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Incentives in the News: The Brookings Institute and Job Incentives

A recently released report from the Brookings Institute highlights the most promising ways they believe cities, states, and regions can move forward in attracting businesses and creating jobs in a responsible and fair way. The study also confirms analysis done by C2ER of the State Business Incentives Database.

The Brookings Institute finds that cities and regions which work together will prosper together. Cities agree to a “code of ethics” which precludes them from attempting to undercut one another and poach economic development opportunities. The report focuses on Denver and Milwaukee but does not address whether this would be workable on a larger regional or statewide basis.

The best places to start may be metro areas which stretch across state boundaries. Brookings cites Kansas City as the prime example of this type of metro area. Missouri and Kansas have begun a dialogue on ways to improve their economic development outside of their competing state governments. If codes of ethics and border city discussions prove successful we may see entire states and regions entering into anti-poaching agreements.

The study also concludes that states need to stop targeting incentives to specific firms and should instead create incentives which can apply widely across an entire industry. Brookings cites Iowa as the prime example of this trend. When Google was looking for places to build a new data center, it found that Iowa could provide the necessary infrastructure and personnel for success. Instead of offering Google a specific tax incentive to expand into the state, Iowa created incentives which would benefit the entire data center/tech industry. These incentives have drawn Microsoft, Facebook, and numerous smaller companies to Iowa.

C2ER recently completed an update of the State Business Incentives Database. In our post-update analysis, we also found that there is growing popularity for industry targeting incentives. A quick search of the State Business Incentives Database finds that, in addition to Iowa, incentives targeting data centers have been created in Mississippi, Tennessee, Minnesota, and North Carolina. If cities, states, and regions are moving in the directions outlined by the Brookings Institute they will find even greater opportunities for economic development.

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