by Paul A. Jargowsky

“Camden is solved,” New Jersey Lt. Gov. Kim Guadagno triumphantly proclaimed at a recent charity event. That’s funny, I thought, given that the city’s poverty rate hovers around 40 percent and its streets – where I had just gotten lost on the way to the elegant gala – are still filled with potholes, dilapidated housing, vacant lots and the ruins of former industrial sites. She was referring, however, to the Economic Opportunity Act of 2013, which has doled out $1.3 billion in tax breaks over 10 years to selected companies who agree to move to the beleaguered city. But what will this massive program accomplish?

Recipients of the program’s generosity include Holtec International ($260 million), a manufacturer of small nuclear reactors; the car maker Subaru ($118 million); EMR Eastern ($253 million), which recycles metal; American Water Works ($164 million), a utility company; and the Philadelphia 76ers ($82 million), who recently held the grand opening for their new practice facility. Camden is clearly better off to have these companies building new facilities and moving their operations within city limits. All of these companies, however, are moving from nearby locations within Camden County or a neighboring county and are bringing most of their employees with them.

Indeed, none of the companies receiving this public largesse is under any obligation to hire Camden residents. Many of the city’s neediest people lack a high school diploma or formal work experience. Some, particularly the men, have felony convictions that will severely limit their chance of working on, say, nuclear reactors. To the extent that any Camden residents are hired by these companies, they are likely to be those who already were employed elsewhere in the region. That may shorten their commute, which is nice for them, but produces little net gain for the city. Perhaps this is not surprising, given that the state’s cost/benefit analysis of proposed projects only examines net benefits to the state as a whole, not the host communities.

To be fair, some of the companies have made commitments to provide a variety of community benefits.  Subaru, for example, has helped the nonprofit youth development organization Hopeworks provide internships and software coding workshops to Camden youth. But this is a miniscule payoff to Camden for a $1.3 billion investment of public funds. In fact, the costs to the taxpayers per new job created are astronomical: $782,000 at EMR, $658,000 at Holtec, $382,000 at the 76ers and $196,000 at Subaru.

The question is not whether the program will do some good; it surely will. The question is how much more could have been done with the same investment of public funds. $1.3 billion is $52,000 per Camden household – or $130,000 per Camden household below the poverty line – in a city where the median household income is $26,000.  With the same resources, you could make a tremendous difference in the lives of Camden residents. Pre-K programs have been shown to have the highest return on investment of any social program. Investments in human capital, such as GED completion and vocational training, would help unemployed residents be competitive for jobs, wherever they are located. Zero-interest loans to bring homes up to code would improve the city’s quality of life and stabilize communities. The City’s residential streets, sewers, parks and other public spaces are badly in need of repairs. It is hard to argue that the state couldn’t afford to spend $1.3 billion over 10 years on these concrete benefits for Camden, since that is the amount they have just committed to giving away.  While direct expenditures are inevitably more subject to political scrutiny than foregone tax revenues, the effect on the state budget is the same either way.

So if Camden doesn’t receive the benefits, who does? Suppose the Philadelphia 76ers built their practice facility without the benefit of the law. Over 10 years, they would have paid $82 million in property taxes and other fees or a similar amount elsewhere (unless they were able to negotiate similar concessions in another community). Instead, the ownership of the 76ers gets to pocket that money or reinvest it, increasing the value of their company. One can only hope the quality of the team improves, but little, if any, of this expenditure will improve the lives of the vast majority of Camden residents.

The gravy train does not stop there. The increase in corporate profits creates a veritable slush fund of campaign cash for the bipartisan coalition of politicians who created the legislation and steered benefits to favored companies. CEOs and major stockholders of the chosen companies will be expected to make campaign contributions to candidates and PACs as directed. “Payto play” is alive and well in New Jersey, and the devious beauty of this legislation is that it supports this corrupt system while appearing to be doing something noble.

In the words of Camden community leader Ray Lamboy, “If the redevelopment of the city is devoid of substantial, deep and lasting grassroots development, we will have only created new buildings protected by fences and surrounded by poverty.” Is it any wonder, then, that voters become disgusted with both parties when politicians collude to hijack public funds meant for poor communities?

Paul A. Jargowsky is director of the Center for Urban Research and Education at Rutgers-Camden and a 2016-217 Fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford University.