The following ran in the June 16, 2012, edition of the San Antonio Express-News. Economist Bernard Weinstein provided expertise for this story.
June 22, 2012
By John W. Gonzalez and Vicki Vaughan
Bexar County commissioners are considering an unusual deal that would give millions of dollars worth of incentives to a food manufacturer that plans to build a factory and hire hundreds of workers, but at the minimum wage of $7.25 an hour.
Last week, Bexar County authorized economic development officials to negotiate with Maruchan Inc. of Japan, which wants to open a Ramen noodle factory, warehouse and distribution center in the southwest part of the county.
Maruchan said it would employ 35 to 55 people but would turn to a contractor to hire as many as 600 factory workers. Those workers would be offered health-care benefits, including dental and vision plans, a Maruchan representative said.
County Judge Nelson Wolff acknowledged the jobs don't meet the county's guidelines on wages, but he said he supported the project and the $5.8 million in incentives because it would have a “lasting impact.”
San Antonio Mayor Julián Castro expressed some reservations.
“I'd be lying if I said this one wasn't a close call,” he said. “There were strong arguments on both sides. But this was an unusual case.
“I decided to stand by it,” he added, based on Maruchan's proposed investment of $325 million and the taxes that would be paid to local entities, including the Southwest Independent School District.
The incentive packages are provoking some hand-wringing, even as the city Thursday signed off on the deal by agreeing not to annex the plant for five years.
San Antonio has tried to change its reputation as a low-wage city,...
Such performance standards are important, said Bernard Weinstein, an economist with the Cox School of Business at Southern Methodist University in Dallas. “This strikes me as a pretty reasonable deal,” he said, “particularly if there are claw-back performance standards on the agreement.”
“I'm not a big fan of tax incentives,” he added, “but you're talking about a sizeable number of jobs. And facing reality, you have a large number of unskilled and semi-skilled workers in San Antonio.”...
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