November 27, 2024
BANGOR DAILY NEWS (BANGOR, MAINE

Subsidizing low wages

Unemployment low? Check. Job growth strong? Check. International trade up? Check. Wages rising? … Wages rising? Anyone?

The check is in the mail on that one. Low wages — the state ranks 36th or 38th nationally in this category — remain a serious problem in Maine, as Gov. Angus King pointed out in his State of the State address last month. So when the Legislature’s Taxation Committee meets today to consider whether wage and benefit standards should be expanded in Maine’s business-subsidy programs, improving income levels should be at the forefront of the conversation.

These kinds of requirements are not unique to Maine, which has standards on some but not all of its subsidy programs, and not on its fastest-growing program, the Business Equipment Tax Reimbursement program (BETR). Thirty-six other states have job-quality standards that must be met if a company is to receive a tax break. Several proposed bills being heard today require all incentive programs to include wage or job creation goals or both, and would expect the money back if the business failed to meet the goals or left the state.

This is particularly important for the BETR program, which encourages businesses to invest in equipment. Sometimes this subsidized investment leads to a company’s expansion and more jobs. But other times it leads to a more-automated workplace and fewer jobs, in which case the laid-off worker not only loses employment but has the pleasure of paying state taxes to do it. What the legislation scheduled for today asks generally is for the state to make a distinction between the first situation and the second.

The Maine Citizen Leadership Fund, which spends a good deal of its time sifting through the data turned in by companies receiving subsidies, finds that a substantial percentage of them paid below-average wages. Why they paid poorly isn’t specifically known. Some of the companies receiving state aid are the typical national mega-corps, which pay poorly everywhere. Others may be struggling to meet payroll and still cover health care costs. Still others might be startups looking for a small state investment now that will pay off handsomely in the future. It needs hardly be said that the state means tests all sorts of social-service programs — Medicaid, food stamps, WIC, etc. The question is whether it will hold corporation owners to the same standard that it holds single mothers.

Only about 3 percent of Maine businesses take advantage of the BETR program, and of those, only a tiny percent receive a large majority of the funding – perhaps two dozen out of the 36,000 for-profit businesses here. That doesn’t mean this subsidy and others like it aren’t valuable and it certainly doesn’t mean that Maine should give up on using them as tools to help businesses. It is useful to remember, however, that the state is supposed to be acting in the best interests of citizens and that these subsidies are a useful way to help raise Maine’s poor wage rate.


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