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Comment by mattgrice | Hacker News Reader

Say you're a support person working at IBM in Dubuque, Iowa, where local and state taxpayers spent $50M to lure IBM in a delusion of becoming a tech hub. [1] You specialize in Lotus Notes support for local businesses like Hormel. Last year, IBM laid off 2/3 of their Dubuque workforce, 700 people, in a city of 60,000. More than 1% of the population. Your only skill is Notes, same as dozens of other people that were laid off. The nearest cities of any note are Cedar Rapids and Madison, both more than an hour away. You know you need to get out, but where and how?

[1] http://www.bloomberg.com/news/articles/2015-05-19/iowa-spent...

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Very good point - the human toll is tough. Did Dubuque get anything in writing about the jobs to be provided? $50M in tax breaks to support 1000 jobs is very expensive!

This might be a case of (X-50 Million) (X being the taxes on 1000 jobs) is bigger than 0 (amount of taxes collected on non-existent IBM office)

But you're not factoring in the cost of the services for that office and the people who work there.

Let's do some math from a source [0]

Sounds like 1300 jobs paying 46K, double the local average, over the course of 6 years.

From a "paying taxes to buy higher salaries" point of view this is 1300 * (0.5 * 46K) * 6 ~= $180M. Sounds like a positive NPV transaction. But... How much of the increase does the city and state actually capture in Taxes? Let's call it 15% between city, state, local and sales. (This is very fuzzy math) Then you get 180M * 0.15 ~= 27M.

In the end it sounds like the city and state of Dubuque did a wealth transfer from taxpayers to a subset of local employees, many of whom are now jobless and will need to go back to $23K jobs or move.

These types of arrangements frequently end poorly. If the local market won't bear a certain wage rate, it's hard for one-off tax rebates to fix things. You need to go deeper - change the entire tax regime, improve the education system, etc.

Cringely [1] opines on this too.

[0] http://www.bloomberg.com/news/articles/2015-05-19/iowa-spent...

[1] http://www.cringely.com/2012/04/18/somethings-rotten-in-dubu...

A gentle point - Here is the value of statying in a large city like NYC. Despite its downfalls, and there are many of those, one thing it does not lack is a spectrum of jobs.

But you take that risk moving to a no-tech area. The best solution is to not put yourself in a position you need to get out of.

And if that means the next Dubuque company needs to be offering million dollar salaries to engineers to get commit themselves out there - since there would be no other opportunities and you would be stuck, so you better have a massive nest egg after five years - then so be it.

But there are many situations what you get yourself into that seem like a good idea at the time. It's impossible to make predictions about future events. The IBM employees getting laid off here are not responsible for the corporate decisions to outsource their jobs, and don't deserve the blame.

Or reverse it, what if you're a blue collard worker in a disadvantaged community that IBM just moved into, they lure you into training at IBM in a narrow skill set with the promise of becoming white collard.

Can't blame someone for taking that risk.

Decentralized economy is good on a macro level but bad for people who live outside the biggest most diversified cities.

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