Kendall Deas, a political scientist at the College of Charleston in South Carolina, has worked in the field of economic evelopment. In a recent article, he warned the leaders of the state that investing in food schools will do more for the state than corporate tax breaks.
He is responding to a recent study by @GoodJobsFirst showing that South Carolina had cut education by $423 million to subsidize corporations.
Deas begins:
When I was in graduate school I worked for an economic development group that recruited companies to the metro Atlanta area. And time and again when executives would visit, this question would be among the first they’d ask:
“How good are the schools?”
It was very clear to me then that the quality of schools matters a great deal when it comes to attracting investment and jobs.
I’m now back in my native South Carolina where I am an educator and advocate for public education. And I am concerned about the subpar, uneven quality of our state’s public schools.; U.S. News and World Report, for example, ranks South Carolina’s schools No. 43 among the 50 states.
The state’s “Corridor of Shame.” a nickname given to a string of rural, impoverished and poor-performing school districts along South Carolina’s Interstate 95 corridor, serves as a stark reminder that much work needs to be done to improve our national standing in education.
This region of the state, with flat farmland and remnants of industries that have relocated overseas, needs to attract jobs — and it also needs employers who want to invest in our future. But by disinvesting in their school systems many South Carolina counties are undermining their ability to compete.
To revitalize these economies we need to invest in traditional public schools — yet this need to improve the quality of our public education system is too often ignored by state political leadership.
We have growth in some areas. And when jobs grow, people move in — and that means more families with school-age children. But then we abate the companies’ taxes, which puts stress on the tax base we need to keep our schools modern and healthy.
A SEVERE PROBLEM
Until now we did not know how severe this disinvestment has become.
Under state law counties award massive economic subsidies and tax incentives — even though school districts lose the most revenue. Last year these corporate tax breaks cost South Carolina public schools $423 million, an astonishing increase of $99 million from FY 2017.
This fact was revealed recently by Good Jobs First — a nonprofit think tank — along with the South Carolina Education Association; they found that millions in property tax abatements have been granted to companies like Boeing, BMW, Volvo, Amazon and dozens of other businesses operating in the state.
The biggest aggregate losers were Berkeley County ($54 million) and Greenville County ($41 million); meanwhile, poorer counties such as Orangeburg, Dorchester, Calhoun, Greenwood and Barnwell lost more than $2,000 per pupil.
Good schools attract good jobs.
Diane Ravitch's blog 
As I have said before, public schools are a valuable community asset. Companies often consider the quality of the schools when they relocate to a new area. Companies look at the number of educated and/or skilled potential workers available before they decide to relocate to an area. Quality public schools elevate communities and make them a magnet for investment and development.
The amount of corporate welfare in this country is out of control and largely out of sight. Companies have come to expect tax breaks when they relocate to new areas. The public is mostly unaware that companies are getting “give backs” to entice them to move to the area. This should be a matter of public information. Tax payers and public schools should be able to have a say as representatives do not always represent the interest of the tax payers or public schools. We have seen how public schools have no say or consideration when charters decide to open up in their neighborhoods. Public schools often are defenseless when these private companies open.
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Is there even one poor community in the US that has “good schools” in the sense meant by the CEOs mentioned here?
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key point
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This professor thinks all schools are bad:
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When I was in high school and we planned a move to a different state due to my fathers work, the first question he asked of people was, “ which town has the best schools”? Even then, more than 60 years ago, that was a vital question in determining where to put down new roots.
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Isn’t “good schools” just code for “lots of well- educated parents”?
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Not necessarily…. could be parents such as mine who wanted a better education for me than what was available for them.
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Okay—“academically oriented parents” then. There are no “good schools” in poor neighborhoods. But there may be good schools there —I.e. schools that make the best of a difficult situation —but not what people mean when they say “good schools”.
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I want people to stop and really understand what Ponderosa is saying here: “There are no “good schools” in poor neighborhoods.”
