Michigan lawmakers are debating bills to give out more money in corporate handouts. It’s a bad idea. Selective business subsidies are ineffective at creating jobs, unfair to the taxpayers who foot the bill, and expensive to the state budget. They also fail to accomplish what their supporters promise. When lawmakers give out more subsidies, they say what they want them to do. And corporate handouts fail to live up to the standards their supporters’ claim.

When Gov. Gretchen Whitmer signed the Strategic Outreach and Attraction Reserve program into law in 2021, she made a statement about what she wanted the program to do. Now that the governor wants to extend the program, let’s see if it performed as pledged.

Today, I signed a package of bills that will put Michiganders first and continue building on our economic momentum.

The state economy is falling behind. Michigan’s economy didn’t recover all of the jobs lost during the pandemic until April 2023. The average state had recovered by June 2022, ten months earlier.

Michigan job growth has continued to lag national averages. Employment in the state has been down since May, and the state has the third-worst employment growth among the states. Michigan did not build upon its economic momentum.

Whitmer also asserted in 2021 that subsidies would spur job growth:

Thanks to the effective collaboration between legislative leadership, my administration, and community and business leaders, I signed bills that will back small businesses and empower Michigan to grow and attract billions in investment and create tens of thousands of good-paying jobs.

One portion of the bill did give $409 million in grants to businesses that suffered pandemic losses. The selective business subsidy portion, however, did not create tens of thousands of good-paying jobs. According to the latest report, no jobs have been created by the law. The state has paid out $590 million to beneficiaries, however.

The governor described corporate welfare as a competition pitting Michigan against other states:

Because both parties in the legislature came together, our state will be able [to] win huge, transformational projects and compete effectively for every dollar and every job for decades to come.

Michigan has lagged in job growth. But other states have not. The states gaining the most in jobs are not the ones trying to win job announcements with subsidy checks. The fastest growing states are Idaho and Utah. Neither state has a program that gives companies checks for hundreds of millions of taxpayer dollars. They offer the lowest amount of business subsidies among the states. In contrast, they also have some of the highest levels of economic freedom. Leaders in Utah and Idaho are transforming their states without the corporate handouts Michigan lawmakers want.

Whitmer also made big promises on behalf of the companies receiving SOAR funds:

The critical economic development fund we have set up will pay massive dividends as we continue staying focused on growing our economy, creating good-paying jobs, and lowering costs for families.

Companies that received money have not created any jobs. They have not lowered costs on state residents. Nor have they paid any dividends to the state — not that they were even required to do so.

The governor concluded her comments on the Strategic Outreach and Attraction Reserve by suggesting corporate handouts would primarily benefit the people of Michigan:

Our work over the last few months proves that when we come to the table in good faith and put Michiganders first, we are capable of extraordinary progress.

Writing big checks to big companies does not put Michigan residents first. It puts the corporations first and the taxpayers who have to pay for those subsidies last.

Whitmer said that corporate handouts would deliver better economic outcomes. They have not done so. And Michigan is falling behind. Business subsidies do not deliver what their supporters claim. Elected officials should stop giving them out.

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