In 2013, the year Smart Incentives started, Boeing’s $8.7 billion deal from Washington state was one of the top incentive stories in the country. That incentive package still sits atop Good Jobs First’s list of megadeals. Looking back at our blog article (A Closer Look at the Boeing Incentive Deal, November 27, 2023) made me wonder how megadeals compare then and now.
Last year Good Jobs First published an article, 2022: A Mega-Year for Megadeals. They identified eight megadeals that exceeded the $1 billion mark in 2022 compared to eight total from 2013 to 2021. But they also found that the total number of megadeals (packages valued at $50 million or more) had been dropping over time.
Using the Good Jobs First Subsidy Tracker, I also compared lists of megadeals for 2013, 2022 (last year of full data), and 2023.
- There were 32 megadeals in 2013 compared to 34 in 2022*. The database lists 20 so far for 2023.
- The average megadeal in 2013 (including the Boeing offer) was $561 million ($705 million adjusted for inflation). The average in 2022 was $738 million.
- The total value of the 2013 megadeals was $18 billion (not adjusted), while the 2022 value was $25 billion.
The top ten megadeals per year have become bigger than in the past. The chart below presents values in nominal terms, but the trend holds if adjusted for inflation. It remains to be seen whether 2022 is an outlier or a harbinger of future growth. So far, the 2023 megadeals are not as substantial.
The picture changes when looking past the top ten, with more consistency over time in the size of the remaining megadeals.
The composition of projects changed dramatically between 2013 and 2022. 2013 saw a mix of aerospace, healthcare, energy, chemical, automotive, and office projects. No surprise, 2022 was dominated by electric vehicle and battery projects along with a handful of semiconductor facilities.
2023 looks like it will be a step back from the 2022 megadeal announcements. The total value of megadeals listed so far in Subsidy Tracker is $9.5 billion with an average of $477 million across 20 projects. Electric vehicle and battery projects are still leading the way.
It would be interesting to dig in deeper to the elements of each of the incentive package. For this article I took a quick look at the top deals in 2013 (Boeing) and 2022 (Micron Technology). The 2013 package for Boeing was built around state tax breaks with a small amount for workforce training. The 2022 package for Micron includes state and local incentives encompassing substantial tax breaks tied to job creation and wages, but also road and infrastructure improvements, $100 million for a community benefits program, and some money for research and workforce development.
Our work over the past decade suggests states have evolved their incentive offers by specifying performance criteria, working with local partners, and using incentives that invest in the community as well as the company.
*The figure above is from a December 2022 report but does not include full-year data.