Should We Go Fishing for PayPal?

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Recently PayPal announced the cancellation of a planned operations center in North Carolina resulting from the passage of North Carolina HB2 (the “bathroom” bill). The reasons a company chooses a particular location to establish a facility are complex, but I believe Pittsburgh offers practically everything that was to be found near Charlotte. I would like to see Pittsburgh actively in the running for more facilities like this. However, there’s a bigger issue here: government entities “buying” jobs, and whether that approach can be considered an investment or simply a political maneuver.

PayPal reportedly chose North Carolina because of the abundance of employees with “fintech” experience — think staffers from the likes of Bank of America and Wells Fargo plus the software geeks in the Research Triangle area. Well, Pittsburgh has much of that same demographic. BNY Mellon and PNC and the software engineers from CMU should be able to provide experienced staff.

What Pittsburgh does not have are locally deep pockets nor readily available funds from Pennsylvania. I note that North Carolina promised $488,000 in direct incentives for community college programs to train new hires. But there was a second tranche of tax incentives from the state of North Carolina totaling $2.9 million. And outside factors such as lower cost electrical power service courtesy of Duke Power may also be a factor for a computer-​intensive facility. PayPal has been working on this project for over five years with Phoenix, Tampa and Salt Lake City all under consideration but none of them matched the total incentives offered by North Carolina. Buying jobs? Sure sounds like it.

The facility was projected to create 400 jobs with an average salary of $51,000 resulting in a $20 million annual payroll when fully operational. So even an incentive package of over $3 million doesn’t need too many years of increased income tax revenue to justify the investment. But if the goal is to build a sustainably expanding economy, that may change the calculus. For example, due to evolving markets, Intel is closing outdated facilities in New Mexico and Arizona that were located in these States with large incentive packages attached. Did Intel help spur a local job market that can now absorb the displaced workers? Maybe, but local reports are decidedly pessimistic. And western Pennsylvania has hard-​earned experience with the former Volkswagen plant as our own personal sore point.

Buying jobs? The jury remains “out” on that approach.


Paul Scripko

Paul Scripko started life in the Mon Valley south of Pittsburgh and after attending McKeepsort’s Serra High School, Pitt, and grad school at Harvard, he’s had a career on Wall Street and in high tech, both of which allowed him to enjoy many of the world’s great cities. Viewing Pittsburgh from a distance resulted in his ongoing commentary about Pittsburgh and western Pennsylvania. He discovered that a bit of distance does indeed provide a better perspective. His goal is to prod Pittsburghers to recognize issues that need addressing, while embracing the region’s world-​class strengths and opportunities.

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