In 2014, Cerner received “the largest economic development project in the history of the state” to build its new headquarters at the former site of Bannister Mall. In return, it promised taxpayers it would create 16,000 new jobs in Kansas City. How is it doing?
At the time of the subsidy application in late 2014, Cerner claimed it had just over 10,000 employees in Kansas City alone. In Exhibit 4B of its application for tax-increment financing (TIF) it promised to create 15,659 “permanent jobs to be CREATED IN Kansas City” as a result of the new headquarters building [emphasis in original]. And Cerner claimed it would accomplish this in 10 years.
One of the unmet challenges with economic development incentives is that it is difficult to know whether any economic growth is due to the subsidies themselves. Growth, if there is any, may have happened for reasons other than incentives, such as an improving economy overall. As we have noted time and again, the economic literature makes clear that there is little evidence that economic development incentives themselves actually drive any growth.
Five years in, it seems the company is struggling to keep the promise about jobs. Just this week, The Kansas City Star reported that Cerner had 14,000 employees in the Kansas City region (presumably including its Wyandotte County, Kansas location). This is 4,000 more employees than what it reported in 2014. That’s pretty good growth for any company in just a few short years. But it’s nowhere near the 26,000 (a baseline of 10,000 jobs plus the 16,000 additional promised) it should have by 2024.
Maybe Cerner will make a lot of new hires in the next five years, but it needs to bring on at least 12,000 people in Kansas City to make good on its commitment.
If Cerner fails to live up to the promises that made it Missouri’s top recipient of taxpayer subsidies according to Good Jobs First, what are the consequences? Did the issuing agencies insist on clawbacks? Were subsidies issued on a performance basis? Or did taxpayers’ representatives just believe what they were told and not insist that Cerner actually deliver on its promises? If experience is any indication, it’s likely the latter.
