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Businesses Government The Almighty Buck IT

New York State Spent Millions On Program For Startups That Created 76 Jobs 238

Nerval's Lobster writes Last year, the New York state government launched Start-Up NY, a program designed to boost employment by creating tax-free zones for technology and manufacturing firms that partner with academic institutions. Things didn't go quite as planned. In theory, those tax-free zones on university campuses would give companies access to the best young talent and cutting-edge research, but only a few firms are actually taking the bait: According to a report from the state's Department of Economic Development, the program only created 76 jobs last year, despite spending millions of dollars on advertising and other costs. If that wasn't eyebrow-raising enough, the companies involved in the program have only invested a collective $1.7 million so far. The low numbers didn't stop some state officials from defending the initiative. "Given the program was only up and running for basically one quarter of a year," Andrew Kennedy, a senior economic development aide to Governor Cuomo, told Capital New York, "I think 80 jobs is a good number that we can stand behind."
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New York State Spent Millions On Program For Startups That Created 76 Jobs

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  • by LionKimbro ( 200000 ) on Monday April 13, 2015 @12:52PM (#49464521) Homepage

    Wait a second -- this program has only been running for one quarter of a year?

    76 jobs doesn't sound that bad, on such a short time frame.

    Sounds like a pre-mature judgement.

    • Sounds like a pre-mature judgement.

      Or maybe prejudgemental?

      • by D-Fly ( 7665 ) on Monday April 13, 2015 @01:07PM (#49464651) Homepage Journal
        Yeah, it had only been operating for three months in the surveyed period, and they'd only spent $1.7 million dollars, meaning about $21,000 per job. Not too bad, and it's only 2 percent of the program's projected budget, according to the second linked article. The Dice.com 'article' is ridiculous equivalent to hiring a coder, then the next morning issuing a performance evaluation saying "he's only written 12 lines of code!"
        • I don't know about the sample period, but the program itself has had to have been running for well over a year or two by now, considering that the advertisements for it on CNN, Fox, MSNBC, etc have been running for at least that long.

          • by Grishnakh ( 216268 ) on Monday April 13, 2015 @01:31PM (#49464865)

            Yeah, I used to live in that area and I remember reading about this program over a year ago. I remember because I looked into it, but it seemed like they wanted your company to locate in out-of-the-way places.

            This program just seems like another silly east-coast attempt to try to replicate the success of Silicon Valley without at all understanding why SV was successful in the first place. They did this years ago in Virginia, where I went to college: they set up something called "Virginia's Technology Corridor" in the southwest part of the state, put up a bunch of signs out in the sticks ("You are now entering Virginia's Technology Corridor!!!" with some shitty trailer home in the background), and then wondered why no companies bothered to locate there even though Virginia Tech was in the region. They eventually gave up.

            • i live in an area that is being bombarded with thee ads daily, and yet i havent seen any new businesses pop up in the hudson valley
            • However it's not about replicating Silicon Valley. It's about ALL BUSINESSES, not just the tech sector. So it's not about another technology corridor. It's trying to bring business back to NY and make NY more business friendly and take advantage of universities who's research can create new business markets. It's a grand idea. Not sure how well it will pay off. But the sample is definitely not long enough.
              • by ShanghaiBill ( 739463 ) on Monday April 13, 2015 @02:51PM (#49465373)

                It's trying to bring business back to NY and make NY more business friendly

                Wouldn't it be better to do things that help all business, like lower taxes and improve infrastructure, rather than spending tax dollars on subsidies and advertising? This sort of spending is just a race to the bottom, as other states ramp up their own subsides. Saying it is justified because of the 80 jobs is silly, because many, if not all, of those jobs would have likely been created with or without the subsidies. Maybe they could send a few million to convince an economist to move to NY, and explain the Broken Window Fallacy [wikipedia.org] to the politicians.

                • by Fwipp ( 1473271 ) on Monday April 13, 2015 @03:12PM (#49465481)

                  Is lowering business taxes not also a race to the bottom?

                  (Totally agree with you on infrastructure, though).

                  • Is lowering business taxes not also a race to the bottom?

                    No. As long as businesses feel they are getting something for the taxes, they are willing to pay them. Many cities tax hotels and restaurants, and spend the proceeds on convention centers and tourism promotion. Business taxes can also be spent on universities, better airports, etc. and that will likely generate more business than it discourages.

