October 24th, 2011 | Published in NJPP Blog: As a Matter of Fact …
Imagine you are a New Jersey job seeker (one of 418,000 unemployed in the state as of September, 2011, according to the state Department of Labor and Workforce Development) and you read in the news that a firm will be getting a state subsidy to hire 175 new workers. You would be thrilled to see those new job opportunities in the state, right?
But, in the case of Goya Foods, Inc., only nine truly new jobs are being created.
Of the other 166 “new” workers, 66 would be moved from Goya’s location in Bethpage, New York and 100 already work for Goya as contractors based in Secaucus, according to documents from the state Economic Development Authority (EDA). So these “new” workers are actually existing employees.
Those 100 current contractors may be counted as new workers because they will be converted to direct payroll employees or become part of a professional employer organization (PEO). The National Association of Professional Employer Organizations describes PEOs as enabling “clients to cost-effectively outsource the management of human resources, employment benefits, payroll and workers’ compensation.” Counting current workers as new workers might be technically correct under the subsidy law — but it just doesn’t make sense.
The state’s tax subsidy for these nine new workers is being offered under the newly revised Urban Transit Hub Tax Credit (UTHTC) statute. It is intended to provide an incentive to a firm by lowering its state corporate business tax obligation so that a company will make capital investments in buildings in urban areas near transit and create jobs.
Earlier this month, the EDA approved the $80 million-plus UTHTC for Goya Foods. The company would get that tax credit for building a new 600,000 square foot headquarters/distribution center in Jersey City, a half-mile from the Jersey City PATH station. Aside from the 175 “new” workers, 316 current Goya workers would move to the new facility from Secaucus. Goya’s current headquarters in Secaucus would be converted to a manufacturing facility and 53 jobs would be moved there from elsewhere in Secaucus, but would not be part of the $80 million subsidy.
Further, Goya is to benefit from the expansion of one of the state’s Urban Enterprise Zones to include the part of Jersey City where Goya plans to relocate, according to the Jersey Journal. Urban Enterprise Zones offer companies a host of tax benefits. The company is also seeking a 20-year property tax abatement for its new headquarters/distribution facility in Jersey City, which would lower the firm’s property tax bills; the Jersey City Council will vote to introduce the measure this week, with final approval to possibly come in the second week of November.
But that all may not be enough to keep Goya in New Jersey, according to EDA documents.
New Jersey is competing with New York state, because Goya is also considering moving North Jersey workers to an 892,943 square foot site in Suffern, New York, in Rockland County. No public information was provided by the EDA about the subsidies that may have been offered by the state of New York to woo Goya.