Tim Bartik

When it comes to business projects, Michigan has had recent disappointments—notably, the July 16 announcement that a large semiconductor plant near Flint will not be built. This plant was reported to involve 9,400 jobs. We cannot be certain about the reasons for this cancellation. However, it’s unlikely the driver was because Michigan didn’t do enough to encourage the project. The state offered assistance of over $676,000 per job.

Place matters. In the US, some cities and states are thriving, while others have been left behind. State and local policymakers have taken a leading role in designing policies and programs that aim to build resilient communities, develop skilled workforces, and create good jobs. But because resources are limited, it is crucial for policymakers to identify effective programs and put them on a sustainable financial footing.

For governors and mayors to win re-election, they must somehow "create jobs." The most visible job creation policy is business tax incentives, or money state and local governments give to entice firms' relocation to or expansion in an area. Nationwide, incentives have tripled since 1990, to an annual cost of $50 billion. But much of these costs is wasted. The incentives do little to create jobs for unemployed local residents. In Illinois, incentive costs since 1990 have almost quadrupled.