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Politics & Government

How “good” must a job be for a company to qualify for new business tax incentives?

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The "Good Jobs for Michigan" laws incentivize companies to hire good-paying jobs in large numbers. But Michigan's unemployment rate is already relatively low.

Governor Rick Snyder recently signed into law a package of bills collectively dubbed “Good Jobs for Michigan.”

It’s a tax incentive intended to reward businesses that hire large numbers of Michigan employees. But it’s not exactly clear what qualifies as a “good job" under the new law. 

Lindsay VanHulle is a reporter for Crain’s Detroit Business and Bridge Magazine who has written about the legislation. She says there’s uncertainty about how the average wages would be calculated when figuring out whether a business qualifies for the incentive.

“[The law] says that companies would have to create hundreds or even thousands of jobs and pay at least the regional average wage in which it operates,” VanHulle said. “But it doesn’t say whether that means that employees have to be paid individually that amount, or if a company could take all the wages it pays to its entire workforce in that area and average it out together.”

VanHulle says the Michigan Economic Development Corporation is working out how to administer the law — specifically, how the regional average wage should be calculated for businesses hoping to qualify for the incentive.

One option is to say a company’s average wage must match the regional average wage to get the tax incentive. If a business hires hundreds of lower-paid employees, it would drive down its average wage. VanHulle says that could push companies to increase pay for typically lower-paid positions in order to bring that average back up. 

There is some speculation that Michigan’s low unemployment rate could mean that companies coming into Michigan and hiring at higher wages might end up poaching employees from existing companies, instead of creating jobs for the unemployed. The U.S. Bureau of Labor Statistics' preliminary calculation of Michigan's seasonally adjusted unemployment rate for June, 2017 is 3.8 percent. 

“Because unemployment is so low, the question is where are you going to find 3,000 people in Michigan who are unemployed and have the skills to fill some of these jobs?” VanHulle said.

Listen to the entire conversation with Lindsay VanHulle, reporter for Crain’s Detroit Business and Bridge Magazine, above.

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