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Can Government Help Create Jobs?

by | Dec 9, 2013 1:17pm () Comments | Commenting has expired | Share
Posted to: Business, Congress, The Economy, Town News, Middletown, Labor, Nonprofits

Christine Stuart photo The headline of this story was the question posed to a group of panelists Monday at the “CT at Work” conference sponsored by the Connecticut Humanities Council at Wesleyan University.

Increasing the minimum wage to giving tax credits to companies in order to get them to stay in Connecticut were just a few of the controversial topics discussed by U.S. Rep. Joe Courtney, former U.S. Rep. Rob Simmons, Deputy Economic Development Director Kip Bergstrom, and Dan Haar, a business columnist at the Hartford Courant. The conversation was moderated by John Dankosky, host of WNPR’s “Where We Live.” (Listen to the panel discussion here).

One of the recent policies the group discussed was the decision by the state to give nearly $115 million to Bridgewater Associates, one of the largest hedge funds in the world, to move its headquarters from Westport to Stamford.

Deals like this are only offered by the state if there’s evidence the company is looking to move out of the state, Haar said. If the hedge fund left, they would take with them something like 1,200 workers who easily average six figures a year in income, he said.

“That’s an enormous risk to lose at a bargain rate of only $115 million, considering this company spins off maybe three times that per year in taxes for the state of Connecticut,” Haar said. And while there is no information about exactly how much the employees and the company contribute to the state in taxes, Haar estimated it was far greater than $115 million.

Simmons disagreed with Haar’s assessment. He called is a “lousy” deal for Connecticut’s taxpayers.

“It’s a bribe. It’s crony capitalism,” Simmons said, adding that there are dozens of other hedge funds in Fairfield County and he doesn’t understand how the state goes about picking one over the other.

Bergstrom, who served as economic development director under Gov. Dannel P. Malloy when he was mayor of Stamford, said the state in the last two years has created 12,000 jobs and retained more than 30,000 jobs through a variety of incentive programs like the “First Five” program used to retain Bridgewater Associates.

Another one of those economic development programs is the Small Business Express program, which gives grants and low-interest loans to small businesses with 100 or fewer employees. The companies don’t have to promise to create jobs, but many have, according to the Economic Development department.

Haar said if those small companies are not exporting goods and services from Connecticut, then the state is simply moving money around.

“It’s not that it’s a bad investment. It’s that it’s not an economic investment,” Haar said.

Bergstrom, who was filling in for Malloy, agreed with Haar.

“I would generally agree with that,” Bergstrom said. “It’s the economic base theory of economic development. You invest in the economic base and not in the local businesses that feed off of it.”

However, this is a unique time in the economy and folks who in the past would be given loans by banks weren’t able to get their hands on working capital, Bergstrom added.

“I look at it as a counter-cyclical program that keeps Main Street open, so that it’s still there when the economy recovers,” Bergstrom said.

Christine Stuart photo There also was the issue of the minimum wage. Last week, fast food workers across the country protested the amount of money they’re paid for doing their job. They said it should be closer to $15 to $19 an hour.

Haar said that if the minimum wage was indexed, then it would be around $10 an hour. At the federal level it’s $7.50 and in Connecticut it’s currently $8.25, but after legislative action this year the minimum wage is scheduled to increase over the next two years to $9 an hour.

“Obviously, the economy can not sustain $15 an hour in fast food,” Haar said.

He said it’s not a matter of simply adding 50 cents to the cost of a sandwich to increase wages. The problem is much larger. “Work has been so devalued verses capital and ideas that people can’t get by working full-time and that’s not okay,” Haar said.

Courtney said President Barack Obama, who proposed a $9 an hour minimum wage, is now supporting a $10 minimum wage. He said there’s a bill in the House that would take it up to $10.10 over a three year period, and then index it going forward.

“If you’re working 40 hours a week at a wage level that still says you have to get food stamps to put food on the table and you are still below the poverty line, there’s something amiss,” Courtney said.

He said that even though economists continue to argue about the benefits of the minimum wage, he believes the public will force lawmakers to take action to increase it. Maybe not this year, but in the next few years, Courtney said.

