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EDITORIAL: City gets creative with Carrier cash

August 5, 2017

When a large employer slashes hundreds of jobs, it grabs headlines. We all sympathize with the displaced workers and their families, for whom the sudden loss of a regular paycheck can cause gut-wrenching economic despair.

If only someone could step in and ease their burden.

That’s exactly what the city of Indianapolis is trying to do for many of the 630 Carrier Corp. workers who are losing their jobs as part of a plan by United Technologies, Carrier’s parent, to move a portion of its local operation to Mexico.

Mayor Joe Hogsett announced in late July that the city wants to help those who are losing their jobs at Carrier by spending up to $2,000 per employee. Half of that would be “transition assistance” for each worker in the form of reimbursement for expenses related to transportation, child care, utility bills, tools and new work equipment. The remaining $1,000 could be claimed by any business that hired one of the displaced workers, on the condition they be paid at least $16 an hour and retained in the new position for at least a year.

The rare city offer deserves careful evaluation to determine its effectiveness.

The assistance and incentive would be funded with the roughly $1.2 million in previously received tax incentives Carrier returned to the city after it announced last year it was moving jobs to Mexico. The city’s plan, which must be approved by the City-County Council, has raised questions about what the city should do with so-called “clawbacks,” the incentive money companies return when they don’t follow through with jobs plans.

Unfortunately, the Carrier repayment is unusual and unlikely to be repeated. In a typical clawback, the employer repays the city a pro-rated amount based on how many years are left in an incentive deal at the time the deal is violated. That amount is then split among the city’s various taxing units. Carrier was in year five of a six-year deal. The remaining year it was obligated to make good on would not have provided much money. But, perhaps because of the high-profile nature of the Carrier pullout, which happened amid the 2016 presidential race, the company agreed to repay the entire value of its original incentive.

That means the city got one fat check with no strings attached.

Using the funds to help displaced workers seems laudable, but it’s not a slam dunk. It remains to be seen, for example, how meaningful the $1,000 per employee, a relatively small amount, will be. Or whether the incentive for new employers will be effective in finding new jobs for former Carrier workers.

The loss of good-paying factory jobs to other countries or to technological advancements is an intractable problem nationwide. We applaud the city for being creative with its Carrier windfall. Time will tell if the strategy works and whether it will offer lessons helpful in coping with future job losses.•

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To comment on this editorial, write to ibjedit@ibj.com.

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