What’s the one thing that could make losing one’s job even more painful? It’s when you lose your job and then have to PAY for your employer to pack up, leave you behind and open their doors elsewhere. And we’re not talking about pocket change; we're talking about $700 million or more every single year for the rest of your life.
Sounds too crazy to be true, right? Well, welcome to the California Enterprise Zone (EZ) Program. The EZ program gives tax breaks to businesses located in any of 40 Enterprise Zones that cover most of the state. Employers can claim up to $37,500 in tax breaks for every “new” person they hire.
Workers at VWR International and Blue Linx are living proof of the devastation that EZs can cause. Teamsters Local 853 has represented workers at both VWR and Blue Linx for years, and workers had good union wages and benefits. But these companies realized that the EZ program offered them perks that they couldn’t refuse.
Workers at both companies were willing to move to follow their jobs, but in order to get the EZ hiring credit, the companies could not bring along any of their current workers. Blue Linx closed down their Newark location in February 2013. Workers at VWR lost their jobs in December, 2012—just in time for the holidays. Meanwhile, the New York Times reported that VWR received $5.6 million in tax subsidies from California taxpayers.
Senator Jerry Hill has proposed legislation (SB434) to reform EZs by only paying for new net jobs (if there were 100 people in the original location, and 100 people are hired in the EZ, the company gets no tax credits.) Among oth
er reforms, the law would require job quality standards, paying at least $16/hour and meeting retention standards; temp agencies would be prohibited from taking the credits; transparency is created; and tax consultants, who ultimately drive up the costs, would be regulated.
Job creation is everyone’s goal. Creating low-paying jobs at the expense of current workers benefits nobody.