So what does all of this have to do with humanities?

Stuart Parnes, executive director of the Connecticut Humanities Council, said the day-long conference is just the first of many events the group is planning over the next year with the theme “CT at Work.”

He said work is a humanities theme, but it’s also an important theme in Connecticut right now.

“Part of our agenda was to help people recognize that the humanities are relevant. That it’s not an irrelevant, intellectual exercise, but that this is real in our lives,” Parnes said. “The whole work crisis is a huge deal in Connecticut right now, so we wanted to focus on it.”

As part of the initiative, the group brought “The Way We Work”, a Smithsonian exhibition, to the state. The exhibition draws upon the National Archives’ rich photographic collections documenting 130 years of changing work life in America. It opens this week at the New Haven Free Public Library and heads to Torrington’s Warner Theater on January 25.

For more information about the “CT at Work” initiative and events related to it, visit: cthumanities.org/ctatwork.

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(7) Archived Comments

posted by: JamesBronsdon | December 9, 2013  2:14pm

We’d be better served if the state government negotiated reciprocal agreements with as many states as possible that they won’t extend any state-financing to lure companies across state lines.

posted by: SocialButterfly | December 9, 2013  3:44pm

While our pretentuous Connecticut Congressmen kill time with personal exposure appearances, and hypothetical created subjects—to avoid our massive national problems—they and their cohorts continue to close their eyes to the initiation of a Federal Jobs Corp and mask our high unemployment figures—and put able-bodied men and women on Social Security Disability pensions, instead.  While this work force is paid to stay home by our tax and deficit spending dollars— our roads, bridges, railroads and airports are crumbling due to lack of maintenance and replacement attention. We can’t fire these non-productive politicians or give them a pay-cut—so we are at their mercy—until their elected term expires—and they now it.  We can only blame this sad political lot—“on bad voters that continue to make the wrong choices.”

posted by: art vandelay | December 9, 2013  5:59pm

art vandelay

The best thing government can do is get out of the way.  It needs to remove collective bargaining,  the right to work, minimum wage, mandatory health care, and every other job killing mandate created by government. Let business do what it does best, create jobs.  Government CAN’T do it with make shift jobs.  It was proven back in the 30’s under the New Deal.

posted by: Noteworthy | December 9, 2013  8:15pm

Absurd Notes:

1. The idea that government creates anything but government jobs is a joke, a myth and an expensive one at that. Government gets in the way of job creation and if you need any evidence, look at Connecticut’s economy.

2. Dan Harr does a great disservice to readers in this state by his assertions and support of all things corporate welfare. There is zero evidence Bridgewater was seriously thinking of leaving Connecticut. It has become common practice for executives who are expanding or pretending to expand, to hold up the host state for money on the promise to stay put. Malloy has spent nearly half a billion dollars nearly all of it to move companies from one Connecticut town to another. That none of these deals or “investments” get any serious review or public vetting is why we have such a poor return on that investment.

posted by: Lawrence | December 9, 2013  9:37pm

JamesBronsdon, +1.

posted by: art vandelay | December 10, 2013  8:49am

art vandelay

During her failed campaign for the Senate, Linda McMahon asked Dick Blumenthal how he would create jobs. Blumenthal danced around the question and could not answer it He has never created one job throughout his political career.  Like her or not Linda McMahon has created thousands of jobs in her private sector company. She has put food on the table for cameramen, “actors”, stage crews, and announcers. All Blumenthal has done is to spend other peoples money on fruitless ventures. I use this as an example. The private sector creates jobs, not the government.  The best thing government can do for business is to get out of their way.

posted by: SocialButterfly | December 10, 2013  11:02am

Art Vandelay:  Richard Blumenthal is a political actor, and you have correctly described him as such.  His acting job got him elected—and he continues at that role—at heavy taxpayer expense. 
The world is just a stage - and Blumenthal is an actor in it. However, Blumenthal, and his congressional cronies have made little constructive use of their knowledge in Congress—to
satisfy their party lines. They are bleeding our country to death—through their actions and inactions.

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