Misery Loves Company: Wisconsin Not Alone in Having a Troubled Jobs Creation Agency

Friday, October 25, 2013 at 5:57 AM by

Public-private jobs creation agencies, like the Wisconsin Economic Development Corporation, are inherently susceptible to problems with accountability, conflict of interest, and public disclosure. That’s the message of a new report by Good Jobs First, which shines a spotlight on WEDC as an example of a partly privatized jobs creation agency beset by accountability issues.

The report includes a five-page summary of the problems that have affected WEDC since it was created in 2011, which include:

  • Spending federal money without legal authority to do so;
  •  Failure to track past-due loans awarded to businesses;
  • Erroneous or unrecorded financial deals; and
  • Inadequate verification of whether companies getting subsidies met performance requirements.

These types of problems aren’t unique to the WEDC. The report details similar issues that have arisen in several other states that have converted their economic development arms to public-private partnerships, including Arizona, Indiana, and Florida.

WEDC officials scoffed at the new report. “Frankly, the concerns raised in this report are old news,” said a WEDC spokesperson in this The Capital Times article. That’s true enough, in the sense that the Good Jobs First report doesn’t include any new allegations of sloppy management by WEDC. And the management issues plaguing WEDC have been well-documented in Wisconsin newspapers, albeit in a piece-meal fashion. But it is still useful (and alarming) to read a detailed and comprehensive history of WEDC and all the problems it has faced in its short and troubled life. After reading the summary, it’s hard not to agree with Republican Senator Rob Cowles, who said about the WEDC, “They’ve got to fix this thing.”

The problem is that it may not be possible to fix WEDC. Problems with accountability, management, and conflicts of interest are baked into the model of public-private job creation agencies like WEDC, according to the report, which offers several conclusions about the downsides of privatizing this function:

  • Economic development is already corporate-dominated. Privatizing the state’s economic development function gives further leverage to companies seeking to lure states into poaching jobs from one another.
  • The lower level of transparency and accountability required by private economic development agencies compared to their public counterparts can lead to poor decision-making in how to spend public money.
  • Privatization favors big businesses that have the staff and expertise to woo private economic development agencies, leaving small businesses out in the cold.

Creating the WEDC was one of Governor Walker’s first initiatives after taking office, and he clearly places a great deal of stock in its ability to help Wisconsin create jobs. But if the Good Jobs First report is correct, then the privatized nature of WEDC will mean the agency could face more, similar problems in the future.

Tamarine Cornelius

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