                    Businesses don't just automatically locate to where taxes are lowest. That is only one of their considerations. Proof: Somalia has no official tax on businesse

            • by ShakaUVM ( 157947 ) on Monday April 13, 2015 @02:53PM (#49465387) Homepage Journal

              Well, it's two things, really.

              1) Yeah, they want to get a tech nucleus thing going (which does actually work in some places, if done right) and are going about it in a really awkward fashion

              2) They realize that the absurdly high taxes in New York are driving businesses away, and so they're giving a temporary tax break to out of town corporations to move in. The trouble is, the turkeys can see the farmer with the shotgun at the end of the line, and aren't buying it. Who would want to grow a business when you know you'll be taxed heavily after becoming successful? You might as well live here in the People's Republic of California where the weather is nicer.

              • by Grishnakh ( 216268 ) on Monday April 13, 2015 @03:48PM (#49465721)

                It's not just the weather; all the tech talent you need is located in California, so it's not that hard to find employees. Enticing them to move to upstate NY isn't so easy. This is the thing all these states don't understand: you can't get companies to just move to some bumfuck place in the sticks, because they need employees, and employees usually don't want to move to someplace which doesn't have a critical mass of employers, because if their job doesn't work out or ends (which it will, tech employment is always short these days), then they're stuck having to pay $$$$ to relocate for a new job. In a tech hub city, you just go find another job at a company a few miles from your old one.

        • by thaylin ( 555395 ) on Monday April 13, 2015 @01:22PM (#49464789)

          Where do you see that they only spent $1.7m? They spent $53m. The 1.7m number was the contribution form the companies involved. Would you like to redo your calculation there?

        • This whole article is dumbn. At 21K a job, the program is doing SPECTACULAR seeing how threse jobs likely pay at least 75K, they will pay more in taxes than the damn job costs IN THE FIRST YEAR ALONE.

    • by unrtst ( 777550 )

      Agreed - if it's only been running 1/4 of a year, that's hardly soon enough to judge.

      The main article is 4 paragraphs. 3 of those were smashed together into the slashdot "summary". How is that a summary of an article if it contains more than 75% of the article?

      In addition, as someone else pointed out below, a few million divided by 76 jobs is about 26k/year. That's not bad by recruiting standards.
      To top it off, they say they have "only invested a collective $1.7 million so far". Some of that has to be going

    • exactly

      this topic is political posturing against Cuomo. not that Cuomo doesn't do fucked up things. and he does deserve criticism. but not on this topic

      cutting taxes for ten years to grow start ups is a great idea

      do we point at pregnant women's bellies and give them our sympathies for their stillborn?

      do we point at elementary school kids and decry that they've become meth heads?

      to say this judgment is preliminary is beyond obvious. it's a weak lame shallow farcical smear attack on Cuomo

      believe me, Cuomo has done some ugly corrupt shit, like protect Silver (unsuccessfully) by shutting down the Moreland Commission

      http://en.wikipedia.org/wiki/M... [wikipedia.org]

      there's plenty of good shots to take against Cuomo

      but if this lame way too early attack on a clearly great idea is the best Cuomo's opponents can do, it shows his opponents to be pathetic and weak and so Cuomo is doing pretty good

      • Yes, it seems way to early to evaluate the program. This is the very first report; basically it's saying "the program just started". Clicking through the links leads to this one: http://www.crainsnewyork.com/a... [crainsnewyork.com]
        with more numbers in the summary:

        The state agency responsible for economic development across New York says companies last year created 76 of the nearly 2,100 new jobs promised over five years in return for tax breaks under the Cuomo administration's Start-Up NY program.

        The first annual report from the Department of Economic Development says 30 companies began operating in 2014 among 54 initially approved for the program.

        According to the report, they made $1.7 million of some $91 million investments promised over five years as part of Start-Up NY. The program has established 356 tax-free zones at 62 colleges and universities that act as sponsors.

        The agency says another 26 businesses have been approved so far this year, while 12 have withdrawn applications.

    • by mc6809e ( 214243 )

      Where did you get the idea that it had been running for just a quarter of a year?

