Top Ten Reasons to Shut Down Enterprise Zones

by Sara Flocks, California Labor Federation

1. A FAILURE: They’re a job creation program---that DOESN’T CREATE JOBS!
2. TOO EXPENSIVE: Taxpayers have spent $3.6 billion on the program since 1986 and the total cost has grown by 35% each year on average.
3. MONEY FOR BIG CORPORATIONS, NOT SMALL BUSINESS: Major corporations with assets over $1 billion, like Wells Fargo and Nordstrom’s, benefit the most from the program. Even big banks get a cut!
4. REWARDS HIGH TURNOVER: The hiring tax credit is for new “hires” not new jobs and the amount of the credit decreases the longer a worker stays on the job.
5. REWARDS LOW-WAGE JOBS: The hiring credit caps at 150% of minimum wage, meaning that employers have an incentive not to pay higher wages—it doesn’t increase how much free money they get.
6. DOES NOT BENEFIT HIGH UNEMPLOYMENT AREAS: Businesses in downtown financial districts in San Francisco and Los Angeles get the most tax credits while rural areas with high unemployment, like Calexico, get much less benefit from the program.
7. MONEY FOR NOTHING: Business can claim “hiring” credits for workers they hired up to four years ago and even for workers who have left the job.
8. UNFAIR TO GOOD EMPLOYERS: Employers not in Enterprise Zones who want to stay rooted in their communities are at a competitive disadvantage with those firms that fire workers and relocate to get EZ tax credits.
9. CASH COW: EZs spawned a cottage industry of consultants that troll EZs for businesses who are unaware of the tax credits. They fill out a few forms and take a cut of the tax savings. They’re parasites on the EZ program, getting fat sucking up taxpayer dollars.
10. SCHOOLS OR ENTERPRISE ZONES?: If the EZ program is not eliminated, the state faces a $924 million hole in the budget. What will we do then? Fire more teachers? Kick more low-income seniors off the IHSS program? Sell our state parks?

Learn more about Enterprise Zones.