A class training workers at Caterpillar. North Carolina paid for most of the instruction.
The primary beneficiary is undoubtedly Caterpillar, a maker of industrial equipment with rising profits that has a new plant about 10 miles away in Winston-Salem.
Yet North Carolina is picking up much of the cost. It is paying about $1 million to help nearly 400 workers acquire these skills, and a community college has committed to develop a custom curriculum that Caterpillar has valued at about $4.3 million.
Caterpillar is one of dozens of companies, many with growing profits and large cash reserves, that have come to expect such largess from states in return for creating jobs. The labor market is finally starting to show some signs of improvement, with the government reporting on Friday that employers created 200,000 jobs in December.
Although the sums spent on training are usually small compared with the tax breaks and other credits doled out by states, some critics question the tactic.
“The question is, why shouldn’t the company pay for this training?” asked Ross Eisenbrey, the vice president of the liberal Economic Policy Institute. “It’s for their benefit.”
Critics suggest the programs may not even be in the best interest of workers if the resulting jobs pay low wages or simply disappear after a few years, leaving employees with narrow skills that do not help them land new positions. In North Carolina, for example, people are still smarting from the departure of a Dell factory that put nearly 1,000 people out of work just five years after the state spent close to $2 million on training.
Various studies have long questioned whether states get their money’s worth from incentives for companies that build facilities or expand existing ones. In a report last month, Good Jobs First, a nonprofit research organization that tracks such spending, found that states often attract companies that create few jobs, pay low wages or scrimp on health insurance.
But customized job training for a specific employer still holds favor with public officials, who often argue it may be an effective use of taxpayer dollars, especially when so many workers have been displaced. Targeted programs can be preferable to the more general training paid for by the federal government, programs that have been used by hundreds of thousands of Americans yet have left many participants still out of work.
“On the whole spectrum of things that are done to attract businesses, this is one of the best investments and highest return for the invested dollar that our state and many other states do,” said J. Keith Crisco, North Carolina’s secretary of commerce.
Caterpillar, which is investing $426 million in the new factory, is one of several companies supported by North Carolina, where the unemployment rate hovers around 10 percent and thousands of textile, furniture and other manufacturing workers have lost their jobs in recent years. The training support is part of a $51 million package of incentives from the state to lure Caterpillar to Winston-Salem.
The state is also paying to train workers for a new Honda Aircraft factory in Greensboro, an expanding Siemens plant in Charlotte and an existing call center in Winston-Salem for US Airways, which relocated 200 jobs from Manila last year.
According to the state, North Carolina spent about $9.4 million to train workers as part of projects that created nearly 4,500 jobs in the 12 months through June 30. (The total cost per job rises sharply beyond the $2,000 in training because of voluminous tax breaks and other incentives.)
Business executives argue that government-subsidized training is a fair payoff given what the companies bring to the table.
“At the end of the day we’re creating more jobs for the state of North Carolina,” said Mark Pringle, director of operations at a Siemens gas and steam turbine plant in Charlotte that has received close to $1.2 million worth of training from the state for about 700 new workers. “There’s no doubt it’s a competitive process,” he added.