Headline of the Day

Study Shows Corporate Subsidies Only Create Jobs for Lobbyists

—Boondoggle on a study showing that massive subsidies to business generate jobs in only one industry.

Yeah, this is kind of a, "Well, duh!" moment.

The promise of corporate “economic development” subsidies is that they will create new jobs. Indeed, elected officials, government agencies, and the corporate executives that receive them all defend these public dollars flowing to private interests in the same way: As investments in local job creation and economic growth.

Research shows that this promise routinely isn’t kept. But a new study suggests that one industry does, in fact, see meaningful job creation from such subsidies: The lobbying industry.

Researchers Russell Sobel, Gary Wagner, and Peter Calcagno tracked data from more than 40,000 lobbying firms, covering all 50 states from 1997 to 2019. They examined what happened in a state before and after it handed out an “extraordinarily large” incentive — defined as a subsidy thousands of times bigger than that state had ever given before — and compared that to states that never awarded such an extraordinarily large incentive.

The study found that in the years after a state hands out its first extraordinarily large incentive, lobbyist employment in that state rises 3.6 percent on average. The effect is sharper in the state capital: In the five years following the incentive, lobbying firms in the capital county see employment gains of 4.5 percent relative to capital counties in comparison states. Additionally, lobbying’s share of the capital county’s private-sector workforce grew by 5.8 percent.

………

Separate research has found that firms that put more resources into the political process are more likely to land these incentives in the first place, suggesting the lobbying isn’t just a side effect of winning a deal, but a key part of obtaining it in the first place.

All of this sits on top of decades of research showing that these incentive programs generally fail to produce the job growth, income gains, or tax revenue they promise. Yet, that has not stopped states from handing out more of them: State governments now spend more than $40 billion a year on these incentives — three times what they spent in 1990.

Subsidies have always been a sucker bat.