When Hummer promised to invest up to $9.4 million in a new headquarters in Detroit or Auburn Hills in 2009, the Michigan Economic Growth Authority approved the company for $20.6 million in state tax credits.

The project would create 300 direct jobs and 640 indirect jobs, the Detroit Free Press reported.

But that never happened.

Jobs deals the state conducted from 2000-2020 quietly and almost completely failed, according to a study from the Mackinac Center for Public Policy. Of all the jobs projected, 91% did not get created. The study looked at headlines from the Detroit Free Press to identify deals between the state and various businesses.

While companies promised 123,060 jobs through subsidy agreements, only 10,889 materialized, the study concluded. Worse, half of the companies awarded deals created no jobs at all, and just 15% met or exceeded their job projections.

The study concludes that lawmakers shouldn’t blindly give away taxpayer money to favored companies and hope that new jobs will result.

Since 2023, Michigan has granted $4.6 billion in corporate subsidies.

This study should be a wakeup call to lawmakers, politicians, and taxpayers, said James Hohman, who wrote the study and is director of fiscal policy at the Mackinac Center.

“I don’t blame the media. They’re just responding with their own news judgment, and the Detroit Free Press reporters are covering the beat like every other newspaper,” Hohman said. “The stories are newsworthy. And they are incontrovertible. But lawmakers and administrators don’t have the track record to demonstrate that things happen the way they say, and reporters ought to know that."

In a rational world, the study should “cause the dissolution of the Michigan Economic Development Corporation,” John Mozena, president of the Center for Economic Accountability, told Michigan Capitol Confidential in an email. “Any private sector investment firm that got caught delivering just nine percent of its promised investment returns would get shut down, and the people who ran it would be sued and possibly even prosecuted.”

The MEDC should explain why they think future job creation subsidies will produce better results than they have over the last 20 years, Mozena said.

“Anyone who’s looked at these deals from the outside knows that their real purpose isn’t to create jobs. Rather, it’s to make voters believe that politicians are responsible for creating jobs. So in that regard, the headlines were ‘mission accomplished’ for the MEDC in its efforts to help Michigan’s politicians get reelected and enrich the state’s automakers and other politically connected big businesses.”

Gov. Gretchen Whitmer and the Michigan High Speed Internet office announced last month that the state will spend more than $3,000 in taxpayer funds for each high-speed internet connection it subsidizes statewide.

The program has connected 10,000 homes and businesses through funding forecasted to connect 71,500 previously underserved locations, the press release said.

A portion of the funds spent on high-speed connections — $238 million — comes from a Michigan grant program called Realizing Opportunity with Broadband Infrastructure Networks, or ROBIN, which aims to bring internet connectivity to the state.

“Access to affordable, reliable high-speed internet is a necessity to pay the bills, do homework, access telehealth services and so much more,” Whitmer said in a statement. “Today’s announcement of the ROBIN program’s 10,000th high-speed internet connection is a sign of our commitment to building out this critical infrastructure in every region of Michigan.”

The state is “working to create a more digitally equitable Michigan where everyone can leverage technology to improve their quality of life,” said a press release from the Department of Labor and Economic Opportunity.

Program funding comes from a U.S. government program known as the Coronavirus Capital Fund Investment project, according to the Benton Institute for Broadband & Society. It will also include $218 million in matching funds from local governments and private sources, totaling $456 million. Funds will go to various companies, including Spectrum, to spend on 71,500 new connections, the press release said.

Each connection will come at a cost of $6,377, with $3,329 supplied by the state and the rest through matching funds.

This program will connect homes to the internet via fiber-optic technology, according to an email to Michigan Capitol Confidential from Eric Frederick, chief connectivity officer for the Michigan Department of Labor and Economic Opportunity.

Frederick believes fiber optic broadband is the best choice for connecting locations, despite its initial higher cost.

“Unlike satellite systems like Starlink, fiber provides consistent high-speed internet uncompromised by bad weather, signal latency, or limited bandwidth availability,” Frederick said, noting that fiber infrastructure lasts longer and is cheaper to maintain than satellite systems.

Government-overseen programs provide internet at a much higher cost than private companies, said Ted Bolema, a senior fellow at the Mackinac Center for Public Policy and founding director of the Institute for the Study of Economic Growth at Wichita State University.

“This is because these programs have been hijacked by other agendas, including choosing winners and losers among competing internet technologies, climate change mandates, price regulations, preferences for hiring union workers, and a lot of red tape,” Bolema told CapCon in an email.

A large share of the spending ends up in populated areas already well-served by private providers, Bolema said. This diverts funding away from homes in underserved areas, which tend to be rural.

The state can’t predict what technologies will be used in the future, Bolema said.

“These are the same discredited arguments used more than 20 years ago to justify Gov. Engler’s Michigan Broadband Development Authority, and every internet spending program by the Michigan government since then,” Bolema said in response to Frederick’s comments. “Governments have a dismal record of delivering on the promises of economic prosperity they claim will follow when the government chooses the type of Internet access people should have, so they keep coming back with more spending programs to try to deliver on what the last spending program failed to accomplish.”

Bolema added the private sector continues to move forward providing the kinds of internet people want, and at far less cost than when the government gets involved. 

The incoming Federal Communications Commission chairman, Brendan Carr, favors giving vouchers to people without sufficient access and letting them choose the best way to connect. Some may choose satellite-based provider Starlink, which offers high-speed internet with a $199 installation fee if using a service and not self-installing.

The cost to connect to Starlink is about $599 in upfront fees. In reviewing the Starlink website, CapCon found other prices listed, including $349 and $249, suggesting the company offers different pricing to customers depending on how they approach the website.

If the state spent $599 on each 71,500 forecasted connections, the cost would total $43 million.