Not only are targeted incentives not uniformly applied, they seem to be awarded to an alarming number of large firms, who demand bigger dollars. Finns with fewer than 20 employees produce three times the job growth of those with more than 500 employees. Many times, firms are able to command astronomically high incentives like those cited by USA Today by playing one state off another, often at a dramatic cost to the states. Meanwhile, the state was under judicial mandate to spend hundreds of millions on its ailing public school system. Many times, after the smoke from the bidding war has cleared, states are left with few rewards for their huge benefit packages.
Incentive programs are in fact a minor factor in plant location decisions for most firms.
A 1993 survey by the International Association of Corporate Real Estate Executives and the American Economic Development Council surveyed 800 corporate real estate executives who rated incentive programs 14th out of 17 factors that influence site decisions. Make sure the community works from key operating cost and condition perspectives. David Birch, Anne Haggerty, and William Parsons agree. In other words, infrastructure matters, and the higher the bidding war pushes prices, the less money states have to pump into exactly what matters to businesses the most. They're more like gardens to be watered and tilled.