Company Reneged On Its Job Creation Subsidy
On March 29th, I posted the story of Wal-Mart's welfare deal in Ohio, which cost state taxpayers $1.8 million. Ohio development officials were blind-sided when a job tax credit subsidy involving a Wal-Mart optical lab imploded. The giant retailer shut down a lab that employed 650 people. Even worse, the company had been granted $1.8 million in 2001 as a bonus for creating employment in Ohio. But Wal-Mart's March Meltdown left these workers unemployed, and gave the Buckeye state's corporate welfare program a blackeye.
This week, without putting up a fuss, Wal-Mart quietly wrote a check to the taxpayers of Ohio for $1.7 million--almost the full amount of the original subsidy.
Wal-Mart owns and operates four optical labs in the U.S., employing more than 1,900 workers. The labs are in Fayetteville, Arkansas; Dallas, Texas; Columbus, Ohio; and Crawfordsville, Indiana. Closure of the Columbus lab zapped one-third of the company's optical workers. "It's a shock," one 7-year Wal-Mart optical lab worker told the Associated Press. Wal-Mart informed workers at the lab just days before the shutdown that rumors about closure and layoffs were only rumors. "They just hired people six weeks ago, and we got raises last month," the employee complained. "I'm very angry because they dogged us out," another lab worker told the media. "They shut us down with no warning, no nothing. They didn't have to do this."
The Columbus lab was created with a $1.8 million job-creation tax credit--a form of corporate welfare that helped Wal-Mart reduce its operating costs vis-a-vis its competitors. The lab, which makes the eyewear sold through Wal-Mart vision centers, was closed by the company in an apparent cost-cutting move. The Ohio Department of Development told the media last month that it wanted its welfare money back. "We've spoken to the company and expressed our disappointment," a state official said.
A spokesman for the Ohio Department of Development said Wal-Mart's repayment this week was 'responsible.' "We're very pleased that Wal-Mart responded so quickly to this," the spokesman told the Columbus Dispatch newspaper. "Wal-Mart was very good to work with us on refunding this tax credit."
But a group called Policy Matters Ohio, a nonprofit research institute, said Wal-Mart's repayment doesn't help its employees at all. The fact that the retailer was required to pay the money back, "shows that the state can be serious about not giving money away when it's not needed," Policy Matters said.
For years, states and municipalities have pushed corporate welfare on companies like Wal-Mart, in an attempt to lure jobs to their jurisdictions. These special tax deals are a waste of taxpayer's money, and amount to little more than a huge government giveaway. The Columbus Dispatch estimates that Ohio has given companies more than $1.7 billion in tax incentives over the past decade with the promise of nearly 200,000 jobs. Yet the state has no records of how many jobs these welfare payments actually produced.
I suggested last month that Ohio should take Wal-Mart's repayment and use it to provide financial support to the 650 workers who lost their paychecks. That would provide $2,769 per worker, or roughly 4 weeks of extended pay per employee.
After my March 29th column appeared on The Huffington Post, I received an email from a person claiming to be a Wal-Mart optician since 1994. "You missed listing the 5th Wal-Mart lab," he wrote. "It's in Mexico. Yes, Mexico. I get half of my daily jobs from there, and they're not as good as the ones from the states. I'm not happy with closing the Ohio lab. As far as I'm concerned the Mexico lab should have went [sic] first, but you know how Wal-Mart works. Cheaper labor in Mexico. I bet no one gets paid near as much as those in the states."
Wal-Mart doesn't need welfare or bailout money. According to the company's 2009 Annual Report released this week, the retailer had net profits of $13.4 billion this past year. One of the biggest economic myths in America is the claim by Wal-Mart that it created 33,000 jobs in the U.S. last year. This is a gross figure, that fails to net out all the lost jobs at other retailers (Circuit City comes to mind). It also fails to count the Wal-Mart workers who lost their jobs in Ohio, Arkansas, Georgia, and other states where the retailer shut down operations this past year. The reality is that Wal-Mart created little or no job growth in 2009, because it is a form of job displacement, not economic development.
Wal-Mart reneged on its Ohio tax deal, and was obligated to pay the taxpayers back. But the Ohio corporate welfare program---and similar programs in other states---should be shut down as quickly as Wal-Mart workers lost their jobs.
Al Norman is the founder of Sprawl-Busters. He has been helping grassroots citizens fight big box stores since 1993.