Three Questions About the MetLife Deal That Need Answers
The big news on the jobs front the past couple days has been the announcement by Governor Pat McCrory that insurance giant MetLife has agreed to make a new $126 million investment in two North Carolina locations, resulting in the creation of 2,600 jobs.
While the news of any job creation is good news when the state’s unemployment rate is over 9 percent, the price tag attached to these jobs is causing a bit of sticker shock. The deal involves providing $87 million in Job Development Investment Grant (JDIG) incentives to MetLife over the next 12 years—the largest discretionary incentive package North Carolina has ever offered from this program.
Given North Carolina’s tight state budget and persistently high unemployment, the public needs to know as much as possible about the real costs and benefits of the deal—and whether it’s really worth $87 million in taxpayer dollars, or about $33,000 per job.
To that end, here are three questions about the MetLife deal that need answers:
Question #1—How many jobs will go to North Carolina residents? While MetLife has promised to create 2,600 jobs, how many of these employment opportunities will be open to people already living in North Carolina, and how many will be filled by moving the company’s current employees from other locations in California and New England? At a cost of $33,000 per job, it’s hard to understand the justification behind simply providing taxpayer subsidies to cover the relocation expenses of out-of-state residents, unless the overwhelming majority of these new jobs can be filled with North Carolina residents.
Question #2—What are the wages MetLife will pay for the positions available to North Carolina residents? During the press conference announcing the deal, MetLife promised that the average wage of these 2,600 jobs would be $81,000 per year, but it remains unclear whether these wages will go to newly hired employees currently living in North Carolina, or whether this includes the wages going to the highly-paid technical and management workers the company is bringing into the state. Given that new positions promised by MetLife include product management, marketing, sales and customer support—positions which do not typically pay $81,000 per year—the results may not be as encouraging on the wage front as originally hoped.
Question #3—Will the large incentive offer to MetLife actually reduce the amount of incentives available to other companies in the future, including those paying better wages and employing more North Carolina residents? Under current law, the State is not permitted to incur more than $15 million in total JDIG liability every year. Given that the MetLife deal incurs about $8 million in liability for 2013, this leaves only $7 million remaining for future projects this year. While capping the State’s total incentive liability is certainly prudent, we should be concerned if the Governor just allocated over half of the State’s available incentive dollars for 2013 for a project that may not live up to its promises of job creation and wage levels—promises that are being used to justify this historically unprecedented incentive package.
While news of new job creation is always welcome, North Carolina’s residents and taxpayers deserve answers about whether this deal is truly worth the cost of the largest JDIG incentive deal in state history.