Keystone research criticizes state subsidies to businesses

Pennsylvania has historically offered tax breaks or, in some cases, simply written checks to companies in order to attract them to the state.

Pennsylvania has historically offered tax breaks or, in some cases, simply written checks to companies in order to attract them to the state.

But a new report by the Keystone Research Center in Harrisburg questions the wisdom of this decades-old practice.

WHYY’s Shai Ben-Yaacov reports.

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What do Volkswagen, Dell, and Harley-Davidson have in common? The answer: each company accepted economic subsidies from the state, only to close their local plants or – in the case of Harley-Davidson – lay off half of their local workforce.

The lead author of the Keystone report, Stephen Herzenberg, says writing checks to companies to get them to locate here is an outdated and deeply flawed form of development.

Herzenberg: It’s not been which companies pay well? Which companies are in the right industries? Which companies are in the places that need jobs where you use existing infrastructure? It’s just been…if you can fill out the form and we have money left, here’s a check.

The report points out companies that receive state subsidies have no requirement to report how they actually use the money. Herzenberg says he’d like to see more state money go to training programs to promote the local workforce.