Aetna’s HQ move to New York is a loser for working families in both states
Last month, we learned that insurance giant Aetna, after operating in Hartford for 160 years, will move to New York. But Connecticut’s loss is not New York’s gain. In fact, it’s a losing proposition for working families in both states.
Here’s why. In states across America, legislators have been pressured into a toxic game of cross-border business poaching that drives millions of dollars in tax breaks and subsidies to wealthy executives – draining funds we need to invest in infrastructure, schools, parks, and other public works that are the bedrock of economic health.
Landing a big company like Aetna may look like a win for New York, but look again. New York State and New York City governments have together spent $34 million in tax cuts over 10 years to essentially bribe a healthy and wealthy Aetna for just 250 jobs that it probably would have received anyway. That’s more than $3 million a year to a company that earned $2.3 billion on revenues of $64 billion in 2016, and whose stock price has been soaring for years.
Perhaps more important, that money is not even the reason for Aetna’s relocation. Their motivation is access to talent. In an interview with the New York Times, Aetna Chairman and CEO Mark Bertolini emphasized that New York City provides “the ecosystem of having people in the knowledge economy, working in a town they want to be living in, and we want to attract those folks, and we want to have them on our team.”
It’s ironic because 40 years ago, when New York almost went bankrupt, states like Connecticut effectively poached businesses from New York because of their stronger infrastructure and workforces.
Back then, New York City was scourged by blight, and public investment was nil. Cities were out; suburban office parks were in. Connecticut reaped the rewards. But it made its own mistakes along the way, relying too much on high net worth individuals, neglecting its own public investments and starving its cities with austerity budgets and cuts to vital services. Now the shoe is on the other foot.
Throwing money to entice profitable corporations is not the solution. When Gov. Dannel P. Malloy offered to match New York’s tax subsidies to Aetna, he once again fueled a corporate welfare culture where large corporations simply stick their hands out, expecting to receive eight-figure subsidies from taxpayers in order to keep their businesses in the state.
Notably, his offer was rejected. No tax subsidy stopped Aetna from choosing a place with a higher marginal tax rate on millionaires, a $15 minimum wage, paid family and medical leave, more paid sick days and constitutional protections for public employee pensions.
But Connecticut working families aren’t the only losers in this deal. While there’s no doubt New York is a mecca for talent thanks to crucial past investments, the hard truth is that most New Yorkers today are struggling with underfunded and inadequate public schools and universities, decaying subways and soaring rents and gentrification. Rather than offering millions in welfare to big corporations worth billions more, New York would be wise to make its own investments in mass transit, public education and more affordable housing.
So here’s the rub: For too long, Democrats in both Connecticut and New York have adopted failed Republican economic policies that rely on taxpayer subsidies for favored wealthy corporations (who often double as major donors), in exchange for benefits that are supposed to “trickle down” to the rest of us.
It is time for our politicians to end the corporate giveaways and stand up for old-fashioned investment in the public goods that lift up all communities and businesses. That is economic development policy that puts working families first.
Bill Lipton is executive director of the New York Working Families Party and Lindsay Farrell is executive director of the Connecticut Working Families Party.
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