Is every new job a good job?
Tue June 19, 2012 3:14 pm

Not necessarily. Brian Chasnoff, in a story published in the San Antonio Express-News, writes about the mixed blessing that is the so-called Texas “Economic Miracle.” The event that has touched off angst in the Alamo City is the decision by Maruchan Inc. of Japan to locate a ramen noodles factory on the city’s southwest side, with the blessing of city and county officials, that would create 600 new contract jobs that include health, vision, and dental benefits. That’s the good news.

The bad news is that the jobs will pay $7.25 an hour: minimum wage. This is a dilemma for a city that has a long history of being a low-wage town, not to mention for a state that ranks first in jobs that pay at or below the minimum wage. (San Antonio is also home to five Fortune 500 companies as of 2011.)

“In fact,” Chasnoff writes, “37 percent of all jobs added in Texas in 2010 paid minimum wage or less. Overall, about a third of all jobs in Texas fail to support a family of four.”

This is an old story in San Antonio. I can recall working on a story back in the seventies when local politics was in an uproar over an upstart community activist organization called COPS (Communities Organized for Public Service), one of whose objectives was to bring more high-wage jobs to the city. The local business community had commissioned a study that concluded San Antonio should concentrate on low-wage jobs, and COPS’s leaders had found out about it. Within a few years, Henry Cisneros would become mayor and the direction of the city would change permanently.

Since those days, COPS has become a fixture on the political scene, and city and county leaders have tried to set wage standard for companies wanting to locate here. Still, the median hourly wage of $14.40 an hour is $2.50 below Houston’s and $2.80 below Austin’s and Dallas’s. It is no coincidence that a city with such a low wage scale has the highest average credit card debt of any city in America: $5,177. The guideline is that companies seeking tax abatements should pay a “living wage” of at least $10.75 an hour. Maruchan is promising to make an investment of some $325 million, plus it will pay $5.8 million to local taxing entities.

Chasnoff quotes economist Keith Phillips, an economist for the San Antonio branch of the Dallas Federal Reserve Bank, as saying, “Low skilled jobs are not the problem. It’s low skilled workers.”

There is a lot of concern among local officials about whether the deal is worth it. Mayor Julian Castro sounded less than enthusiastic. “I’d be lying if I said this one wasn’t a close call,” he told Chasnoff. “There were strong arguments on both sides. But this was an unusual case. I decided to stand by it.”

* * * *
This is one of the best newspaper articles I have read on the subject of tax incentives and economic development. It raises serious questions about whether these deals are worth it–to the city, or to the state. Perry has built his political career on the strength of the Texas economy, but Chasnoff’s story raises serious issues about the wisdom of trying to build up a portfolio of low-paying jobs so that the governor can point to how many jobs he has created.

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