by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
The Carolina Panthers have been pushing the state of South Carolina to build them a new headquarters and practice facility in Rock Hill, SC, just over the border but still considered within Charlotte metro area. Gov. Henry McMaster (R) supports the idea, and the state House already passed a $115 million tax incentives package for it.
South Carolina’s Commerce Department says it’ll have a monster economic impact. All 150 players, coaches, staff members, and owners will move into South Carolina. It’ll create 5,715 new jobs. All told, it’ll have an economic impact over 15 years of $3.8 billion.
Wow. The Panthers just strolled south of the border and offered South Carolina policymakers a way to turn $115 million into a staggering $3.8 billion! How magnanimous!
Here at John Locke we’ve been warning about ridiculous economic-impact numbers for years. It’s precisely about such a thing that I wrote a research brief called “Nonsense with big numbers: How to get legislators to support your industry.”
Fortunately for South Carolina, a state senator wasn’t dazzled by the big numbers. He wondered about the assumptions behind them. As reported by The State, Sen. Dick Harpootlian (D-Richland) put the Panthers’ incentives package on hold to have an economist look at the benefits and costs of the idea. Harpootlian personally “hired Rebecca Gunnlaugsson, the S.C. Department of Commerce’s former chief economist and now an analyst with a conservative think tank [Palmetto Promise Institute].”
As Roy Cordato could tell you, once you acknowledge costs, the “impact” game comes to a halt. Economic impact studies are geared specifically to ignoreopportunity costs. See his report on “Economic Impact Studies: The missing ingredient is economics” for the difference between them and sound economic analysis.
The State reported:
In her analysis, Gunnlaugsson estimates the Commerce Department’s projected economic impact is overstated by nearly $2.7 billion, relying on assumptions all 150 Panthers players, coaches, staff and owners will move to South Carolina. Gunnlaugsson said the move actually will create only 208 jobs, instead of the 5,715 promised.
Gunnlaugsson said the Commerce Department estimated that for every one job the Panthers bring to South Carolina, 39.1 more will be created through economic development sparked by the deal — a multiplier she described as “unfathomably high.”
The typical jobs multiplier for “arts, entertainment, and recreation” projects is actually 3.785, Gunnlaugsson wrote.
She added she expects only about 75 Panthers employees to move to South Carolina permanently, half of what the Commerce Department expects.
Panthers football players, coaches, and the team’s mascot are visiting the State House today to lobby for the incentives.