Michael Rathbone

The silver lining in this recent report regarding the continued underperformance of the IBM call center in Columbia is that taxpayers could have lost a lot more money than they already have.

Back in 2010, in an effort to spur job creation in Columbia, the city and state combined to award a $31.2 million incentive package to IBM so that it would place a new call center in the town. In return, IBM promised to create 600 jobs at the new center by 2013.                

Fast forward to March of 2015. Instead of 600 jobs, IBM had only created 453, far short of the number promised. Since then, things at the call center have deteriorated even further. Employment now stands at 388. This has prompted the state to withhold $800,000 in additional funding for the call center.

                Again, it’s good that the city and state didn’t give away the whole $31.2 million to IBM, but they’ve already have spent a lot of money (at least $10 million) on this project. Probably the most egregious part of the incentive package is the fact that the city of Columbia actually owns the building where the call center is located. This building cost the city $3 million and IBM’s rent is a miniscule $1 every year.

We were bearish on this plan when it was first enacted, and unfortunately for taxpayers, we were proven right. Tax credits are not a good economic investment, and their failure is not isolated to Columbia.

What is happening in Columbia is just another example of the consequences that occur when government picks winners and losers. If policymakers want to create economic growth, they should work to create a business environment that is welcoming to everybody and not just Big Blue. 

About the Author

Michael Rathbone
Policy Researcher
Michael Rathbone was a policy researcher at the Show-Me Institute. He is a native of Saint Louis and a 2008 graduate of Saint Louis University, where he earned a bachelor of science degree in biomedical engineering.