Taxpayers fund firm’s outsourcing

How many jobs should a company have to create to get more than $5 million from North Carolina’s taxpayers? And how many of those jobs should go to North Carolinians?

Tax incentives for corporations are controversial enough when the company’s promised jobs go to local residents – or at least to Americans. They become even more questionable when those jobs go to foreign nationals here on temporary guest visas.

Last month, North Carolina awarded Fortune 500 company Cognizant Technology Solutions up to $5.088 million over 12 years for expanding its N.C. presence, including hiring 150 workers in Charlotte and 350 elsewhere around the state. State and local economic developers and elected officials gushed about the deal.

Editorial board member Eric Frazier, then a business reporter, noted at the time that Cognizant is a leading provider of “outsourcing” services, meaning shipping U.S. jobs overseas. And he asked Cognizant if it would hire foreign guest workers to fill the N.C. jobs and qualify for the incentives. The company dodged the question.

Now, WFAE’s Ben Bradford reports that the N.C. Department of Commerce apparently didn’t consider Cognizant’s role in moving U.S. jobs overseas. And he says that public records on H1-B visas and L-1 visas suggest that 75 percent to 90 percent of Cognizant’s U.S. workers have been brought in from India and other countries. Most of them don’t stay here; Cognizant sponsors less than 12 percent for permanent residency, Bradford reports.

Ron Hira, a Howard University public policy professor, told Bradford that North Carolina’s offer to Cognizant is “a bit surprising.”

“If I was a North Carolina taxpayer I would be really baffled and shocked that we would be taking our tax dollars and subsidizing a firm that’s actually going to be a net negative for the economy,” Hira told Bradford.

The Charlotte Chamber referred the Observer editorial board to the state Department of Commerce. Commerce spokeswoman Kim Genardo points out that state law does not preclude use of H1-B visa workers to fulfill incentive requirements. And she argues those workers, even if they are not North Carolinians, contribute to the economy by buying goods and services here.

But Commerce’s indifference about who gets the jobs points to a flaw in the state’s approach to economic development. Commerce officials and politicians are eager to trumpet the jobs they are attracting to Charlotte and North Carolina, but seem less concerned about what business the company is in, what its overall impact on the local economy will be or who will fill the jobs.

In Cognizant’s case, there is nothing to prevent the company from filling all 500 new jobs with foreign nationals on temporary visas. Those employees will pay income taxes to the state, but the deal would do nothing to give North Carolinians jobs. In fact, with Cognizant expanding its work with N.C. clients, the deal might actually cost North Carolinians their jobs. And that’s nothing to cheer about.

This story was originally published December 21, 2014 at 12:00 AM with the headline "Taxpayers fund firm’s outsourcing."