He has already defined “good schools” as schools as “lots of well-educated (or academically oriented) parents”. There are no such schools in poor neighborhoods, he says. So parents in poor neighborhoods by definition are not academically oriented or well-educated.
I really want people to think about this and understand the pervasive racism that runs through Ponderosa’s posts on this blog when he talks about poor schools, poor kids, poor families. These are they types of attitudes he is talking about. All poor neighborhoods are filled with wild, uncontrollable, violent children of uneducated parents who have no interest in education for their children.
Let that marinate for a while and if it doesn’t make you nauseated, maybe you need to go back to that anti-racist drawing board.
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Of course the term is relative….depends on one’s definition. I am not arguing with you, merely expressed a slightly different viewpoint. I agree that more “academically oriented” parents (to put it a different way, parents who value education) would be inclined to find a town that had schools that provided great opportunities for all of its students.
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Mostly likely the CEO’s are looking to pitch their tents where corporate costs are competitive, yet close enough to thriving urban centers to benefit from a talented and varied pool of labor. Schools will reflect the labor pool. I expect ponderosa’s remark above was sardonic: vulture-capitalists looking to invest $0 in the community should not be expecting good anything.
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Susan,
Thanks for your post. It is a good reminder that school choice was perfectly acceptable as long as that choice was restricted to people of the appropriate class.
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School choice is acceptable so long as public funds are not involved. We can barely afford to support one public system. Why defund public schools to fund a second and third system?
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“investing in food schools will do more for the state than corporate tax breaks.”
I agree.
One can never have too many well trained chefs.
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Sounds good, but I couldn’t make the numbers work. The author can no doubt prove his point by providing more details. But he shouldn’t imply SC is chopping poor kids’ school budgets by $2000 per pupil, that didn’t happen. All the counties he mentioned went up by at least a little (a couple by $1000 per pupil) in that year alone. And they’ve continued to rise since.
https://ed.sc.gov/finance/financial-services/student-data/revenue-per-pupil-reported-by-school-district-fiscal-year-2019-2020/ ]
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A lot of businesses are setting up in Utah right now, and we are 51st in the country in education funding, BUT the state gives very generous (read: takes away a lot of tax money) incentives to these companies. These companies don’t seem to care that Utah’s education system is flat broke.
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They are not locating there for the schools.
They are doing it for the well educated but cheap labor force.
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Utah does what no other state could. Educate a populace on peanuts.
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They also know that with a large system of private schools where many middle class students attend, businesses in Utah can have access to a large educated populace.
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I find the article illogical. Low-resourced communities cannot whistle up the funds out of nowhere to somehow create good schools [if that’s possible in a vacuum] on the chance they’ll attract good business.
For sure, businesses looking to establish major new branches will skip right over areas locals have been leaving for decades as soon as they could scrape up bus fare. Are businesses supposed to build new communities single-handed? Turning poor areas into thriving communities requires long term planning at state & local govt level, integration of multiple sources of funding, step-wise growth one business at a time. Schools themselves will just keep reflecting the communities as they develop. [Once again we see pundits claiming schools can effect social change independently].
But perhaps the author is just saying SC has become stubbornly penny-wise and pound-foolish over the 25 yrs since Reps took over all its branches of govt. The changeover ties right into when they lost their longtime industries to offshoring. It’s probably been all austerity since then, w/zero innovative solutions [except privatizing, leading to further decline]. As I said above, SC has not been slashing budgets by thousands per-pupil as he implies; they’ve been moving ahead [about $1200 per pupil added over 3 yrs], but it’s probably insufficient to recoup deep slashes made in 2008. As he says, a drill-down in numbers is required to see whether the tax incentives offered to new business square with increased jobs and $benefits ploughed back into the communities. Broad-brush I suspect it doesn’t square. Strategic long-term planning could lead to gradual growth that can be built on. Reps are particularly bad at that, & Dems not much better. The neoliberal pattern still prevails; it’s based on short-term returns & results in volatility.
