Thursday, December 07, 2006
Cabela's Lacks Jobs Impact; State Should Refuse Assistance
From: Mackinac Center News Release
Sent: Thursday, December 07, 2006 11:46 AM
To: Mackinac Center News Release
Subject: Cabela's Lacks Jobs Impact; State Should Refuse Assistance
For Immediate Release
Thursday, Dec. 7, 2006
Contact: Michael D. LaFaive
Director of the Morey Fiscal Policy Initiative
989-631-0900
Study Finds Cabela’s Has No County Jobs Impact
State should avoid targeted assistance even to large and successful businesses, say Center analysts
MIDLAND — Mackinac Center Director of Fiscal Policy Michael D. LaFaive today cautioned policymakers that offering financial incentives to Cabela’s Inc., the outdoor sporting goods giant, would likely not result in any net new job creation. Published reports indicate Cabela’s is seeking $15million in government business incentives in exchange for locating in Walker, Mich.
LaFaive cited a recent econometric analysis by Mackinac Center Board of Scholars Member Michael Hicks, who studied Cabela’s employment impact in six counties nationwide — including Michigan’s Monroe County — from 1998 through 2003. Hicks found that the retail chain had “no persistent impact on employment” in those counties or in surrounding counties. “What little positive change I found in employment tended to disappear within three months of a new store’s opening,” said Hicks, a research professor at the Center for Business and Economic Research at Marshall University and an assistant professor of economics at the Air Force Institute of Technology. His study is scheduled for publication in the semiannual Journal of Regional Analysis and Policy.
Michigan Senate Majority Leader Ken Sikkema is reportedly calling for assistance for Cabela’s Walker location from the Michigan Economic Development Corporation, a state agency he criticized last year. The MEDC has not pledged incentives so far.
“State business incentives tend to become political, not economic,” said LaFaive. “They create exciting job announcements, but they don’t result in an actual increase in employment.” LaFaive and Hicks are co-authors of the 2005 Mackinac Center study “MEGA: A Retrospective Assessment,” which detailed the lack of economic development impact of the Michigan Economic Growth Authority, an MEDC-affiliated program that provides targeted business incentives.
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