A recent article in the Wall Street Journal continues the debate surrounding economic development incentives designed to attract businesses and create jobs. When are incentives a useful tool, and when do then undermine long-term vitality?

From our perspective, the question is not whether incentives are ‘good’ or ‘bad,’ but, instead, how are they used? Many of the anecdotes cited in the article demonstrate that, outside the context of a well-designed strategy, incentives can be poorly applied, resulting in disappointment. The challenge, then, is finding mechanisms through which a community can direct its economic future in accordance with a long-term goals.

Incentives are only one tool. There are many other ways communities can attract employers. Building local capacity (such as a skilled local workforce) and investing in amenities that enhance quality of place (parks, public transit, a vibrant downtown) also offer valuable alternatives to the ‘incentives game.’

What do you think? Has your community had a positive or negative experience with incentives? Join the conversation by commenting on this post.

States to Business: Give Our Cash Back
By JENNIFER LEVITZ
April 22, 2011 – The Wall Street Journal

To the list of those dinged by states’ budgetary woes—from Illinois vendors to Wisconsin public employees—add YUSA Corp., an auto-parts supplier in the city of Washington Court House, Ohio. YUSA received a $35,000 development grant from the state of Ohio five years ago, pledging to expand a plant and employ 816 people. It’s only at 445. Recently, Ohio sent the firm a bill, demanding $15,915 back. This was one of nearly a dozen “clawback” orders signed in two months under the state’s new Republican governor, John Kasich. There will be more, says his job-creation director, Mark Kvamme: “We need every single dollar we can get our hands on.”

YUSA’s view: “Give me a break,” says Chris Fairchild, the auto-parts firm’s controller. “For crying out loud, we’re doing our darnedest. While other local businesses have gone bankrupt or gone to Mexico or other states, we’re right here. You’d think there would be a little respect for that.” The budget vise squeezing states and cities is changing the economic-development game. Governments are attaching more strings to their offers of tax breaks, cheap rents and bond deals designed to lure business, and are getting tougher on past recipients who didn’t come through.

Officials fret that taxpayers will look askance on any giveaways to business that don’t yield a clear benefit, at a time when governments are paring services to save money. “We want to challenge this stuff before the public does. The political environment now is that you have to,” says John Garcia, director of economic development in Albuquerque, N.M. His city, facing a potential budget gap of $35 million or more in the coming year, is taking steps to retrieve $492,399 in past property-tax abatements given to lure a call center, which closed in August and eliminated 670 jobs it had created. “In the past, we might negotiate that out, but now we’re not real quick to want to negotiate anything. We’re hurting pretty bad here,” Mr. Garcia says.

State and local governments collectively give more than $70 billion a year of incentives to lure business and jobs, primarily through tax breaks, says Kenneth Thomas, an associate professor of political science at the University of Missouri-St. Louis. Economists have long debated the wisdom of such incentives. Supporters say they help states build diverse local economies and boost employment, ultimately generating more tax revenue than they cost. Detractors say perks sometimes go to businesses that would have come anyway, and in other cases just enable companies to play one region against another for a sweeter deal.

The issue has started to attract limited-government activists, who decry the perks as waste and government overreach. On Wednesday, a tea-party group gathered at the South Carolina Statehouse in support of a Republican-sponsored bill calling for disclosure of how much economic sweeteners cost taxpayers. “It’s the wrong time for these deals; we really don’t have a lot of money in the state,” said Talbert Black, Jr., state coordinator for the Campaign for Liberty, a tea-party group. “But even in a good time, it’s still not right to have the state deciding who gets to pay taxes and who doesn’t,” he said. “It messes up our free market if the government gets to pick who the winners and losers are.”

One downside of the arrangements from the standpoint of businesses, which need to be able to adjust output to demand, is the inflexibility of being locked into a jobs commitment. Many companies weathered the financial crisis by cutting jobs, not creating them. So even as states take a harder line on incentives, amid budget strain, the same weak economy drives companies to press for every possible concession. “Companies are being forced by shareholders to play the incentive game to get the best deal possible,” says Brent Pollina, vice president of Pollina Corporate Real Estate Inc., a site-selection firm that represents businesses planning moves. Ever since the recession struck, he says, “companies are trying to get as much up-front as possible from communities.”

