Corporate Welfare Rocks!

The Wall Street Journal and Newsweek give Utah the puff treatment

The Wall Street Journal reports that government activism is good… when it benefits Big Business.

It’s a puff piece about how Utah’s corporate-welfare policies are boosting its economy. Here’s the headline:

Incentives Spur Utah’s Growth

State’s Red-Carpet Treatment Toward Businesses Is a Catalyst for Job Gains

Here’s the top:

The recent recession knocked business-friendly Utah off its perch as a jobs leader, but now the Beehive State’s aggressive approach to court businesses has helped fuel job growth that ranks among the highest in the West and the nation.

That dynamic can be seen in Lehi, a suburb here in the state’s capital, where software company Adobe Systems Inc. is set to build a new technology campus that could create up to 1,000 new jobs over the next 20 years. Adobe, based in San Jose, Calif., announced in August it would open the new campus after Utah offered the company a $40.2 million tax credit based on the company meeting its performance goals.

“Utah’s leaders understand a simple truth: As businesses go, so goes Utah,” said Brad Rencher, general manager of Adobe’s Omniture unit, which is undergoing the expansion in Lehi for a variety of other reasons and is currently located in Orem.

So, Utah’s government bribed Adobe to come with forty million bucks to create “up to 1,000 new jobs over the next 20 years”? That’s $40,000 of taxpayer money per job, and the Journal doesn’t tell us if these are low-paying call-center jobs or high-paying software-engineer ones.

That $40 million is for a Fortune 500 company on track to make three-quarters of a billion dollars this year. Meantime, Utah’s closed its big budget deficit by cutting public health programs, education, and disabled benefits, among others. The WSJ gives us none of that context.

This from the Journal is also wanting (emphasis mine):

Adobe’s expansion is just one of a slew of deals that the governor’s economic-development office has helped broker recently as the state seeks to come out of the downturn. Before the recent recession, Utah led the nation in job growth. To resume that mantle, it is now pursuing an unusual approach combining tax breaks, help in securing grants and other tactics to lure businesses.

How so? We’re not told. But it’s certainly not “unusual” for states to dole out millions of dollars in tax breaks and outright grants to corporations playing them against each other to get the highest bid. These jobs aren’t created out of thin air. They were going to be somewhere anyway. Utah’s gain is California’s (or some other state’s) loss. This is another way corporations suck money out of the public treasury.

And the Journal would have you believe that Utah’s better-than-average job growth is due to its “business-friendly” policies:

The initiatives are helping to fuel the state’s job growth. In October, Utah gained 16,500 jobs, up 1.4% from a year earlier and its third straight month of year-over-year gains, according to Bureau of Labor Statistics data. That outpaces the rest of the nation, where job growth averaged 0.5% in October. Indeed, Utah was the fastest-growing state in job growth across the Intermountain West, which excludes West Coast states, Alaska and Hawaii. Utah also is among the fastest nationally, trailing only a few states such as New Hampshire and Texas, according to BLS figures.

But there’s no context given about how Utah fits in with those around it. Let’s see: Montana’s unemployment rate is below Utah’s. As is Wyoming’s, South Dakota’s, and Nebraska’s, Kansas’, and Oklahoma’s. North Dakota’s rate is half that of Utah’s.

In fact, it’s a red flag that the WSJ pulls out the a single month’s number and then says it was its “third straight month of year-over-year gains,” which implies that just four months ago, it had fewer job gains than the same 2009 period.

Another red flag: The to-be-sure paragraph stuffed toward the bottom:

Utah isn’t out of the woods. Despite its job growth, the state’s unemployment rate in October rose to a 25-year high of 7.6%, up from 6.7% a year ago, according to the BLS. Utah Chief Economist Juliette Tennert attributed the rise to an economic upturn that has prompted long-term unemployed workers who gave up looking for jobs to get back into the hunt, which has made the jobless rate go up. Utah’s unemployment rate remains below the national average of 9.6% in October.

Maybe Tennert is right. But let’s look at the BLS data ourselves. Last October, Utah had 1.188 million workers on nonfarm payrolls. This October it had 1.195 million. In other words, it’s added 7,000 jobs in the last year. That’s a 0.6 percent increase, not much for a population growing as quickly as Utah’s. Next-door neighbor Wyoming saw a 1.1 percent increase, Arizona was up 1 percent. New Mexico tied at 0.6 percent.

Nor does the Journal bother to mention that this business haven and economic star’s wages rose just 0.3 percent over the past year while the nation averaged a 0.8 percent gain, according to the latest stats from the first quarter.

In other words, there’s not much of a story there to begin with, much less a “corporate-welfare rocks!” one.

But it appears the flacks at the Utah Economic Development office have been busy little beavers lately. Two weeks before the Journal’s story, Newsweek dropped a piece touting “Utah as the new economic Zion.” At least the Journal’s piece didn’t include this jaw-dropping (and boneheaded) elitism:

Why Utah? Founded by Mormon pioneers, the state, which has been called “a quasi theocracy” by the editor of its largest newspaper, is overwhelmingly white (93 percent) and Mormon (60 percent). Those demographics make for a socially conservative mind meld—no gay marriage, mixed acceptance of women in the workplace—that might seem hostile to the idea-swapping associated with a go-go economy. Mix in a thin coffee-and-booze culture, and you might expect Utah’s economy to be listless as well.

Yeah, because no coffee, no booze and lots of social conservatives = listless economies. For that paragraph, Newsweek ought to send the responsible editors and reporters in wagons to create its new Provo bureau.

Newsweek also touts the Adobe move, but doesn’t bother to tell its readers that it was lured by $40 million of taxpayer’s money.

At a time of budget deficits and high unemployment, that’s inexcusable.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,