Changing Gears is a public media project about the future of the industrial Midwest. Each week, reporters Dan Bobkoff in Cleveland, Niala Boodhoo in Chicago and Kate Davidson in Ann Arbor cover issues of interest to the Great Lakes region. Changing Gears also sponsors public events and conversations.
Now, the Pew Center on the States is taking a look at incentives from a different angle. The Pew Center tried to figure out whether anyone is actually checking to see whether the incentives are worth it.
Turns out, a lot of states do very little follow-up once they approve incentives programs.
Buyers at General Motors, Chrysler, Nissan and Hyundai paid record amounts for new vehicles during May, according to True Car.com, which tracks statistics about buying habits.
True Car bases its calculations on transaction prices: the final amount people pay, after incentives, bargaining and trade-ins. The numbers include the whole range of vehicles that the companies sell, such as cars, sport utilities, pickups, and minivans.
Transaction prices are way up since the beginning of 2010. Take a look at this chart by Meg Cramer of Changing Gears, which shows the industry average and what consumers at major carmakers are paying.
The incentives war between the Midwestern states has heated up over the past few months, especially between Illinois, Indiana and Ohio, which, are fighting over Sears and the CME Group. Here is a look at how states use incentives to keep or steal companies, and how that effects overall economic development.
Think back to Political Science 101 and what you learned about game theory. If you need some help, think about the premise of one of my favorite 1980s movies: War Games.
Remember the ending? (No? Keep reading.) The movie’s star, Matthew Broderick, wants to show Joshua, the computer, that there’s no way to win a zero-sum game. He gets the computer to play itself, first Tic Tac Toe, then a simulation of a nuclear war between the then-Soviet Union and the United States. In the end, Joshua realizes no one can win.
Keep game theory in mind, because we’ll come back to it later. But that’s kind of what’s happening between Illinois, Ohio and Indiana. These states have spent the past few months waging an economic incentives war worth millions of dollars and thousands of jobs.
Chicago Mayor Rahm Emanuel has introduced a measure to repeal the city’s head tax on company employees. And he says the proposed repeal is why Ford is agreeing to create 1,100 more jobs in the Windy City.
Photo by Slobodan Stojkovic via Flickrobs in his city.
Chicago charges $4 per person per month to companies with 50 or more employees in the city. The mayor, who proposed the repeal to city council this week, calls it a “job killer,” according to our partner station WBEZ.
He said the proposed repeal, which would reduce city revenue by $23 million, is already making the city more attractive to companies like Ford.
As part of a new contract with the United Auto Workers, the company is pledging to add 12,000 jobs nationwide. Government officials said earlier this week that the company would add 1,100 jobs at the Chicago Assembly Plant, and possibly 900 more at a stamping plant.