      The program was being developed in 2013 and by January 2014, they had already begun running ads. [youtube.com]

      That makes the program more than a year and a quarter old.

      • > "Where did you get the idea that it had been running for just a quarter of a year?"

        From the quote in the summary of the economic adviser defending it:

        "The low numbers didn't stop some state officials from defending the initiative. "Given the program was only up and running for basically one quarter of a year," Andrew Kennedy, a senior economic development aide to Governor Cuomo, told Capital New York, "I think 80 jobs is a good number that we can stand behind.""

        • by mc6809e ( 214243 )

          I thought he had simply mis-spoken or was mis-quoted given that the commercials have already run for more than a year.

          If the quote is accurate, then it must mean the new tax rules began in 2015.

          Still, it's one year of hype leading to a launch that virtually no one showed up for.

    • by geogob ( 569250 )

      Not only that. With coarse assumption on the salaries for those 76, the program has easily a social return/benefit of 200%.

      I'll just quote the quote...

      "I think 80 jobs is a good number that we can stand behind."

    • Wait a second -- this program has only been running for one quarter of a year? 76 jobs doesn't sound that bad, on such a short time frame.

      Damn right!

      It takes a substantial time to set up a company. (The startup I just helped start up took over five months before I was actually "employed" (and over 6 before the payroll was in place to pay me as an employee with a W2 rather than a consultant with a 1099).)

      Three months and they ALREADY have 76 new jobs? It sounds like there are some bats exiting hell!

      Come

      • Woah wait a second.

        You're saying that creating Tax Free zones helps create jobs? So why doesn't New York lower taxes for the companies that still reside there, that are threatening to leave to Texas or other lower taxed states?

        This is like Cable companies screwing existing customers and favoring customers that are new. I guess it works.

        • Government will basically claim ANYTHING improves the economy except the one thing everyone wants: lower taxes across the board.

          They'll claim that welfare and UC improve the economy by giving poor people more buying power.

          They'll claim tax breaks for crony corporations (auto manufacturers, green energy) give them incentive to hire.

          But apparently, this doesn't work if we let everyone keep more of their money. They'll just bury it in the backyard.

          • But apparently, this doesn't work if we let everyone keep more of their money. They'll just bury it in the backyard.

            Worse yet, they might save for retirement, making them less dependent upon the government in their "golden" years.

        • They're just like apartment complex management companies: they're banking that you're too lazy to pack up and move, so they continue jacking up your rent year after year, while giving new renters a big discount.

    • The simple numbers aren't too bad either - 1.7 million spread among 80 workers gives you about $20k a piece, so this is clearly cheaper than a job-creation initiative where you simply pay salaries directly. On top of that, this being NY, those are probably decently high salaries, so once you account for the extra taxes brought in, you probably aren't too far off from break-even. Especially after you give the program some more time to work.

      Sounds like an attempt to smear a program that is actually working de

    • by Holi ( 250190 ) on Monday April 13, 2015 @01:28PM (#49464831)
      http://www.governor.ny.gov/new... [ny.gov] Startup-NY was launched in October 2013. Not sure where you get 1/4 of a year from.
    • by Holi ( 250190 )
      Since they delayed the report from January7. Anyone saying it started 3 months ago is either greatly misinformed or a flat out liar.

      http://nypost.com/2015/01/12/t... [nypost.com]
    • Spawning programs on public money is not a startup.
      Key to success is to level the playfield for commercial activities (all contenders pay more or less identical tax, no monopolies) and spend money on activities that are not commercially viable yet valuable.
      In short, you'll end up with effectively bureaucrats hopping from one program to another writing pretty money requests and/or companies squishing creativity.
      For some constructive criticism, if anyone knows of a place succesful as mentioned above, plea
    • not only that, but it sounds like it was good for advertising jobs too.
  • by Vermonter ( 2683811 ) on Monday April 13, 2015 @01:04PM (#49464627)
    "Last year, the New York state government launched Start-Up NY, a program designed to boost employment by creating tax-free zones for technology and manufacturing firms that partner with academic institutions."

    See, this is what you are supposed to think, but here is how the truth of the matter reads:

    "Last year, the New York state government launched Start-Up NY, a program that allows state politicians to give tax money to their buddies while having the appearance that they care about jobs and the general public."
  • You could just pay those 76 people $600,000 a year for doing nothing and you'd have enough left over that you could use to hire another 12 at the same rate.

