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Policy experts are worried that the state could be wasting millions of dollars in a misguided effort to preserve industries and jobs in counties threatened by outsourcing.
Lawmakers recently set aside $60 million in a compromise bill with Gov. Mike Easley for incentives to convince companies to remain in the state, a policy that some argue will prevent widespread layoffs during the next few decades.
But many experts disagree with this kind of reverse incentive. The state usually concerns itself with creating incentives to lure companies to the state, they say, not to convince them to stay.
"It is a terribly misguided policy to be giving public money to a handful of industries to keep jobs in North Carolina," said Chris Fitzsimon, executive director of the nonprofit N.C. Policy Watch.
The $60 million provided by the legislation will be allocated during the next 10 years to five qualifying companies. The only two currently selected are Goodyear Tire & Rubber Co. and Bridgestone Firestone North American Tire.
Fitzsimon said that while the legislation aims to prevent layoffs, loopholes would allow companies to do just that.
To be eligible for the grant, Goodyear must maintain at least 2,000 jobs in Cumberland County. But that still allows the company, which currently employs 2,750 area residents, to reduce their labor by 27 percent.
Jonathan Morgan, a professor in the UNC School of Government, believes this investment is a short-term fix to a long-term problem.
"It might be good for now and buy us another day. But what in the long run do we need to be doing as a state to help these depressed communities?" Morgan said. "That's what we've got to come back to."
He listed improving the school system, investing in infrastructure and retraining workers as essentials to growing the economies of counties like Cumberland.
But Margaret Dickson, a Cumberland Democrat who co-sponsored the legislation, argued that keeping Goodyear around was in her county's best interest.
Prerequisites for receiving the incentive grant include providing health care benefit packages and maintaining wages that are at least equal to 140 percent of the average offered by area private employers.
"I would challenge anyone to tell me how they're going to retrain some of those people and find them a comparable job that pays that and provides for their families in such a way," Dickson said in defense of the legislation.
Dickson said that the General Assembly will continue to look at long-term sustainability plans and that the proposed change will not be treated as a permanent solution.
"This program that we've set up is a 10-year program. This is not necessarily forever."
Rep. Jennifer Weiss, D-Wake, voted against the legislation and said she feels that incentives like this detract from other state priorities.
"It's very compelling when a company comes and says, 'Pony up or else,' but we've got a limited state budget, and we cannot just spend it on paying companies to keep them from leaving," Weiss said.
Fitzsimon referenced a similar incentive proposal two years ago that would have benefited Bridgestone Firestone but failed to gain ground in the General Assembly. The company stuck around, he said, and enjoyed a considerable profit margin thereafter.
"I don't blame the businesses for trying to get the money," he said. "I blame our policymakers for the policy."
Contact the State & National Editor at stntdesk@unc.edu
