MEDC bids adieu to 'indirect,' 'retained' and 'spinoff' jobs
When the Michigan Economic Development Corp. trumpeted news of business expansions under former Gov. Jennifer Granholm, monthly press releases touted the "retained," "indirect" or "spinoff" jobs promised by companies that received business tax credits from the state.
Well, say goodbye to that dubious public relations strategy.
The Kalamazoo Gazette's Alex Nixon today published an informative report about the MEDC's decision to stop publicizing the number of indirect jobs it estimates will be created as a result of an expansion.
It's something I've noticed, too, since former SPARK CEO Michael Finney took control of the MEDC under Gov. Rick Snyder.
And it's the right decision. Calculations of "indirect" jobs are rough estimates, at best.
I think readers understand that a business' decision to open a new factory, for example, will benefit the restaurant across the street. But is it possible to accurately calculate how many new workers that restaurant will hire because of the factory's expansion?
That's questionable.
What do you think? Is it possible to accurately calculate so-called "spinoff" jobs?
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
A2rez
Fri, May 20, 2011 : 2:10 p.m.
1) Eliminating consideration of indirect jobs and spin-off jobs allows economic developers to ignore the kinds of industry and businesses that are brought into the state. 1 job = 1 job. This kind of thinking, then equates the value of a retailer's distribution center to an auto assembly plant. We will end up with more low-paying and low-value service sector jobs. 2) The input-output matrix is a complex, well-built mechanism for measuring connectedness in the economy. The raw data is gathered through business surveys. It is not hypothetical science. The input-output matrix is the foundation upon which the economic models that calculate employment contributions are built. The matrix is comprised of real world transactions and known, measured business-to-business impacts. A retailer's distribution center is proven to have a much different impact on the economy than an auto assembly plant. 3) Manufacturing (and agriculture) is the backbone of any successful economy. This is such a basic statement that economic developers almost seem to have forgotten it. By ignoring the value of indirect and spinoff jobs, it won't matter what kind of jobs the MEDC and MEGA bring into the state. This could rapidly lead to an unsustainable economy – which would be considerably worse than an economy that has to ride the roller coaster being a manufacturing-based economy that has to try to stay competitive in a global manufacturing environment. 4) Are the lessons of the 2009 recession already forgotten? During that time, the recession made a rare (once-in-a-career) opportunity for economists to see the real-world impacts of models and economic theory. When considering the accuracy of estimating indirect and spinoff job numbers created by manufacturing, may I suggest that during the worst of the 2009 downturn, a drive through any Michigan or Ohio town with all the shuttered strip malls and closed service businesses would easily demonstrate the point.
Bonsai
Wed, May 18, 2011 : 6:31 p.m.
I hate to agree with Pat Lesko, but... If you didn't think the indirect job estimates were reliable, why did you print them? I'd love to see an investigation of the DIRECT job creation estimates over the years, and whether they even came close to the actual employment produced by each incentive.
JSA
Wed, May 18, 2011 : 4:01 p.m.
I would have to question if the term "eventually" means within a generation. It is nothing but political spin and any politician practicing it needs to be slapped down hard.
Patricia Lesko
Wed, May 18, 2011 : 2:35 a.m.
May 10, 2011 you write: (This story was written by Ryan Stanton and Nathan Bomey.) Economic development group Ann Arbor SPARK said that 42 of the companies it assisted in 2010 announced plans to eventually add 1,425 jobs, according the group's 2010 annual report, which was released Monday night at Ann Arbor City Council's meeting. <a href="http://www.annarbor.com/business-review/ann-arbor-spark-helped-dozens-of-companies-get-started-or-grow-last-year-officials-say/">http://www.annarbor.com/business-review/ann-arbor-spark-helped-dozens-of-companies-get-started-or-grow-last-year-officials-say/</a> May 17, 2011 you write: "But is it possible to accurately calculate how many new workers that restaurant will hire because of the factory's expansion? That's questionable." Nathan, not linking those two stories makes it look suspiciously as though you're trying very hard not to write the story that needs to be written. Ann Arbor SPARK has skimmed millions from our schools through the LDFA since 2006. You're dancing around the story and while it's somewhat amusing to think you forgot you wrote what you did exactly one week ago, I'm pretty sure that's not the case. While the right hand print press releases from SPARK, the right hand does something different. You're so close. Ask the questions: "Mr. Krutko, what mechanisms are in place at Ann Arbor SPARK to track the number of actual jobs created? The 2008 Annual report claims SPARK was responsible for helping county businesses retain or create 12,000 jobs. How was that number verified?"
alan
Tue, May 17, 2011 : 8:22 p.m.
I find it humorous that you mention SPARK. Have they ever provided verifiable evidence that their efforts have created a single job? Lip service and disappearing money seems to be the norm.
Stephen Landes
Tue, May 17, 2011 : 7:49 p.m.
It is possible to estimate indirect jobs due to direct hires, but certainly not possible to calculate them with any degree of certainty. There are some well-known ratios that can be used to make "quick and dirty" estimates, but these are estimates, not as certain as countable direct hires. It is one thing for projects to use these indirect jobs as an indicator of the impact of a project but quite another for a government agency or public-private partnership to take credit for these jobs for political advantage.