Taxpayers in NY, Erie County, and Buffalo will pay about $133 million to Adelphia Cable, which has
promised to create 1500 new WNY jobs. Illinois and Chicago taxpayers will pay $63 million to Boeing
for almost 500 jobs. There are some parallels in the tale of these two corporations.
The contest to lure Boeing into making Chicago the location of its world headquarters saw three cities
pitted against each other: Chicago, Denver and Dallas-Ft. Worth. Because of a $63 million incentive
package, Boeing will move its headquarters to downtown Chicago this summer, leaving Seattle, where it
has been since 1916.
Interestingly, three big cities vied, with millions in hand, for a company that promised less than 500
hundred jobs, but Chicago and Illinois officials said they thought there was plenty of ripple effect,
prestige, and potential for job growth.
Of course, not entirely unlike the Adelphia deal, nothing is guaranteed. According to Buffalo Council
President James Pitts, a little known provision in the Adelphia deal - which claims to promise 1500 jobs
- the deal allows for an escape clause for Adelphia, in the event of a "downturn in their industry." In
short, if business is bad for Adelphia, it can, in effect, pay back a fraction of the $133 million in
incentives and grants and pocket much of the rest.
Chicago Mayor John Daley, and Illinois Gov. George Ryan, lured Boening with these benefits: The state
pledged $41 million, and the city promised $3 million in grants, and $19 million in property tax
abatements over 20 years. Of course, only headquarters is moving; no other jobs are promised. Boeing
presently has more than 78,000 of its nearly 200,000 employees in Washington state. That could also
change.
Boeing officials are undoubtedly pondering what kind of multi -municipal bidding war could be ignited if
Boeing "threatened" to move their rank and file employees. They just negotiated $63 million to move
their headquarters; Adelphia will pocket $133 million after it "threatened" to move out of WNY. This may
be the new American shell game: Move or threaten to move, and rake in millions . Current price
$100,000 per job.
Subsidized employment for highly profitable companies makes them more profitable. The quid pro quo
of economic ripple effect, and jobs for locals, however, disappears when enough corporations get on the
bandwagon. Consider, Chicago pays $63 million to get Beoning, and 500 jobs. In turn, Seattle loses 500
jobs. But suppose, Seattle pays $63 million to lure some Chicago based company to relocate to
Seattle. What happens then is that the taxpayers in each city are out $63 million, with no net gain of
jobs.
An Illinois sponsored study concluded that Boeing’s relocation will generate $4.5 billion in local
economic benefits over two decades. Some of the study’s premises - like so many studies of this type -
are flimsy. Among them is that every job Boeing creates will create five outside jobs. Even if it were true,
Chicago’s gain of $4.5 billion will mean Seattle loses the same amount. Should Seattle have paid $70
million to keep Boeing?
If Rich products of Buffalo needed a huge capital boost, and threatened to move its headquarters to
Seattle - how much could Rich rake in from taxpayers - here or in Seattle? Who, among local
politicians, could resist offering incentives? If Rich Products or the Buffalo Bills Inc. threatened to
relocate, who, among politicians, would say "No, it’s a dammed horrid policy to bid taxpayer money to
keep corporate jobs. It’s bad for us as a nation, although good perhaps for us locally. As we win jobs,
somebody else loses them, and, sooner or later, vice versa. Let the Buffalo Bills go."
But it doesn’t happen that way. Sears, Roebuck & Co., threatened to move out of Chicago ten years
ago, and officials promptly gave them $180 million, and they stayed. Possibly they weren’t even serious
about relocating. Nobody knows for certain..
In any event, Illinois and Chicago will pay $63 million for their new company, .Seattle lost a company
associated with their city since 1916, and Denver, and Dallas, who couldn’t, or wouldn’t pay as much,
lost out... or did they? Interestingly, there is no guarantee of Boeing’s long term stay in the Windy city.
But those who worked to secure the Chicago deal point to factors more applicable to Boeing than to
Adelphia. Boeing is a household name; its headquartering in Chicago is an immense public relations
coup.
"The economic value at this point is almost impossible to calculate," said Mary Sue Barrett, president of
the Chicago’s Metropolitan Planning Council. "It will have huge ripple effects... Headquarters
(operations) tend to employ attorneys, ad agencies and accountants."
Boeing, like Adelphia, is expected to grow into new business areas and employ new people. Buffalo
Mayor Anthony Masiello, Erie County Executive Joel Giambra, and NY Governor George Pataki, and
their Illinois counterparts, secured their prizes with taxpayer money. The happy "Boeing-ites" displayed
on the marquee of the Chicago Theatre: "Chicago Wins! Welcome Boeing." Perhaps WNY could put up
a similar marquee: "WNY Wins. Welcome Adelphia,." and add, "You came at one hell of a price."