  • I tried Start-Up NY (Score:5, Informative)

    by rbrandis ( 735555 ) on Monday April 13, 2015 @01:28PM (#49464839) Homepage
    I tired to use Start-Up NY. We called and were told that it was only for out of state businesses opening in New York. They referred me to a small business consulting group at Stony Brook University. They referred me back to Start-Up NY. I had the impression that no one I spoke with knew what they were talking about, and really weren't interested in helping at all. I have even considered writing to Governor Cuomo. I think that Governor Cuomo's concept here is very well intentioned and could be a great benefit to the state. But, from my experience the administrative staff are not executing the Governor's program as intended.
    • by Livius ( 318358 )

      from my experience the administrative staff are not executing the Governor's program as intended.

      Unless it's actually working *exactly* as intended.

  • Around the time Dubya took office, we had a surplus and the debt was being repaid and was going down. Then he cut taxes, income taxes, inheritance taxes, all kinds of taxes and promised millions of jobs and prosperity for all. All the money ended up with his cronies, and the economy lost millions of jobs and we came to the brink of total financial collapse. In fact all the trickle down economics and tax-cut politics are simply means to transfer wealth to the rich, keep the middle class despo enough to accep
    • So your argument is that because some Republicans fucked up, it's OK for Democrats from NY to get a free pass when they fuck up and waste tens of millions in taxpayer money? Your attitude is the absolute embodiment of everything that's wrong with this country, and literally how we got into the mess we're in now.
    • Clinton had one projected surplus that went away when .com imploded. That included the SS trust fund accounting tricks so it wasn't even an honest projection.

      Aside from being completely wrong, you have a point (on your head).

  • Simple google search will reveal that "October 22, 2013 was the official day the program has started by CUOMO".

    Typical distortion and deception from the governmental officers.

    The problem with NY is that they are offering as a perk something which is offered by other states for free, without even asking, such as low taxes and pro-business government.

    • "The problem with NY is that they are offering as a perk something which is offered by other states for free, without even asking, such as low taxes and pro-business government."

      Here's a very interesting question for the business owners...what exactly is a pro-business government? What regulations exist in one state, that don't exist in another, and overly burden a business's ability to operate? I know the tax code in many states is a huge pain in the butt, but all you have to do is hire one tax lawyer/acco

      • Try the run you expenses through the corp trick. We'll send you a cake with a file in it when you go to federal prison.

        You ought to check your facts. You are taxed on a company car. Try and have the corp pay for your house and you will go directly to jail.

  • We're a society that depends heavily on the service sector. Over 3/4 of the GDP comes from services. And over 3/4 of the people depend in one way or another on them for their job.

    Services are awesome when it comes to generation of GDP. Because it's pretty hard to store them. They have to be used when produced. More, they usually have to be consumed. And only by consumption, value is generated. Yes, consumption. Not production. That's hard for the supply side preachers to wrap their head around, but tell me,

  • Just once, I'd like to see a politician stand up in front of the cameras and say "We fucked up. We fucked up royally. We blew millions and didn't get a fraction of the benefits for society we'd hoped for. I'm going to take responsibility for that mistake and fire myself."

  • I live here, and have seen the ads for this program. One of the problems facing New York, both the metro area and upstate, is the loss of old-line employers, both in manufacturing and services:
    - Upstate NY had huge numbers of manufacturing jobs as recently as 20 years ago. Most of the actual jobs have either been automated or the companies themselves have moved to other states or countries. Steel mills and auto plants in Buffalo, Kodak in Rochester, Carrier in Syracuse, Corning Glass in Corning are just exa

  • Tax breaks as an economic development program. There is a similar giant program in Chicago called TIF. No one believes it actually creates jobs or anything. It's just a way for the mayor to reward his supporters and other rich people.

  • They set this up at universities, so the start ups they are creating are going to be Amazon/Google likes where a 5 billion dollar company can employ 3 guys. A university is filled with the privileged, highly skilled, rich 1%. You will not going to employ hundreds of working stiffs out of a university; You will employ one or two guys in a tech focused highly automated business.

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