Comments by EW in the Feb. 6 issue about the “new economy” criticize Lane County and local communities for spending time and money to lure large companies to create jobs and tax revenues. EW goes on to reinforce the commonly held myth that these companies are only here to get the cash and tax breaks and leave as soon as they are exhausted. Once again, Sony and Hynix are used as examples to perpetuate the myth. In neither case is it true.
One very good reason to recruit large employers is the Willie Sutton effect. 1930s bank robber Willie Sutton allegedly told a reporter he robbed banks because “that’s where the money is.” And that’s why it makes sense for state and local governments to continue to recruit large employers. On a per project basis, these large employers like Sony, Hyundai, Symantec and Royal Caribbean, to name a few, provide a lot of bang for the buck in terms of jobs and tax revenues.
All of the services of local government, including schools and public safety, are paid for by property taxes. The state is dependent on the income taxes provided by jobs, some of which also goes to fund local services including schools. Big employers employ lots of people and make large investments in buildings and equipment. The jobs create income tax revenue and the investments create property tax revenues.
At its peak, Hyundai/Hynix employed more than 1,000 people at its west Eugene campus and was the largest property tax payer in Lane County by a very wide margin. Yes, it is regrettable that Hynix ceased operations; however, it did not shut down because the tax breaks went away. It shut down due to rapid changes in the high-tech world in which they operated. The plant became economically obsolete. But even now, years after its closing, Hynix is still one of the largest property tax payers in Lane County.
And the infrastructure created for that recruitment remains in place for continued job growth for both large and small employers. Investments in transportation, water, wastewater and electricity continue to provide the basics for future development in the area. Other firms, like Life Technologies, continue to expand and grow and create high-wage jobs nearby.
The same could be said for Sony. Sony shut down its Springfield facility because people stopped buying compact discs, not because the tax breaks ended. And even though Sony is no longer operating, the property developed by Sony now employs far more people than Sony ever did.
Symantec was another large employer recruited by state and local governments. It originally located in downtown Eugene, giving that area a significant boost when it was badly needed. And when it outgrew the downtown location, it was able to relocate locally, thanks in large measure to the infrastructure investments made for the Sony recruitment. Without the Sony investments, Symantec may have left our area completely. The Sony investments were also instrumental in locating Royal Caribbean in our area.
And Symantec’s former location in downtown Eugene? The infrastructure investments made to accommodate Symantec made the former department store an attractive location for continued job creation, first Enterprise Car Rentals and now a Sykes call center.
It is true that many small businesses suffer when a large employer like Hynix or Sony goes out of business. They purchase materials and services that local businesses provide. When they leave, that business is missed. For that reason, the recruitment of large employers can be part of a strategy to support the small business community. But not the whole strategy.
Cumulatively, small businesses create thousands of jobs and pay millions of dollars of property taxes. They are important and vital to the health and well-being of our local economy. We absolutely need to support and nurture our small business community.
We need a wide range of policies and programs that nurture and support up-and-coming businesses like Urban Lumber. We need the programs that help our established small businesses to grow right here.
Companies like Urban Lumber are wonderful. They help define our community. They help make life interesting and enjoyable. They manufacture high-quality products that improve the livability of our communities. And they provide jobs, good jobs. These small businesses help define who we are.
Fortunately, we can do both. We can support local small business while also recruiting large employers. We can nurture our local startups and we can create and maintain policies that support the existing small business community. Recruiting large employers and supporting small businesses are not mutually exclusive endeavors. We don’t have to do one or the other. They are both essential components of a comprehensive economic development strategy.