A U.S. division of Fraunhofer-Gesellschaft, a German research and development company, regards development subsidies as highly important because, just like public officials, “we are also facing more uncertainty, and are more hesitant to start something new,” says Christian Hoepfner, director of technical operations for the firm’s American division. The division received $750,000 in incentives from public officials in New Mexico for a new facility that opens soon. But it had sought more than twice that amount, and the plan took a long series of meetings in New Mexico to negotiate. “In the past, people were more ready to go: ‘Hey, great idea….Let’s pass right through the system and get it done.’ Now it’s clearly more difficult to close even a sound plan,” Mr. Hoepfner says. The city of Albuquerque canceled plans to contribute to the package. “Truthfully, we got a little queasy, and we pulled out,” says the city’s Mr. Garcia. “We’re more cautious now.”

Even under budgetary strain, states aren’t going to cease economic-development spending, because of their need for jobs. Indeed, a few, far from souring on sweeteners, are expanding their job-quest programs. Virginia raised its spending on economic-incentive deals 56% last year, while making budget reductions elsewhere. The administration of Republican Gov. Robert McDonnell says job creation is the best way to raise tax revenue and pay for services. The state’s unemployment rate has been declining and was 6.3% in March. And Wyoming has adopted legislation permitting the state next year to buy as much as $600 million, up from $100 million, of industrial-development bonds, which are securities that local governments issue to help businesses borrow for capital projects.

The sponsor of the bill, State Sen. Marty Martin, says he was responding to situations where businesses wanted to do projects in Wyoming but had trouble getting loans. “The large banks, they are just not putting out money to work with businesses,” says Mr. Martin, a Democrat. The legislation, however, requires that bond purchases be approved by the state treasurer, and that official opposes the new policy. “I take the position that if a bank will not loan money to a business, in very rare circumstances should the state of Wyoming do that,” says Treasurer Joseph Meyer, a Republican. He has a dim view, in general, of giving businesses incentives to come in. “They take our money, stay for a couple of years, and then move to another state,” Mr. Meyer says.

In New York, another state facing tight finances, new governor Andrew Cuomo complained in his budget message that economic-development spending had soared, while not doing enough to create jobs. Such spending totaled about $1.55 billion in the fiscal year ended in March, more than triple the level a decade earlier, a time during which the number of manufacturing jobs in the state declined by more than a third, according to the budget briefing. Mr. Cuomo, a Democrat, called for changes including better oversight of the deals.

In some cases, public officials have grabbed ownership stakes in companies that lagged in producing jobs. Alabama’s public-employee pension system lent more than $550 million in 2007 and last year to finance construction of a rail-car plant, part of a strategy by the fund to spur development in the state and generate tax revenue. But the recession curbed demand for rail cars, and by last summer the plant was idle, says the pension director, David Bronner. Fearing it would lose its investment, the pension system took ownership of the mile-long plant and is trying to lease it to others. The plant’s original owner, National Industries Inc. of Hamilton, Ontario, declined to comment.

Massachusetts revoked tax breaks or other economic-development perks for 74 companies in 2010 for failing to create the promised jobs. That compares with 18 such revocations in 2007, before the financial crisis hit. Most companies that fall short argue, “Gee, the economy is so bad, did you really expect me to add jobs in this economy?” says Gregory Bialecki, the state’s secretary of housing and economic development. In the past, Massachusetts might have considered whether a company made a good-faith effort, he says, but “the economy has changed things. It’s much clearer now; if you don’t create the jobs, we expect our money back.” Getting it can be difficult. Massachusetts officials believe they may be legally able to salvage only about $3 million of $21 million in grants given four years ago to Evergreen Solar Inc. The company was supposed to create 350 jobs at a plant near Boston and maintain them for eight years, but it is now closing the plant after just three years.

“Changes in the competitive environment caught everyone off guard” after subsidized Chinese production forced down prices, says a company spokesman, Michael McCarthy. He says Evergreen is cooperating with officials to determine how much it must repay but believes it fulfilled most of the agreement because at its peak the plant employed around 800. Massachusetts legislators now are considering a bill that would stiffen development contracts. One provision would require companies that don’t meet commitments within two years to pay back the value of the tax break.

Officials in Henry County, Va., regret they didn’t strike a tougher deal with American of Martinsville, a maker of sofas and recliners. The business got a $280,000 state grant in 2009 for an expansion of its local plant, which was supposed to include retaining 121 jobs and adding 94 more within three years. The firm would be considered in default if it filed for bankruptcy during that time or didn’t create 75% of the jobs. The jobs came; by April 2010, the facility had 200 employees. But they didn’t stay. That month, the plant abruptly closed. Trying to protect its investment, Henry County put liens on the sofas and loungers still on the premises, but the furniture maker filed for bankruptcy reorganization in June. The court ruled the county an unsecured creditor and it never was repaid, says county administrator Benny Summerlin. “Now we’re stuck,” he says. Unemployment in Martinsville was 17.8% as of February. The furniture company is owned by a private-equity firm, Hancock Park Associates. It declined to comment.

