News from the Tennessee Valley Business

Study industries before recruiting

Like every industry that has located or expanded in the Decatur area in recent years, Wayne Farms has received tax breaks from local government.

Also like every industry to locate here, Wayne Farms brings with it a collection of both positives and negatives.

One of those negatives is tuberculosis. This month, one Wayne Farms employee and one former employee tested positive for active tuberculosis disease. So far, 47 tested employees are infected with TB.

Richard Ault, a professor of economics at Auburn University, believes local governments throughout the state are recruiting industry blindly.

“The people involved don’t want to measure the costs and benefits,” Ault said. “They want to land a big fish and they want to be able to brag when they do so.”

Local officials, Ault said, tend to accept a company’s overly optimistic assumptions on future benefits, and they studiously ignore any future costs to the community.

Not all such costs are foreseeable. Some are.

The fresh processing plant at Wayne Farms is a case study in some of the negatives that Ault believes local governments should study before recruiting an industry.

The most recent negative is tuberculosis. Because Wayne Farms hires large numbers of immigrants from countries with high TB rates, the company increases the risk of a TB outbreak in Decatur.

The plant pays $9.50 an hour, which pulls down the median wage in Morgan County. Median wages are one of the first things that retailers examine in deciding whether to locate in a community.

Many Wayne Farms employees are not proficient in English. That tends to burden the school system and reduce test scores.

Wayne Farms is not unique in bringing negatives; every company does. The positives Wayne Farms brings to the community, including tax dollars, may outweigh the negatives. Ault’s point is not that industry is bad, but that local governments should be methodical in evaluating both the good and bad that an industry brings to the table.

A problem for local government is that industries are quite proficient at presenting the benefits they bring to a community. They have no incentive, however, to broadcast the negatives. That requires investigation, and local officials are the only ones with the resources to do it.

“The idea is to try to ignore any costs; we don’t want to bring that up,” said Ault. “We say, ‘Let’s look at the bright side and let’s ignore the costs.’ ”

Not only do local officials need to identify and evaluate the costs associated with a new industry, Ault said, they also need to be more skeptical of the promised benefits.

“The estimates are made on the most rosy assumptions one could possibly imagine,” Ault explained. “They are selling themselves. We need to look deeper than that.”

Seeing into the future is not easy, and Ault does not pretend that local governments can do so with precision. He suspects, though, that most are not making the effort.

“I think they could do a better job,” he said. “Frankly, I do not think right now that anyone is even trying to do a good job.”

Contact Eric Fleischauer at

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