Creating Jobs

4 minute read

States launch enterprise zones

The biggest thing in LeMoyen, La., used to be Baker’s Stop and Shop, the general store that serves as a landmark along Route 71 for this impoverished rural community. With unemployment in St. Landry Parish at 15.3%, the job seekers among LeMoyen’s few hundred residents have been lucky to find occasional farm work in the nearby soybean and rice fields. Now a huge $25 million plant is rising in an empty meadow across the road from Baker’s. When it opens next April, the Martco plant will churn scraps from southern hardwoods into 130 million sq. ft. of building board per year, providing up to 150 jobs. “We’ve got about 200 names on file already,” says Jonathan Martin, who is supervising construction of the plant. “We must get two or three people in here every day asking when we’re going to start hiring.”

Martco is one of the first firms to qualify for state assistance under the Louisiana Enterprise Zone Act of 1981, a package of tax-relief measures designed to lure investment to depressed rural and urban areas. Martco and the seven other companies approved so far are expected to generate some 1,200 jobs in exchange for $4 million in state tax breaks over the next five years. Says Governor David Treen: “We think the returns far outstrip what we give up in revenues.” Indeed, while Congress has been sitting on President Reagan’s federal enterprise zone proposal, made last March, a dozen* states are forging ahead with their own versions.

In some cases, notably in Toledo, the state legislation is giving an extra push to experiments that were already successfully under way. City Venture Corp., founded three years ago by Control Data Corp. and other companies in cooperation with the American Lutheran Church and the United Church of Christ, is helping to revive Toledo’s rundown Warren-Sherman district, where unemployment is higher than 30%.

The project’s centerpiece is an $8 million commercial complex that has acted as a small business incubator for the neighborhood. Companies renting space there were given managerial and technical advice. Area residents, many of whom had never held a full-time job, got free training in the skills they needed and day-care help for working mothers. Additional incentives for new businesses were provided by parking, security and low-cost clerical services for some firms.

As a result, Warren-Sherman is beginning to hum. Twenty companies, doing everything from carpet installation to computer-parts assembly, have set up shop in the district. Some 500 new jobs have been created so far, and 1,500 more are projected by 1987. In October, Ohio designated Warren-Sherman as its first enterprise zone. That promises to reduce state and local taxes for some firms. The next step is a 23-acre industrial park, where Owens-Illinois is now building a plant that will make corrugated boxes.

Some states are creating service jobs by attracting high-tech firms to dilapidated areas. In New Haven, an 80-acre science park is being built near Yale University as part of a larger enterprise zone. A nonprofit, joint effort by Yale, the Olin Corp. and the city, this park offers new companies special access to the university’s research and teaching facilities, as well as generous tax abatements. More than a dozen companies have expressed an interest in moving in. Park officials are now busy helping the maintenance, security, restaurant and other support businesses in the zone gear up for their new customers. They expect this district to blossom with up to 300 nonprofessional jobs in the next year, 1,000 by 1988.

In states with no enterprise-zone legislation, some cities are devising their own zones. San Jose, Calif., for instance, has waived taxes and fees that can amount to 4.7% of building costs in order to spur new business and residential construction in a 5-sq.-mi. “central incentive zone” downtown. One result: the Sainte Claire Hilton, product of a $6.5 million renovation, which employs 150 people.

Critics fear that instead of creating new jobs, these zones will simply draw business away from other areas. But in some instances they have attracted companies that could not otherwise have afforded to expand. More important, many workers finding jobs in enterprise zones were formerly dependent on public assistance. Sums up City Venture President George Bardos: “The basic goal is to address unemployment where it is worst.”

* In addition to Louisiana, they include Connecticut, Florida, Illinois, Kansas, Kentucky, Maryland, Minnesota, Missouri, Ohio, Rhode Island and Virginia.

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