 doesn’t sound bad to him.

What do you think? Was this incentive package priced right? Should the state have offered incentives at all?

Comments

10:54, it's you're, not your

Sincerely,

Your High School English Teacher

"Pay a couple hundred of these guys an annual six figure income and you can pay the rest at $10/hr. And that's not a living wage by any stretch of the imagination."

"You and some of your fellow Democrats may care more about playing politics than giving these people jobs, but I don't."

Why it is the fault of the company that $10/hr is considered bad pay? Why don't we blame CP Morgan, Davis Homes, Precedent Development, etc.? Is it because those companies are more involved in politics? Why don't we blame the contractor who charges me $50/hr labor costs and won't let me buy my own supplies? How about the auto dealers who charge $80 just to find out what is wrong with your car, even if it takes just 15 mins? I recently went to an oral surgeon. What I had was a common problem, nothing major. I just wanted his opinion because I was referred to him by my dentist. His 15 mins costs me $65. It would have been that no matter if I was there for 15 mins or 30, or 45.

It is funny how we just slam a business because heaven forbid someone whose job is to just run bar codes over lasers doesn't make $50K/year. If you act like a true human and use logic, $10/hr is plenty. You can work that and a part-time job with a livable apartment. Sorry, but all your going to do by paying a living wage is force wages for everything else up. If you think I am keeping my high risk, high liability, working nights, weekends, and holidays job at $18/hr when I can work for $16/hr at Wal-mart stocking shelves your nuts.

"See that's the difference between you and me. I care more about the nine hundred people who will have to work a second, or even third, job to feed and clothe their kids and heat their homes. A million for a couple hundred great jobs and FIVE million for piss-poor ones."

You aren't as good at this as your daughter, Mom. First, you are assuming all the lower wage workers all have kids and homes. $10/hour could in reality be a big raise for them. It could be plenty to support whatever they have. I made $20,000 for about a year after college and did just fine.

You know, the people in poverty and on the unemployment line are not like Cousin Eddie. They aren't "holding out for a management position". They want a steady job, with a regular paycheck and maybe benefits.

You and some of your fellow Democrats may care more about playing politics than giving these people jobs, but I don't.

As a state employee, I wish I earned $18 an hour.

"I abhor averages. I like the individual case. A man may have six meals one day and none the next, making an average of three meals per day, but that is not a good way to live." ~Louis D. Brandeis

"Then there is the man who drowned crossing a stream with an average depth of six inches." ~W.I.E. Gates

And my personal favorite:

"The average human has one breast and one testicle." ~Des McHale

Wrong blog, dude.

with ballard as mayor all our crime is going to disappear so we won't need defender direct at all!!!

See that's the difference between you and me. I care more about the nine hundred people who will have to work a second, or even third, job to feed and clothe their kids and heat their homes. A million for a couple hundred great jobs and FIVE million for piss-poor ones.

"Pay a couple hundred of these guys an annual six figure income and you can pay the rest at $10/hr."

Thanks for making a good point, Mom TDW.

Of course, you don't like Mitch Daniels, so you will focus on the jobs on the low-paying end of this scale ("We're paying $5,700 for each janitor that will work that facility!!").

I focus on what really matters -- those "couple hundred" guys making six figures. Giving $5,700 in incentives for those guys? What a steal!!!

I don't necessarily think these incentives were not well used, but I think the questions raised in Norm's post are valid ones.

I'm still not sure the majority of these jobs qualify as the kind of jobs we want to recruit.

If you look up Defender Direct's job listings on CareerBuilder, you get page after page of sales and installation positions. It's work that needs to be done, but the Guv sometimes gets himself all worked up over jobs that don't even meet his campaign definition of what we should be aiming for.

Ah, that word "average". You remember from grade school; you add the hourly pay of all the jobs together and divide by 1100? My bet is those call center jobs will pay diddly! Pay a couple hundred of these guys an annual six figure income and you can pay the rest at $10/hr. And that's not a living wage by any stretch of the imagination.

Any analysis of cost vs benefit needs to look at what is actually being provided and what impact it has...

For example, a cash payment of $5,700 is far different than a 10% tax credit worth $5,700... one takes money away from something else right now... the other only takes effect if you create $57,000 of taxable income.

Other things sound good... but cost nothing. For example, a $5,700 job training "credit" that pays for a person to attend a class at a state school. If the person attends a class of that can handle 25 and only 19 have registered, then the cost of adding one person to that class is virtually zero.

There are hundreds of other examples as well... but the point is that macro implications of incentives vary greatly... and unfortunately, there aren't many reporters in the state who understand that and take the time to sort through them.

Again, TDW, 1,100 jobs averaging that salary is a time to use them and $5,700 per is very appropriate.

Didn't we pay around $70,000 per Honda job? That was a worthwhile use of incentives. And we are paying one tenth of of that for jobs that are not one-tenth worse.

I think we did fine.

I don't think anyone in economic development would tell you not to use incentives; the question is when to use them and how much to put on the table.

In this case, we offered up the equivalent of $5,700 per job for some high-level jobs and some mediocre call center jobs.

As an aside, the Guv's tendency to label call center jobs as "tech jobs" makes me laugh.

I make extensive use of the phone and my computer in my job. I could even get one of those fancy headsets so I'd look important sitting at my desk. But that would not in any way, shape or form make my job a tech job.

$37,500 is a very livable wage. That's what $18/hour comes out to. If a home-grown company is going to create 1,100 jobs like that if they have financial incentive, then you do it.

If any candidate says differently, then they've lost all credibility in my mind.

Indiana pays $9.75 per hour to it's unemployed.

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