Going after companies that built a plant but then saw the economy turn against them can fray a state’s welcome mat. Mr. Fairchild of YUSA, the auto-parts company Ohio is dunning for part of a past grant, says, “Frankly, you wonder whether…they are trying to chase industry clean out of here, and beat us with a stick until we finally say, ‘The heck with you.’”

Asked about that, Ohio’s job-creation director, Mr. Kvamme, says the state “will continue to be pro-business [but] when companies receive tax dollars with the promise that they will create jobs, we must hold them accountable for the sake of our tax-paying businesses and citizens.” He adds that the state is simply upholding to the same standards as others in the business world: “What does their bank say if they don’t make a payment? What does their mortgage company say?”

In recent decades, the practice of economic development has focused on industry analysis – driver industries, target industries, industry clusters – as the silver bullet for economic growth. At TIP Strategies, Inc., we agree that a strong industrial base is the hallmark of a successful economic development strategy. An industry-centric approach, however, usually sidesteps a basic building block that employers seek: a reliable, skilled workforce.

Even with today’s high unemployment levels, employers continue to report difficulty finding workers, particularly in technical occupations. Documenting regional skillsets and identifying training gaps is just one benefit of a workforce-focused approach to economic development. In addition to addressing employers’ needs, a solid understanding of the regional labor market is an essential foundation for a talent management strategy. During the course of an individual’s career, he or she will most likely move through a series of jobs, often across multiple industries. As a result, understanding what skills are transferable and ensuring a range of options for career growth are prerequisites for attracting the talent needed to support new and emerging industries.

A focus on workforce also makes sense in light of the more footloose nature of industry. While people can and do migrate from one area to another, the movement of workers happens on a completely different scale than that of business. Your local workforce is not likely to move overseas en masse; your largest employer might.

Case Study: The Lower Rio Grande Valley of Texas
Over the last 7 years, we have completed a number of workforce-focused projects. Recently, we prepared a regional strategy for the workforce boards serving the Lower Rio Grande Valley of Texas. The primary goal of the planning process was to validate employer needs regarding current and emerging skills and to document the availability (or lack) of training in the region.

A cornerstone of this project was the development of a tool that can be used to compare the occupational demands of the target sectors with the available training programs to identify any potential gaps. Using this information, our analysis pointed to areas where the supply of training appears to outweigh the available openings (such as entry-level medical positions) and, conversely, where training appears to be insufficient to meet demand (such as nursing and public safety workers). To help prioritize occupations for training, we also created a second tool– an interactive scoring matrix for use by Workforce Solutions staff.

The resulting document will be used to identify areas where regional resources can be better aligned in support of the target industries. To learn more about the project, visit our website.

Workforce Webinar
TIP will be conducting a webinar on workforce analysis for the Texas Economic Development Council on June 8. In the webinar, participants will learn how to identify and use public sources of labor market information to better understand local workforce capacity and readiness. This information can help shape regional economic development strategies for retention and recruitment. Register here.

Joshua Lutz for The Wall Street Journal. SCENES FROM Montclair, N.J.: The view from a rooftop.

Smart ‘edge cities’ are turning their shuttered malls and aging office parks into hip hotspots.
In Lakewood, Colo., a long-shuttered mall is being rebuilt into a 22-block area with parks, bus lines, stores and 1,300 new households. Tysons Corner, Va., is undergoing a full transformation from an office park to a walkable, livable community. And officials in Ferndale, Mich., are promoting the arts scene and building affordable housing in an attempt to revitalize the small city outside Detroit. Remaking America’s sprawling suburbs, with their enormous footprints, shoddy construction, hastily built infrastructure and dying malls, is shaping up to be the biggest urban revitalization challenge of modern times—far larger in scale, scope and cost than the revitalization of our inner cities.


Just a couple of decades ago, the suburbs were the very image of the American Dream, with their sprawling, large-lot homes and expansive lawns. Suburban malls, industrial parks and office campuses accounted for a growing percentage of the nation’s economic output. Planners talked about “edge cities”—satellite centers where people could live, work and shop without ever having to set foot in major cities.


