As Smart Incentives marks its 10th year, we have been revealing the top ten ways that incentives have changed since 2013. We are pleased to share the full list of incentive trends here in our last blog article of 2023.
1. Big incentive deals are getting bigger. Top projects receive significantly higher offers than in the past. The most prominent incentive packages are for new electric vehicle and semiconductor facilities. However, looking past these high profile projects, the average incentive offer has been surprisingly stable over the past decade.
2. The rise of remote work. Remote and hybrid work continue to reshuffle our living and working patterns. Incentives to attract remote workers have become part of the landscape. Many traditional business incentive programs are adjusting how they count workers to account for remote or hybrid work.
3. Better project compliance and reporting. State and local governments have improved their ability to track incentivized projects, monitor performance, and share results with internal and external stakeholders.
4. Thinking beyond tax credits. Today’s incentives include grants, loans or high-value services. They also have more “invest in yourself” elements related to workforce, sites, and infrastructure that help connect business-oriented economic development to benefits for residents and communities.
5. Not just jobs, jobs, jobs. Economic development today touches on housing, childcare, transportation, education and training, and more. Incentive offers increasingly reflect these priorities, but quantifying the impact is an ongoing challenge.
6. Commitment to evaluations. Growing numbers of state and local governments are formally assessing their incentive programs.
7. Focus on talent. States continue to expand workforce training programs for businesses while also striving to attract new workers and invest in homegrown talent.
8. Increased transparency. States are taking more steps to share information with the public about projects and companies that receive incentives.
9. Greater focus on small businesses and underserved communities. Incentive and financing programs are increasingly intended to address economic development goals related to small business support, greater equity and inclusion, and expanding economic opportunity.
10. Improved due diligence. State and local governments have better processes in place to screen companies and projects seeking incentives.