Bill Stovall: Workforce Incentives Are Important To Economic Development

Editor’s note: Bill Stovall, author of this guest commentary, is executive director of Arkansas Community Colleges, a nonprofit association representing Arkansas’ 22 public community colleges.

For years, states have been in competition to create economic incentives – primarily through money or hard cash – to recruit businesses and industries to their states for job creation. Of course, this is done in hopes the new employers will stay in town long enough to reap an economic benefit to the community and state.

These incentives carry attractive titles such as Create Rebate, InvestArk, Advantage Arkansas, etc. They are typically viewed as investment incentives or job-creation incentives. Also, there are specialty incentives for specific industry sectors. Satisfy it to say that should you choose to take a quick glance at the Arkansas Economic Development Commission’s webpage for incentives, you will find 20 (at least, by my hillbilly math) such programs designed to encourage business and industry to locate in our great state.

These programs, along with other financial investments the state of Arkansas is prepared to make to a potential employing suitor, total in excess of $300 million annually. These various financial incentive initiatives have purchased land, equipment, provided sales and use tax exemptions for the equipment, reduced the employer’s withholding obligations to their workers or, in some instances, simply written the business or industry a check to their home headquarters in Germany or wherever the home office happens to be. Many, if not most of the time, these home offices are not located in Arkansas.

Please know that my written word is not to be confused with my appreciative attitude for these incentives or their very necessary existence to attract employers to our state.

While a good evaluation from time to time as to the efficacy of these incentive programs might serve us all well, I simply want to frame the discussion around the dialogue of workforce incentives and how we have accepted them in decades past as a cost of doing business in our states across this country.

However, the bottom line in this story and most every story of employment is: what happens to the business or industry when profitability becomes a challenge? Find creative ways to cut costs or increase revenue thereby changing the profitability of the widget. And, of course, if necessary, relocate to another state or country where the opportunity to relax the financial challenges becomes more attractive.

What’s left? An empty building, likely paid in whole or in part by us and the land we purchased sits in need of repurposing. The equipment acquired with our various financial incentive programs is unbolted and transported to a new location in another state or country willing to provide financial support to assist the company’s relocation efforts. Displaced workers are left to find jobs that are not available and usually these workers are in need of new training and education.

In the event you are wondering what the city, county and state would normally do with this challenging situation, go back and re-read the second and third paragraphs of this piece. We’re dealing with the never-ending vicious circle my father warned me to avoid. Is there a better answer?

I’ve got it. How about an economic incentive to target a business or industry that has little, if any, desire to relocate; a business or industry that has no wish to negotiate financial incentives from state to state. A business or industry that cares little to capitalize financially by making one state compete across the borders with another state for investment and job-creation incentives.

What is this precious, hidden, elusive business or industry in which everyone should be recruiting and investing dollars? Shouldn’t Arkansas consider investing credits, incentives and rebates in this business or industry?

This proven, resilient business and industry is simply our people.

Why not invest in the human capital of our great state. Why not build from within – an economic infrastructure of people to live, play and stay in our state. A human infrastructure to take root once again, building their lives and their family’s lives for the long-term future of Arkansas. Why not invest in the resource that has proven time and time again to persevere?

How about creating a state and local effort to properly train and credential Arkansas’ number one resource and asset? An additional incentive program for the corporate community that educates, trains and credentials you, your family, your neighbor, your community. An incentive program designed to invest in portable credentials, which makes our workforce attractive to business and industry recruitment. An incentive program to create upward pressure and mobility on compensation and wages. An incentive program that continually invests in improved productivity for the companies already located in our state, but also makes our people an attractive commodity to any interested business or industry desiring to expand.

Companies need to recoup their investment when proposing a new expansion. Providing dependable, trustworthy, productive employees at startup is, quite possibly, the most effective means of long-term sustainability, and therefore, profitability of any company.

I hope we both have spent our time wisely and you are ready to assist in transforming the dialogue and mindset of economic development in our state. When it comes to credits, incentives or exemptions, let’s create another financial incentive program besides money or hard cash.

Its attractive title? Arkansans First!

If, upon concluding this op-ed piece, you still believe the only economic incentives government should provide for business and industry recruitment and retainment are tax breaks, tax credits or rebate programs, then we have both spent our time unwisely.