Friday, June 28, 2013

Workers near victory in reform of faulty Calif. jobs program

California Gov. Jerry Brown is expected to sign legislation to change a corporate tax break that cost Teamsters their jobs.

The state Assembly yesterday approved the bill, AB 93, yesterday.

For years, companies across the Golden State used the $750 million-a-year enterprise zone program as a way to relocate good-paying jobs to other areas deemed economically challenged. Then the companies pay the workers less in the new location. In some cases, corporations used the tax breaks for hiring decisions made years earlier.

Brown called the program wasteful and pushed for reform. The bill approved by both chambers of the California Legislature this week strips the power of the state's 40 locally owned enterprise zones. It replaces the program with a broader slate of statewide business incentives. About $200 million would be used for updated enterprise zones that target the hiring of the poor and unemployed.

The California Labor Federation praised the legislation for replacing the existing program with one that will improve the state's job market:
By flipping the broken enterprise zone program into Gov. Brown's smart, strategic plan for job growth, the Legislature strengthened California's economic recovery. We applaud the Legislature for rooting out the waste and abuse in California's enterprise zone program and shifting those tax dollars to create good jobs that boost local economies.
The governor, unions and others had complained enterprise zones strayed from their original purpose. The program had turned into a big business giveaway for jobs that largely would have been available without the tax breaks. It often led a company to move from one place in the state to another. In several cases, employers left their unionized shops behind to set up non-union workplaces elsewhere.

Earlier this year, we noted Teamsters from building products distributor Blue Linx and laboratory supply and distribution company VWR lost their jobs when their employers moved elsewhere in California and they were told they could not follow the company to its new location. The enterprise zones program allowed businesses to receive tax breaks of $37,500 for each new employee they hired.