MEDC: The Same Old Run Around On Jobs Numbers

The Michigan Economic Development Corp., the state’s corporate welfare and promotional arm, is still ducking direct questions about job creation.

When Gov. Jennifer Granholm was in office, the MEDC dodged questions about the job creation numbers it claimed on behalf of the taxpayer subsidized businesses it promoted. Instead of giving “yes” or “no” answers to reporters, policy researchers and even lawmakers, the MEDC typically responded by sending data or pointing to websites that were supposed to present answers.

With that, those seeking answers from the MEDC were, in essence, being told to figure out the answers for themselves.

In his first State of the State Address, Gov. Rick Snyder promised the people of Michigan a greater degree of transparency.

“True success is based on achieving real results for real people,” Gov. Snyder said at the time. “We’re going to have tough, hard measurements. Our achievements or lack of progress will be evident.”

Gov. Snyder has brought some changes to the MEDC, which is a quasi-governmental agency. However, the lack of transparency for which the MEDC acquired a reputation under former Gov. Granholm remains.

Before going bankrupt, lithium-ion battery maker, A123 Systems, was one of Michigan’s most prominent green energy initiatives. The state approved A123 Systems for $100 million in MEGA (Michigan Economic Growth Authority) tax credits and another $41 million in tax breaks and subsidies from a separate program.

In April of this year, the MEDC reported to the state legislature that the company had 844 employees as of September of 2012 — less than three weeks before A123 filed for bankruptcy. In June 2012, the company announced it was hiring 400 new employees, at a rate of 100 per month. 

The MEDC said the jobs numbers were taken directly from the company's payroll records. 

Capitol Confidential asked the following questions of the agency:

Q. Could a company game the MEDC job count system by making sure its employment figures peak at just the right time during a reporting period?

Q. If a company hired a certain number of employees temporarily and then showed the MEDC its short-term payroll numbers, and then laid off the employees, would the MEDC still count those employees in its official report?

Q. Obviously, companies like A123 know at any given point in time how many employees it has on their payroll. These companies have received millions of dollars in taxpayer provided subsidies. Shouldn’t the MEDC be receiving payroll reports from then on a monthly basis?

Q. Should an agency, independent of the MEDC, be tasked with evaluating the job creation performance of these companies?

The following is the MEDC's response:

“This link on our website will take you to a great deal of information about the operations of our incentive programs and the results," said Kathy Fagan, communication specialist at the MEDC. "Anything not available on michiganadvantage.org can be sought through a FOIA request. I would be happy to help you with this if you choose to pursue it.”

Rep. Bob Genetski, R-Saugatuck, has expressed his concerns about transparency issues at the MEDC more than once based on some of his own experiences with the agency.

“I wish the MEDC would have answered your questions rather than sent you the link,” Rep. Genetki said. “Taxpayers and legislators deserve to know how companies receiving these subsidies may be gaming the system. The lack of verified ‘jobs created’ remains a very poor legacy for what continues to be a failed central planning organization that continually gambles with taxpayer money trying to outsmart the free-market system.”

James Hohman, assistant director of fiscal policy at Mackinac Center for Public Policy, said the MEDC’s long-practiced evasions only serve to undermine its credibility.

“It’s important to know what’s going on in the projects that Michigan taxpayers are supporting,” Hohman said. “But the MEDC continues to be opaque. Even in the rare cases where jobs numbers are published, it’s unclear what they mean.”