As lawmakers continue to wade through the budget this spring, they routinely raise the question that is on so many South Carolinians’ minds—how do we put more people back to work?
But the state’s elected officials and some agency heads aren’t like the rest of us—they have a Deal Closing Fund at hand. Budget-writers fund it. And the governor, together with the Department of Commerce, uses it to close economic development deals.
The House passed a budget in March that would send $47 million to the Department of Commerce for the Deal Closing Fund, site development and research initiatives. The bulk of the funding—$37 million—would go into the Deal Closing Fund.
The Senate Finance Committee is currently taking up the budget.
While economic incentives that draw business expansion to South Carolina aren’t the only factor influencing the jobless rate, they make good talking points for policy makers. It’s worth assessing incentives on occasion to see whether—and how—they are reaching the people who need the jobs we’re drawing to the state.
Last year the fund’s total neared $26 million, including $500,000 in reclaimed money and a $1.4 million transfer into the fund by South Carolina’s Coordinating Council for Economic Development. The council is made up of 11 heads of state agencies, like the Department of Commerce, that oversee economic development.
The council awarded grants to 55 new business development projects last year, wrote Department of Commerce spokeswoman Allison Skipper in an email Thursday. Approximately 6,300 new jobs are expected from those announcements. Forty-two other deals were made, but haven’t closed yet. If they do, South Carolina could see nearly 8,000 additional jobs.
In total, more than 15,000 jobs have been committed for 2013. Not every project gets incentives, but the fund helps local governments draw business expansion by helping counteract expenses associated with location and expansion. According to Skipper, these grants give the state a competitive edge compared with similar locations in other states. Last year alone, the council awarded nearly $22 million for 18 grants from the closing fund.
Jobs for the jobless
And how well are those incentives working? We may not be able to find a direct correlation between incentives and job growth, and the state’s shrinking jobless number—5.7 percent in February down from 6.4 percent a month earlier. But as the talking point goes, we need to create jobs and put people in South Carolina back to work. For policy makers and others, that correlation is real.
More than 8,000 South Carolinians got back into the workforce in February.
But the incentives and the resulting actual job growth (as opposed to projected growth) don’t seem to be reaching a segment of the population—marginally attached and underemployed workers.
Last year the state’s unemployment rate was 7.6 percent, compared with the federal rate of 7.4 percent. When factored into a broader measure of unemployment—which includes unemployment, marginally attached workers and the underemployed—that rate was 14 percent, compared with a federal rate of 13.8 percent, according to the federal Bureau of Labor Statistics.
Marginally attached workers have sought work within the previous 12 months, but not in the last four weeks. Discouraged workers fall in that category, but haven’t sought work in the previous four weeks specifically because they thought no jobs were available to them. Underemployment refers to workers who want to be working full time, but can only find work up to 35 hours per week.
And so the budget-writers work to address joblessness and workforce shortages.
In its budget the House set aside $17 million for the S.C. Technical College System, including $1.5 million for a stipend for students enrolled in programs related to a workforce shortage.
The budget also sets aside $5.4 million for ReadySC, a workforce-training program that operates within the S.C. Technical College System.
But even if policy makers close the gaps in the workforce and enable more people to find jobs by funding incentives and workforce training, the incentives are frequently criticized for a supposed lack of transparency.
The State newspaper reported in January on South Carolina’s low ranking in online disclosure of business incentives—45th in the nation, according to the corporate subsidy watchdog group, Good Jobs First. And The Nerve, the news wing of the Libertarian-leaning South Carolina Policy Council, routinely publishes articles calling into question the secrecy surrounding business incentives deals.
Many lawmakers and the Department of Commerce say confidentiality is necessary because of the competitive nature of the projects and of recruitment. But the department does disclose either grants or job development credits that are already approved by the council in the agency’s project announcements, according to Skipper.
And if businesses fail to meet commitments, the council can clawback, or recover, “all or a prorated amount of the grant that was awarded,” wrote Skipper.
Also in the agency’s so-called toolkit are infrastructure grants and job development credits.
More than 310,000 in South Carolina were unemployed, under-employed or marginally attached just last year, according to the BLS. That number is shrinking, considering February’s drop in the unemployment rate.
Still, many are floundering without work.
Taxpayer funded incentives may be a prominent fixture in South Carolina’s economic growth. Watchdogs may never get the level of transparency they seek. But let’s at least see to it that the long-term unemployed find their way in this brave new economy.