My name is Jeff McCourt. I am Research Project Director for the Illinois office of Good Jobs First. Good Jobs First is a non-profit, non-partisan research center promoting accountability in economic development. We track the use or misuse of economic development incentives, or subsidies, and promote what we believe are best practices.

I appreciate the opportunity to present testimony to Senator Ronen and other members of the Senate Labor and Commerce Committee.

Earlier this year, Good Jobs First published A Better Deal for Illinois, a critical review of the states economic development policy over two decades. In this report we focused on how well this policy contributed, or failed to contribute, to public accountability for the use of subsidies, quality of jobs created, and the state's ability to recover public investment when subsidized companies failed to keep investment or job creation commitments.

Good Jobs First for several years has had a big focus on "big box" development, particularly when it is funded by public subsidies and when it contributes to sprawl. Recently an article in the Florida Palm Beach Post described how Wal-Mart, perhaps the most aggressive of the Big Box chains, had successfully garnered over $150 million in various public subsidies in Florida and other states--money that we think is largely unjustified.

Our general conclusion is that the costs generated by such development may often exceed the public benefits and make public investment by states and local governments in big box development.

As other witnesses have noted, these big box developments often pay inferior wages and offer few or no benefits. Only 38% of Wal-Mart employees have company provided health insurance--compared to a national average that shows 60% of employees are covered by company plans. Facts like these accelerate trends like that described in yesterday's business section of the Chicago Tribune--falling or stagnant wages at the nation's biggest companies as well-paying manufacturing jobs disappear and union membership declines.

Poorly paid, uninsured workers erode the state and Chicago region's tax base and raise public sector costs, as do big box stores at the edge of suburban communities that kill their downtown districts and promote traffic congestion and sprawl.

While creating new costs, big box development does little to cut existing costs. Public support for such suburban big box development does little to create job opportunities for disadvantaged workers who don't have the cars or public transit to reach them, or can't afford to live in the communities where they are located.

Good Jobs First thinks that the state and Illinois local governments should look carefully before they use or allow the use of tax increment financing and other anti-blight, anti-poverty economic development measures in projects that don't benefit disadvantaged citizens, either because the jobs created don't pay a living wage or are not accessible to these citizens.

We also think the state should look hard at providing state and local financial aid to big box companies like Wal-Mart, now the world's largest company. In 1996 Wal-Mart received over $2 million in Illinois state and local assistance for a distribution site in Olney. There was apparently no consideration of the impact of on existing Illinois businesses and jobs on this public contribution to the competitive infrastructure of a retailing giant.

We applaud the efforts of citizens in Plainfield, Galena and Antioch to oppose, even when unsuccessful, big box construction, and Senator Ronen's legislation earlier this year to block further big box/superstore development. We think Mayor Daley was right last year to laugh, as the Tribune reported, when Wal-Mart demanded an $18 million subsidy.

As Wal-Mart and other big box type stores launch their drive to locate in the city, Good Jobs First thinks it will be crucial, at the least, to insist that any public investment (if justified) be tied closely to clear commitments on neighborhood benefits and to company compliance with federal and state labor laws.

Support for restraining the publicly funded, unrestricted growth of big box chains is growing. In August, Good Jobs First released a national study based on interviews with 50 labor federation leaders; it finds that they see serious problems in their regions caused by suburban sprawl. They increasingly have advocated for urban reinvestment policies that have come to be called smart growth, including fighting "big box" retail projects. (I have brought a copy for the committee.)

In August, Illinois adopted the Corporate Accountability in Tax Expenditures Act (Public Act O93-0552). Illinois is now a leader in the national movement to subject state economic development subsidies subject to full disclosure, evaluation, and accountability. We hope this tremendous step forward can be extended to evaluating public investment in big box development that is likely to be in most cases unneeded and actually contrary to the interests of Illinois communalities, businesses, and workers.

CONTACT: Jeff McCourt
312-332-1480
jeff(at)goodjobsfirst.org