With millions of American homes now “underwater” or in foreclosure, the suburbs and exurbs have taken some of the most visible hits from the great recession. In a stunning reversal, big cities like Boston, Chicago and San Francisco have become talent magnets, drawing ambitious people, empty-nesters, young families and even a growing number of offices back to their downtown cores. As inner-city neighborhoods gentrify, blight and intransigent poverty are moving out to the suburbs. A Brookings Institution study released this week found that the number of poor people in the suburbs has grown by 37.4% since 2000, compared with 16.7% in cities.


The suburbs that have continued to prosper during the downturn share many attributes with the best urban neighborhoods: walkability, vibrant street life, density and diversity. The clustering of people and firms is a basic engine of modern economic life. When interesting people encounter each other, they spark new ideas and accelerate the formation of new enterprises. Renewing the suburbs will require retrofitting them for these new ways of living and working.


Even before the recession, our changing demography had begun to alter the texture of suburban life in favor of denser, more walkable mixed-use communities. The average age of marriage has been rising, households have gotten smaller, and home-buyers—surprising numbers of them single women—are looking for smaller houses closer in, with access to parks and cultural amenities.


Though most suburbanites are happy with where they live, many are unhappy with how much time they have to spend in their cars. A 2002 study found that more than half of Americans would prefer to walk more and drive less. Commuting by car is time-consuming and expensive, and according to research by the Nobel Prize-winning economist Daniel Kahneman, it is also one of life’s least enjoyable activities. Most suburbanites don’t want to move to the city; they want the best aspects of city life to come to them.


Walkable suburbs are some of America’s best places to live, and they provide their sprawling, spread-out siblings with a model for renewal. Relatively dense commercial districts, with shops, restaurants and movie theaters, as well as a wide variety of housing types, have always been a feature of the older suburbs that grew up along the streetcar lines of big metro areas. A 2007 study by Christopher Leinberger found more than 150 walkable towns in America’s 30 largest metro regions—places like Hoboken, Montclair and Princeton, N.J.; Stamford and Greenwich, Conn.; Brookline, Mass.; Bryn Mawr, Pa.; and Royal Oak and Birmingham, Mich. Newer versions of walkable suburbs can be found in regions that developed later, like Palo Alto, Calif.; Boulder, Colo.; Coral Gables, Fla.; Decatur, Ga.; and Clayton, Mo.


These are the places where Americans are clamoring to live and where housing prices have held up even in the face of one of the greatest real-estate collapses in modern memory. More than that, as my colleague Charlotta Mellander and I found when we looked into the statistics, the U.S. metro areas with walkable suburbs have greater economic output and higher incomes, more highly educated people, and more high-tech industries, to say nothing of higher levels of happiness.


Of course, not all of America’s suburbs have the option of developing compact cores along streetcar lines or transit, and not all are filled with wonderful old housing stock that is ripe for upgrading. Many are relatively characterless places, with spread-out working class populations living in cookie-cutter houses on large lots and commuting long distances to work. These suburbs have to rebuild from the bottom up.


Languishing older malls are a good place to start. In Phoenix, three abandoned strip malls clustered around one corner have been converted into a restaurant, an upscale grocery, a chic bakery and a cocktail bar. It’s called La Grande Orange, and it has become a huge attraction, for both customers and local home-buyers. National Harbor, a mix of hotels, residential units, marinas, parks, stores and indoor and outdoor entertainment venues, is being built on the footings of two previous failed projects in Prince George’s County, Md. When completed, it will extend along a mile and a quarter of the Potomac. Outside Minneapolis, the parking lot that surrounded a dead shopping center built on landfill was turned back into wetlands—which in turn attracted new “lakefront” townhome development.


Perhaps the biggest retrofit of all is happening in Tysons Corner, Va., the virtual archetype of an auto-dependent, sprawling edge city. Located near the junctions of three major highways, it boasts 25 million square feet of office space and four million square feet of retail space. Decades ago developers hailed it as the wave of the future—one of hundreds of new satellite centers that would render our old downtown commercial centers obsolete. But Tysons Corner has lately been losing out. Its perpetual traffic gridlock and its lack of human energy have caused home-buyers to choose other places. Some companies that were headquartered there have even moved back into the District of Columbia.


Now developers and landowners are seeking to make it more walkable, with a more integrated mix of uses. In June, the county’s Board of Supervisors adopted a comprehensive plan that would transform Tysons Corner into a “24-hour urban center where people live, work and play.” Its hallmarks will be green construction, access to public transportation and abundant public amenities, like parks and bicycle trails—something that sounds very much like a real city.