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Companies that move and ask the “good schools question” are trying to bet that they can get the people they want to move with them. The irony of this is that the move will bring in more people who see the value of a good education. In my south, this has often meant bringing people who are used to the amenities of good education (qualified teachers, knowledgeable and concerned, extensive extra-curriculars ( what do you mean you don’t have a chorous?), and a minimum of difficult students to educate. At first, the new folks are full of criticism about the lack of services, but supportive generally. Soon the traditional population is displaced by a new population of more motivated students and the self-fulfilling prophecy has begun. Almost imperceptibly, certain geographical areas become known as producing “good schools,” and other areas become known as educational backwaters.
Colleges recruit heavily from the places where the deep pools of students exist. You look up one day and he best students, the ones who worked hard and eschewed some of the social life of school or were naturally talented, are raising their families over in X district or county. The self- fulfilled prophecy is extending itself into a new generation. The schools in X win the championships and earn the accolades. More industry moves in, but now the industries are leaning toward research and management, bringing in even more money for all the programs. Manicured lawns cover the rocks and sands. Never mind that the suburban development leads to the extirpation of local endemic species of plants and animals. Never mind that people who have lived there for years are ignored.
So goes the slash and burn approach to urbanization in America.
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Dear fellow thoughtful correspondents: I’m the director of Good Jobs First, the think tank that issued the study Prof. Deas wrote about. We are researching the question bethree5 raised about recent trends in SC school funding and will respond this week. But here I want to quickly address some of the other issues you all have raised.
First: there is a large body of academic evidence that the two best investments government can make to generate job growth and rising personal incomes are education and infrastructure. There is also a substantial body of evidence, from both left and right, that tax incentives like those we analyzed in our study, have very marginal effects and can routinely come at costs that exceed their benefits, or at best very exaggerated cost-benefit ratios.
For a cogent summary of these issues, we recommend a website maintained by Prof. Emeritus Peter Fisher
http://www.gradingstates.org/the-problem-with-tax-cutting-as-economic-policy/
One of the costs most often overlooked is that of induced growth. That is, as scholars like Dr. Timothy Bartik have documented, when new-job growth occurs, 7 or 8 of out of 10 of the new-job takers come from outside the region (depending on unemployment rates).
That means more students to teach, more lanes to maintain and widen, more water to treat, more trash to pick up, more public safety calls to serve. There’s no such thing as free growth. But when newly arriving industry pays few or no taxes, that means those increased costs cause 1) upwards pressure on everyone else’s tax rates (small and incumbent businesses and working families) or 2) lower-quality public services or 3) some of both. Since public education is the costliest local public service, it loses the most revenue. AND, as in SC, school boards in most states have no say.
That’s the nub issue here: we know public education is a great leveler in terms of creating generational mobility, and we know it is an economic development winner. And yet we allow it to foot most of the bill for incentives. And we do it in a way that amounts to an intergovernmental free lunch.
Here is another salient factoid: incentives almost never determine where a company relocates or expands, because they cannot. Why? Because they are too small. As a cost of doing business (and therefore a variable companies put into their spreadsheets as they weigh the costs and benefits of competing locations), all state and local taxes COMBINED come to just 1.8% of their cost structure. (That’s an IRS statistic.) Put another way: the business basics — skilled labor, occupancy, raw materials, energy, logistics, IT, CEO bonuses, etc — make up 98.2% of companies’ cost structures. Micro-variations in those big cost variables dwarf anything one can do with incentives, which is to say shaving some fraction off of 1.8%.
That’s the dirty BIG secret of incentives that site location consultants and their corporate clients don’t want people to know. That’s the misinformation achievement of the tax break-industrial complex we have in the US that was born in the late 1930s and remains usually hidden behind non-disclosure agreements except for rare public auctions like the Amazon HQ2 episode.
For those seeking more detail, I lay all of this out in chapters 2, 3 and 5 of my book, The Great American Jobs Scam, which is free online at:
https://www.goodjobsfirst.org/GAJS
Greg LeRoy
Executive Director
Good Jobs First
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