Jobs estimate for Apple is optimistic

'More than 3,000' may not be likely

Staff WriterJuly 16, 2009 

The $1 billion Apple data center headed for western North Carolina will create "more than 3,000 jobs in the regional economy."

At least, that's what the N.C. Department of Commerce said when the project was announced last month.

Records released by the agency, though, don't support that claim.

They show that a $1 billion investment will generate 2,757 jobs statewide. Even that number might be rosy. Some of the figures used to develop jobs estimates were aggressive, according to the records.

At issue is an economic model that Commerce uses to estimate the ripple effect of landing a big project. When a business expands, it creates construction jobs. Those workers need bricks, which creates more demand at the brick factory. With more money circulating in a community, spending on TVs, clothes and food also increases. And that can mean more jobs at stores and restaurants.

The calculation had extra import for the Apple project. The company agreed to create just 50 jobs. But it wanted a change to tax law before committing to coming to North Carolina. In response, legislators in May rushed through a measure that could trim Apple's tax bill by $46million over 10 years.

They did so to avoid missing out on the $1 billion investment and the benefits that could come with it.

"It's all hype," said Bob Orr, a frequent incentives critic who is executive director of the N.C. Institute for Constitutional Law. "It's the same old, same old."

Commerce estimates have come under scrutiny before. In 2004, when Dell announced its intention to build a factory in the Triad, for example, Commerce estimated 8,086 people would find work because of the plant. A similar analysis by Virginia, which competed for the Dell factory, put the figure at 4,113.

North Carolina competed with Virginia for the Apple data center, too. Virginia, though, has denied a request to access those records.

Kathy Neal, a spokeswoman for the N.C. Department of Commerce, said that jobs projections evolved through the months as Commerce officials talked with Apple representatives.

"As the project progressed and more information was available, the models were updated," she wrote in a statement. "The job number of 3,000 is an approximation based on the latest information available."

Much of that information has been removed from the Commerce files to protect specific spending and other information that Apple considers proprietary.

Some details left in, though, hint at the way the calculations were reached. A number plugged in to extrapolate the benefit of machinery and equipment purchases was at the "upper limit of value recommended" by Mike Walden, an N.C. State University economist, who has advised Commerce on its calculations.

"Overall, our models use conservative assumptions," Neal said, and Commerce officials consider the input a "reasonable number to use."

Indeed, little in economic development is certain. Almost everything -- including the ultimate value of incentives that companies win -- is contingent on what companies actually do.

jonathan.cox@newsobserver.com or 919-836-4948

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