There are countless other opportunities for reclamation, all across America, as Ellen Dunham-Jones and June Williamson document in their 2008 book, “Retrofitting Suburbia.” Under-used golf courses can be transformed into parks and nature sanctuaries; abandoned car dealerships can be landscaped and developed as new, mixed-use neighborhoods. Developers can cut streets through formerly walled-off corporate campuses and add restaurants, stores and public spaces.


Historically, America’s economic growth has hinged on its ability to create new development patterns—economic landscapes that simultaneously expand space and intensify our use of it. The rebound after the panic and long depression of 1873 was based on the transition to an urban-industrial economy organized around great cities and their early streetcar suburbs. Our recovery from the Great Depression saw the rise of massive metropolitan complexes of cities and suburbs. Today the challenge is to remake our suburbs, to turn them into more vibrant, livable, people-friendly communities and, in doing so, to make them engines of innovation and productivity.


By Richard Florida
Via The Wall Street Journal
—Richard Florida is director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management and the author of “The Rise of the Creative Class” and “The Great Reset.”

IN LATE 1976, Pink Floyd arranged to have a pig-shaped helium balloon the size of a double-decker bus raised above the hulking Battersea Power Station on the Thames in London for a photo shoot. The balloon escaped its tether and the pig floated away, eventually landing in a distant pasture and badly frightening some cows. But the image of pig and brooding power plant was committed to film, and later graced the cover of the group’s album Animals.

So when talk of demolishing the station arose in 2005 (it hadn’t been running since 1983), Pink Floyd fans rushed to the barricades. “You don’t dare to touch my chimneys,” one declared on a fan site. Demolition would be “an act of vandalism,” wrote another. “Every effort should be made to save Battersea.”

The monumental structure, designed by Sir Giles Gilbert Scott and built in stages beginning in 1929, is now safe from the wrecking ball. After more than a quarter-century of debate, London’s mayor signed off on a plan late last year that puts the iconic brick structure and its smokestacks at the center of a development of mid-rise apartments, offices, and entertainment venues. The project encompasses almost 40 acres and will cost nearly $9 billion.

Across the Atlantic, in Brooklyn, another monumental project on a former industrial site is also finally moving ahead. The Domino Sugar Refinery in Williamsburg sits on nearly a dozen prime acres facing the East River. It’s long been a sentimental favorite—the 40-foot-high DOMINO SUGAR sign, with its jaunty script, sits like a comic-book dialog balloon over a grim Ashcan School tableau. The sugar factory closed in 2004; shortly afterward, it was acquired by the for-profit arm of a nonprofit seeking to build affordable housing. In 2007, the city landmarked the 1880s-era Romanesque Revival sugar refinery at the heart of the complex, and plans for its redevelopment called for residential towers to flank the old factory, much of which would itself be converted to apartments. Missing from the initial designs? The Domino sign. “It just looks empty, like there is a void,” Dewey Thompson, a member of Brooklyn’s Community Board 1, told a New York newspaper after seeing the designs at a meeting. Back to the drafting table: under revamped plans, a refurbished sign will glow again from atop the remodeled refinery.

The London and New York projects have several things in common. Chief among them: Rafael Viñoly, the Uruguayan-born, Argentinean-raised, New York–based architect famed for soaring steel structures such as the Tokyo International Forum and Seoul’s Samsung Jong-ro Tower. In charge of the master plan in both cases, he is designing new edifices for each site. But something else is worth noting: in both projects, Viñoly and his co-developers are trying to map a route through the hazy and treacherous borderlands that lie between architectural history and public nostalgia.

Viñoly’s studio is located on Vandam Street, in Manhattan, which by pleasing coincidence is the same street where William and Frederick Havemeyer established, circa 1807, the sugar factory that would eventually become Domino. When I spoke with him about the two projects, he radiated a wry detachment, sometimes sounding less like an architect than like an anthropologist trying to plumb complex and obscure rituals—in this case, how large-scale development navigates civic-preservation agendas on both sides of the Atlantic. And I thought I detected some irked undertones, as if he felt that he was working with a committee to design a setting for a jewel, rather than the jewel itself.

Viñoly made clear that he doesn’t think too highly of either gem he’s been handed. He panned the 1880s Domino factory as a pattern-book building, whose design was imported from Germany and is not native to the American industrial tradition. (What’s more, conditions in the factory may not have been worth celebrating. An 1894 story in the New York Tribune noted that the sugar-factory workers “are nearly all thin and stooped and rarely above middle age, it being a well-known fact that men employed in the refineries rarely live to old age.”) Viñoly designed the project to accommodate the factory; had it been torn down, he said, he likely would have arranged the buildings differently, playing off the nearby Williamsburg Bridge.

