Michigan’s Corporate Welfare Failure: Only 1 in 11 Jobs Promised Were Created

New study examines 20 years of job announcement headlines

By Holly Wetzel of The Mackinac Center for Public Policy.

"As the Michigan Legislature considers a new wave of corporate welfare handouts during its lame-duck session, a new study from the Mackinac Center for Public Policy sheds light on two decades of broken promises tied to taxpayer-funded business subsidies. The study reveals that only 9% of the jobs announced in major state-sponsored deals from 2000 to 2020 were ever created.

Analyzing front-page headlines from the Detroit Free Press, the study found that while companies promised 123,060 jobs through subsidy agreements, only 10,889 materialized. Worse, half of the companies awarded deals created no jobs at all, and just 15% of companies met or exceeded their job projections.

“News headlines frequently tout the promise of new jobs, but rarely report when the programs fail to deliver on their promises,” said James Hohman, director of fiscal policy at the Mackinac Center and author of the study. “This creates a misunderstanding among the public that job announcements are the same thing as actual jobs created. Yet lawmakers continue to rubber-stamp these ineffective and costly deals.”

Here are just a few of the 41 job announcements and results covered in the study:

• A 2007 deal with a Detroit pharmaceutical company promised to create 600 jobs. Instead, the company added zero new jobs and closed its facility by 2014.
• A 2009 deal with General Electric promised 1,200 jobs. Zero jobs were created.
• A 2008 headline announced, “State reels in jobs.” It announced 4,800 jobs. Companies created 112 jobs.
• One local official proclaimed she could not “overstate the impact” of a 2015 deal to create 1,000 jobs. The company created 26 jobs.

Even so-called success stories provide little justification for the programs. Amazon’s subsidized distribution centers, for instance, accounted for a third of the successful job announcements, yet it built several others in with state without subsidies. A previous Mackinac Center analysis found that on the rare instances when incentive deals do create permanent jobs, they come at a high cost to taxpayers.

"The state has delivered two decades of false promises as the companies and politicians involved in these deals rarely deliver on their promises," Hohman said. "Michigan lawmakers should rethink their reliance on corporate welfare as an economic development tool and the media should use more skepticism when reporting on these deals. At a minimum, journalists should provide context that job announcements are different from actual jobs and have a poor track record of success.”

View the full study here.

Video interviews with James Hohman about the study are available here. News outlets are free to run the clips, provided that attribution is given to the Mackinac Center for Public Policy."