Quick Hit Ellyn Fortino Tuesday February 10th, 2015, 7:31pm

Corporate Subsidies Contributing To Economic Inequality, Study Shows

State and local economic development subsidies awarded to large corporations are exacerbating inequality in America, argues a recent report by Good Jobs First.

Such subsidies are intended to spur economic development and job creation. But, as the report points out, they tend to be given to low-wage employers as well as billionaire-owned "profitable, growing companies that do not need tax breaks to finance a project, meaning that the subsidies serve mainly to increase profits."

"Inequality has many causes, and now we can say development subsidies are among them," said Greg LeRoy, executive director of Good Jobs First, a Washington, D.C.-based subsidy watchdog group. "Subsidies are being awarded to large, profitable companies controlled by billionaires such as Warren Buffet's Berkshire Hathaway, while we have too many communities that really need the help."

For its report, Good Jobs First tracked taxpayer-funded incentives doled out to major low-wage companies and firms connected to members of the Forbes 400 list of the wealthiest Americans.

Its findings showed that about a third of Forbes 400 members, "including every one of the 11 wealthiest individuals and all but two of the richest 25," are tied to 99 total companies that have collectively received $19 billion in development subsidies from state or local governments.

In addition to Berkshire Hathaway, which has landed $1.2 billion in subsidies, other firms connected to Forbes 400 members that have won hefty incentives include Microsoft ($203 million in subsidies), Wal-Mart ($161 million in subsidies), Koch Industries ($154 million in subsidies), and Oracle ($18 million in subsidies), to name a few.

"Subsidies are not the primary source of the Forbes 400's wealth, but they contribute to it in a way that makes things more difficult for working families," the report reads. "When large corporations controlled by billionaires are given lavish taxpayer subsidies, the rest of society--especially working families--gets stuck with a larger share of the cost of essential public services."

Good Jobs First calculated the incentive amounts based on information in its "Subsidy Tracker," a database containing "more than 260,000 company-specific entries covering more than 550 state and local subsidy programs in all 50 states and the District of Columbia."

Additionally, the group found that 87 companies with predominantly low-wage workforces have collectively received $3.3 billion in development subsidies, which each firm pulling in more than $1 million in incentives.

According to the report, "the low-wage companies with the most in subsidies are: Sears ($536 million), Amazon.com ($419 million), Cabela's ($247 million), Convergys ($202 million), Starwood Hotels & Resorts ($166 million) and Wal-Mart Stores ($161 million)."

Overall, retailers made up most of the 87-company list, with 60 firms raking in $2.6 billion in total subsidies. Good Jobs First researchers found those figures concerning, noting that the retail sector "is supposed to be disqualified by many economic development program rules." Another $244 million in taxpayer dollars went to the hospitality sector, which "is also troubling, given that it includes fast-food chains, among the lowest paying large companies and the target of an ongoing organizing campaign to raise wage levels," the report says.

Eight firms cited in the report that have benefitted from large subsidies are both low-wage employers and connected to Forbes 400 members, including Allegis Group, Amazon.com, Bass Pro Shops, Best Buy, Meijer, Menards, Sears and Wal-Mart.

"Subsidies are certainly not the main cause of growing inequality," LeRoy added. "But subsidizing billionaires and low-wage companies is a strong facial connection that our Subsidy Tracker now enables us to make."

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