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Cable BoxCall centers are bad economic development. The jobs don’t pay well and there’s little opportunity for advancement. There’s high staff turnover. Call centers are easy to open and close.

But none of these concerns stopped the state from awarding Time Warner Cable $3.1 million in tax breaks for a Buffalo call center that will employ 152 people.

This is a company that charges you $100 a month for cable and Internet service and raked in $21 billion in revenue last year.

The Buffalo News reports:

Assemblywoman Crystal Peoples-Stokes, D-Buffalo, said such jobs typically pay an average of $15 an hour nationwide, or $31,200 for a 40-hour workweek. That means roughly two-thirds of the average salary would be paid for by tax credits.

(snip)

Terence Rafferty, regional vice president of operations for Time Warner Cable, confirmed that other states were in the mix, with their own incentives.

Still, he said it wasn’t just the money. “Tax incentives are a business decision,” he said. “At the end of the day, it’s the people. That’s what makes a business great, the people, not tax incentives.

If that’s true, Mr. Rafferty, please give the incentives back to a community struggling to shore up its tax base.

The size of the tax breaks mean that like Xerox’s call center in Webster, the state could foot the bill for much of the cable giant’s investment. The state is paying rich companies to open call centers that don’t provide the stability needed to rebuild and revitalize the economy.

 

Links of the Day:

 

– I reported on the Regional Economic Development Councils failure to disburse money quickly to projects. The state says it doesn’t pay for projects until they’re completed. That makes sense. But when only $19 million has been disbursed out of $1.5 million, there are questions about what is being accomplished.

– Six in 10 children who have Medicaid did not see a dentist in 2011. Dentists often don’t accept Medicaid patients.

Heroin deaths spike in Onondaga County.

– The majority of service members who are sexually assaulted every year are men.

– A Hamburg mother is furious at a crazy teen party at her house that ended with the family car being stolen and set on fire.

– Supreme Court Justice Sonia Sotomayor made a secret visit to North Syracuse graduation ceremony.

Xerox explained to the Lexington Herald-Leader why it only pays call center workers $10 an hour plus benefits. Xerox, with its acquisition of ACS, has 5,000 workers in Kentucky. The issue came up because Amazon announced it is opening a call center paying workers $15 an hour plus benefits.

The newspaper asked CEO Ursula Burns and COO Connie Harvey if Amazon’s wages will force Xerox to up worker pay:

Burns: …we have a business to run. We pay the market. So we’ll continue to pay to market on the jobs we have in Kentucky,

(snip)

Harvey: And we have not, at least until this point in time, had trouble finding employees. If we started having trouble finding employees, we would not be putting more jobs here. So we’ll see how it plays out.

(snip)

Q: When you say you pay “market,” what is considered market here?

Harvey: In Lexington, we usually pay $10 an hour plus benefits. And then obviously with seniority and advanced skill sets, that can increase.

(snip)

Harvey: We look at it, we’ve got to be competitive for the customer. We can give them a call center in India, we can give them a call center in Lexington, we can give them a call center in Lexington or Phoenix.

Xerox pays low wages because it has no trouble finding people to work for low wages. And if it can’t find people to work for low wages, it will go elsewhere.

“They could move those jobs to India and pay $10 a day,” said tax expert, Rochesterian and Reuters columnist David Cay Johnston. “The fundamental trend is to push U.S. wages down in a global economy.”

Xerox can run its business the way it wants. But should government continue to pay Xerox to open call centers under the guise of economic development? How does a $10-an-hour worker contribute to the economy when he can barely support himself, much less his family?

Call centers are often criticized for low wages, opening and closing quickly, having no career track for workers and having high turnover.

The comments from the Xerox executives are particularly troubling for the Rochester area as Xerox transitions into a service-based company. As Burns recently told the Democrat and Chronicle, “The thing that made Xerox ‘Xerox’ in Rochester, which was the maker of technology, will not be the exclamation point after that.”

In other words, say hello to more call center jobs and say goodbye to the thought of more engineers.

Rochester needs to make things, invent things and provide high-level services. Call centers may be good for people desperate for jobs (emphasis on may), but we cannot call them a win for our community and economy.

Is Xerox, which posted profits of $1.3 billion last year, getting a call center courtesy of taxpayers?

Xerox – after several weeks of mildly threatening to locate the call center elsewhere – decided to proceed with plans to renovate a portion of Building 200 in Webster. The call center would employ 500 people over two years and cost $4.3 million.

The company had already been awarded $271,000 in county sales tax breaks. But the state press release made clear what sealed the deal: a $1 million grant and $5 million in job creation tax credits.

If you do the math, $1 million plus $5 million minus $4.3 million means Xerox comes out ahead.

Lieutenant Governor Bob Duffy and County Executive Maggie Brooks seemed genuinely started when I pointed out the call center would essentially be free and questioned the accuracy of the state’s press release.

But both defended giving the project incentives.

“It’s not about giving anyone a free call center. It’s all about leveling the playing field for companies that want to stay here because they have a larger investment,” said Brooks.

“I can assure you that other governors in other states would be right there offering to build this,” said Duffy.

A Xerox spokesman disputed the idea the company would be getting a free call center. He tax credits are not cash and they are paid out after many years and only if Xerox creates and retains jobs. But the spokesman could not say exactly how much money the tax credits would be worth.

Austin Shafran, a spokesman for the Empire State Development Corporation, also said this is not a free call center. He said tax credits are paid out over 10 years and Xerox must adhere to its job creation and investment agreement.

“Only after verifiable proof has been demonstrated will the company get the tax credits,” Shafran said. “The tax credits are paid off over a long term period, get paid off over 10 years.”

Shafran says it’s not fair to compare tax credits with Xerox’s $4.3 million investment. I disagree because Xerox may not have moved forward with the call center without the incentives. Tax credits are worth money, whether Xerox realizes that savings up front or down the road. The fact is the company could eventually recoup its $4.3 investment.

As for the jobs being created, Xerox couldn’t say how much they would pay. Innovation Trail points out call centers don’t pay a whole lot. Also, Xerox is being rewarded for creating 500 jobs after eliminating 500 local jobs in 2011. (Two-hundred-fifty were outsourced to another company, much to the consternation of those workers.)

Whether the state foots the bill for some or all of this project, it’s clear taxpayers are paying a lot so a multi-billion dollar corporation can rehab an existing building to create low-paying jobs.