Tuesday, March 06, 2007
Is the State Fudging Job Creation Data?
The recent announcement that LANXESS, a chemical company based in the area near the airport, is creating a new technology center was met with much fanfare since the center helps meet goals on investment and job creation set in 2004. That year, the state gave LANXESS $1.8 million for its U.S. headquarters, based in Allegheny County. In return, according to the Department of Community and Economic Development press release, the company would “create up to 435 jobs within three years”.
Sounds great. As the three year deadline is six months away, we would expect someone at DCED to take inventory at the headquarters site to see if the investment paid off. It will be easier said than done.
First, the DCED press release also says that “LANXESS will relocate a portion of its Akron, Ohio, staff to Pittsburgh”. All right, so some of the jobs are transfers, but they are from outside of the state. But then a newspaper article from that same month noted that “the company will employ up to 435…the bulk of them current Bayer employees who will transfer” (italics added). Since LANXESS was a spinoff from Bayer formed out of a consolidation of some company functions, the two companies were linked. That explains why some employees might have moved to the new headquarters. It also explains why when DCED swung in to drop off a check to LANXESS, the generosity spilled over to Bayer in the form of a $1.7 million check.
So it is possible that some of the “new” jobs came from Ohio, and it is also possible that some of them—termed “a bulk” in the newspaper article—came from the airport area. That’s not the same as creating 435 net new jobs to the region. But if the state finds 435 jobs at the headquarters site this fall, they might consider the investment a sound one and the criteria met, implying a win for taxpayers. Sounds like a bait and switch scheme to us.
If this type of counting is not an isolated incident and occurs across the Commonwealth, it calls into serious question the state’s claims of stimulating the economy through all the checks it hands out.
Sounds great. As the three year deadline is six months away, we would expect someone at DCED to take inventory at the headquarters site to see if the investment paid off. It will be easier said than done.
First, the DCED press release also says that “LANXESS will relocate a portion of its Akron, Ohio, staff to Pittsburgh”. All right, so some of the jobs are transfers, but they are from outside of the state. But then a newspaper article from that same month noted that “the company will employ up to 435…the bulk of them current Bayer employees who will transfer” (italics added). Since LANXESS was a spinoff from Bayer formed out of a consolidation of some company functions, the two companies were linked. That explains why some employees might have moved to the new headquarters. It also explains why when DCED swung in to drop off a check to LANXESS, the generosity spilled over to Bayer in the form of a $1.7 million check.
So it is possible that some of the “new” jobs came from Ohio, and it is also possible that some of them—termed “a bulk” in the newspaper article—came from the airport area. That’s not the same as creating 435 net new jobs to the region. But if the state finds 435 jobs at the headquarters site this fall, they might consider the investment a sound one and the criteria met, implying a win for taxpayers. Sounds like a bait and switch scheme to us.
If this type of counting is not an isolated incident and occurs across the Commonwealth, it calls into serious question the state’s claims of stimulating the economy through all the checks it hands out.
