FLINT, Mich. | States should consider broadening their economic development agendas beyond exploring tax cuts for businesses, a Michigan-based employment economist said Wednesday.
Instead, Indiana and other Midwest states should invest in early childhood education and other initiatives that can provide a similar or larger improvement in workers' earnings.
"There is no one solution for how do you create better earning opportunities for local residents," said Timothy Bartik, senior economist with the Upjohn Institute for Employment Research. "You need a broad suite of policies that (complement) each other."
Bartik was the keynote speaker at a conference hosted by the New York City-based National Employment Law Project. The organization is hosting a two-day summit to analyze and advocate policies that have created jobs and sustained communities around the country.
Through legislation Gov. Mitch Daniels signed last month, Indiana will reduce its corporate income tax rate by 0.5 percent over the next four years to a final rate of 6.5 percent. Bartik said while the goal to increase the state's domestic product and the number of jobs is good, corporate tax cuts don't have a large enough impact on increasing wages for families. To support the tax cut, revenues have to increase or other spending has to be cut to balance the state budget.
At $34,022, Indiana's annual income per capita is about 86 percent of the national average, according to 2009 data from the U.S. Bureau of Economic Analysis.
Bartik said targeting tax incentives to help grow export-based companies can bring dollars into a local economy that wouldn't have come in under other circumstances. It also would have a larger economic impact through job creation. He said the tax incentives should include strong clawback provisions if job or investment promises aren't met and adequate public disclosure.
He said state subsidies for customized job training, manufacturing extension programs or wage assistance for employers also are beneficial because they have generated a return on investment of between $6 and $30 for every dollar spent.
While investing in the current labor force is important, Bartik said putting money in early childhood education can raise work force quality and job-creating potential, since a majority of people stay in the areas where they went to school. Bartik, whose book was published earlier this year on the subject, said universal preschool programs and mandatory summer school for struggling students has a strong impact on future education attainment, especially among low-income families.
While reducing the deficit is directing the policy agenda in Washington, D.C., National Employment Law Project Executive Director Christine Owens said states have an opportunity to address employment issues. However, she said she's disappointed many state governments are taking a "fiscal and ideological bulldozer" to programs that have created economic security for millions of people nationwide.
These programs aren't cheap, Bartik said, and cities such as Gary and Flint don't have the financial resources to the implement them. He said the onus is on state governments to reach out to community colleges and other institutions and organizations to develop these programs.
One audience member, Barney Oursler, executive director of a Pittsburgh-based coalition of faith-based, community, union and environmental groups, said Bartik's presentation serves as a call to action among groups that serve workers. Oursler, of Pittsburgh United, said work force investment boards around the country have to better target workers and retrain them in high-demand occupations. He also said the political attacks against public educators in the country aren't beneficial to helping families especially those in urban areas.
About 75 people were at Wednesday's presentation at the Sarvis Conference Center, which is located in Flint's cultural district. The National Employment Law Project received a grant from the Flint-based Charles Stewart Mott Foundation to host the event.