Nevada’s unemployment rate remains stubbornly high at 9.3 percent. In Southern Nevada, the rate is 9.4 percent, with more than 92,000 people looking for work. Although the region clearly is through the worst of the economic downturn, with home values rising and taxable sales steadily increasing, its job market is still among the most discouraging in the country.
It’s an incredibly challenging environment for business survival, let alone growth. The competition between cities and states to lure new companies, or encourage existing ones to expand, is fierce. Not surprisingly, officials are all too eager to provide those businesses with incentives — at your expense.
Two weeks ago, a pair of job-creating ventures came to fruition thanks to public subsidies.
Barclaycard US, the credit card division of banking giant Barclays, announced it would open a customer service call center at Zappos’ former Henderson headquarters. (Zappos had vacated the space to move into the old Las Vegas City Hall.) The bank, which has more than $2.25 trillion in assets, got $1.87 million in catalyst funds from the Governor’s Office of Economic Development to help close the deal.
As reported by the Review-Journal’s Kristy Totten, Barclaycard US plans to hire 400 full-time workers in 2014, grow its Henderson workforce to 700 by 2015 and eventually have 1,000 workers at the call center. Based on the bank’s initial 400 jobs, the subsidy amounts to almost $4,700 per job.
Meanwhile, over at Las Vegas City Hall, the City Council approved a development agreement with CITRA Real Estate Capital to build a $71 million skilled nursing and assisted living center with a retail and restaurant component. As reported by the Review-Journal’s Benjamin Spillman, the deal allows CITRA to purchase 3.3 acres of city land downtown for about $3.5 million, even though appraisals say it could be worth as much as $11.5 million.
Bill Arent, the city’s economic and urban development director, told the council the benefits of the project outweigh the land discount, because the project will create almost 900 direct jobs with $37.6 million in annual payroll and more than $780,000 in new, annual property taxes. The center isn’t projected to open until late 2016.
Let’s say the public subsidy is worth $6 million. That’s more than $6,700 per job, based on the city’s projection of 892 direct jobs.
Earlier this year, the Governor’s Office of Economic Development handed out $18 million in tax abatements to nine companies to create about 330 jobs — about $55,000 in subsidies for each job.
Even at the levels handed out last month, the public simply can’t afford to subsidize its way to full employment. And it’s absolutely brutal to ask local businesses, who have invested in this community and sacrificed to keep their doors open, to pay full freight for themselves so newcomers — and potential competitors — can enter the market at a discount.
Nevada needs jobs, and the Barclaycard US and CITRA plans will help. But having Nevada governments pick winners isn’t a long-term employment solution. Our officials should be just as focused on doing whatever it takes to ensure existing companies can stay in business and grow. Let’s find a way to give them a break.