Is Job Poaching Between States Worth It?

Jun 14, 2013

Attempting to lure a company from one state to another isn’t new. But some governors are attracting plenty of attention for so-called “job-poaching.” Illinois is one of several states that have been targeted by such efforts. But is it an effective strategy? 

Back in April, Rick Perry tried to make it clear: Illinois was a bad place for business, and that a new zip code for large companies located here might give them a new lease on life.

"This is Texas Governor Rick Perry, and I have a word of advice for employers frustrated by Illinois' shortsighted approach to business: you need to get out while there's still time" Perry said in a radio ad.

That radio ad campaign, which boasted limited government and low taxes in the state of Texas, informed Illinois businesses they could shed their misery and head down to the Lone Star State. The ads coincided with Perry’s visit to Chicago this spring.

Illinois wasn’t his only punching bag. In recent months, the Republican has visited other traditionally Democratic-leaning states, including California and New York. Other governors have hit the road in hopes of coming back with a Fortune 500 company in their pocket. Florida’s Rick Scott launched a campaign this year that took on a similar tone.

So, with these state leaders ramping up job-poaching efforts, you might  think, “This is an effective strategy, isn’t it?” Maybe not so much.

Political strategist Mike McKeon says a governor using this tactic to  score points with voters is out of luck.

“Most of the time, it really doesn’t have that much impact at all. It just looks good PR-wise,” McKeon said.

So if it fails to get the attention of voters, why spend money trying to create a media buzz? McKeon says the long-standing belief that any coverage is good coverage still applies.

“You’ve got the 24-hour-a-day news cycle – you throw it in there and see what fits,” McKeon said.

But McKeon says there are potential drawbacks.

“If a company leaves the state while you’re out trying to get another, people will ask, ‘Why weren’t you taking care of business at home?’,” McKeon said.

As for governors trying to fend off these economic assaults, McKeon says the worst they can do is respond. Instead, he says they would be wise to give em’ the old brush-off.

“When you say something, you give them a chance to respond again, and it heightens the attention on the thing,” McKeon said.

When political leaders DO respond, it can open the door to hard feelings. In the case of Rick Perry-versus-Illinois, not only was Democratic Governor Pat Quinn defending his state’s business climate, but Republicans also took issue with the campaign carried out by their fellow GOP member.

So if a PR victory is a pipe dream in these situations, the economic payoff must make it worthwhile – right? Wrong again, says NIU economist Jeremy Groves. He says past and current research has suggested that it’s nothing more than short-term political gain.

“In the long run, this ended up being more costly to the states because -- once the incentive package ran out -- you would see the firm requiring an even better incentive package to stay,” Groves said.

Illinois ran into that problem a couple of years ago when companies like Sears forced state leaders into a bidding war. Groves also says it can be very costly for a large corporation to just pick up and move, especially when it’s long-distance.

And what is it exactly that seems to put Illinois in the path of governors trying to steal their dance partner? Groves says the state’s budget problems make it an easy target. But, he says, for politicians out on a business hunt, Illinois is the land of milk and honey.

“We have a decent set of very large firms who have their headquarters, and it would be attractive for anybody to be able to poach those firms and their headquarters to their own location,” Groves said.

Unless all of these firms suddenly ditch Illinois for greener pastures, it’s likely that governors from other states will continue to hone their sales pitch.