Although he acknowledged the heroic monumentality of Battersea, he’s slightly mystified by the public affection for the plant—people seem to forget that it is, after all, “a culprit in the history of pollution of the Thames,” and something that has helped destroy the climate. “It’s like preserving Dracula, somehow,” he said.

Cities are living projects, and must be constantly edited, often by an invisible hand—one structure needs to be deleted to make room for another, an early draft of this neighborhood is recast in a newer, tighter form. If nostalgia rules the day, nothing changes, nothing moves forward.

Still, it seems Viñoly may be more ambivalent than he need be about the historic structures on these sites—good arguments can be, and have been, marshaled that these buildings should be preserved for historic rather than sentimental reasons. But he’s right that, in general, nostalgia is gaining too much influence in these debates. “Train stations were done in the 19th century with some glamour,” he said. Now the preservation movement considers factories to be “as important as the Penn Station building, which they are not. But the narrative is the same.” Whether in New York or London, Viñoly lamented, the civic debate about setting preservation standards offers mostly shifting sands on which to try to construct something, before popular sentiment shifts yet again.

By WAYNE CURTIS, The Atlantic

The very rich have planes and helicopters and yachts. They can go wherever they want, whenever they want.

On today’s Planet Money, we pose a question being debated in state capitals around the country: Do the rich flee high-tax states?

We talk to a bunch of people and read a bunch of studies. We hear stories about rich people moving from high-tax to low-tax states — especially when they retire.

But when economists look at the big picture, the anecdotes don’t add up to data. As one expert tells us, “Taxes [have] essentially no impact on causing people to leave a state.”

For More:

Boston College study cited by NJ Gov. Chris Christie.

How taxes influence migration patterns in New England.
Summary: The impact of state and local taxes on migration is a perennial concern. When generating new revenues for public services is suggested, the prospect of people fleeing the state is inevitably raised. The available evidence, however, suggests that the impact of taxes on cross-state migration decisions is weak. There are many reasons households do not flee from a state when taxes are increased, including the fact that they value the public services financed by taxes, the cost of relocating to a different state (both financially and psychologically) is quite high, and the potential gains from moving are often small. The main reasons for moving to a different state are employment, family-related matters, and education. Taxes account for little of the migration from New England.

How a New Jersey tax hike affected millionaires.
Summary: This paper examines the migration response to a millionaire tax in New Jersey, which raised the tax rate on top earners by 2.6 percentage points, becoming one of the highest rates in the country. Drawing on complete NJ state tax micro-data, we estimate the migration response of millionaires using a difference-in-difference strategy. The results indicate little responsiveness, with semi-elasticities mostly below 0.1. Tax-induced migration is higher among people of retirement age, people living off investments rather than wages, and potentially those who work (and pay tax) entirely in-state. The tax is estimated to raise $1 billion per year and modestly reduce income inequality.

via EMSI & The Wall Street Journal’s: “Big U.S. Firms Shift Hiring Abroad: Work Forces Shrink at Home, Sharpening Debate on Economic Impact of Globalization”

On Monday of last week, the Bureau of Economic Analysis released its 2009 estimates of employment, sales, and capital expenditures for multinational companies. Jobs for these companies in the US have declined by 2.9 million jobs between 1999 and 2009, while jobs overseas have increased by 2.4 million (see the WSJ graphic below).

This looks like offshoring — and if there were crimes against labor markets, offshoring would be around the level of a felony, if not high treason. But before you get too worried by all this, read this post from Kash Mansori over at The Street Light. His take:

It’s easy to jump to the conclusion that this data indicates that MNCs are shifting jobs overseas, and that foreign employment growth is coming at the expense of jobs in the US. However, that is probably not what’s going on here. The vast majority of employment and sales by the foreign affiliates of US-based MNCs are serving the local market.

He bases this conclusion by looking at not only the employment numbers, but also the sales numbers. The short version:

… (T)he clearest implication of this data is that the primary motivation for (multi-national corporations) to expand their operations outside the US is not to produce stuff more cheaply there to be sold to the US. Rather, (multi-national corporations) expand overseas mainly to service overseas markets.

Which is to say that US-based multinational corporations are likely creating jobs in sales, customer service, and retail, and that means they are simply creating more ways for the world’s money to head back into the US.