Jobs Tug Of War: Kansas City Businesses Poached By Kansas, Missouri

May 5, 2016
Originally published on May 18, 2016 9:11 pm
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RACHEL MARTIN, HOST:

There is a standoff in the American Midwest. Kansas and Missouri are in a fight over jobs. Noel King from our Planet Money podcast has the story of what people there are calling the Border War.

NOEL KING, BYLINE: CBIZ is an accounting and insurance firm. It's been in the Kansas City area for years. It started out in Missouri, on the second floor of an upscale office park.

JEFF CARLSTEDT: Where were we? We were right at 420 Nichols Rd., right above Panache chocolate. That's a good place to be.

KING: Jeff Carlstedt is the managing director of CBIZ. About 12 years ago, CBIZ moved 10 miles into Kansas. Not much changed. Workers had a different commute. Then about two years ago, CBIZ moved back across the border to Missouri - so close, Jeff can see his old office.

CARLSTEDT: We were right through that Skelly sign, right down there by that parking garage. I can see my very first window that I had from this window.

KING: I asked Jeff, why the moves? And he said there are a lot of factors in play, like the company's growing, needs a bigger space. And Kansas and Missouri are both competing for businesses like his. That means both states are offering stuff. They dangle incentives, breaks on property taxes, payroll taxes, paving new roads, to get companies like CBIZ hopping across the border.

Jeff wouldn't say how much CBIZ got in the most recent move, but local papers reported Missouri offered around $26 million in incentives. Lots of companies are taking advantage of offers like that - AMC Theaters, Applebee's, JP Morgan Retirement. They've all hopped the border from Kansas to Missouri or Missouri to Kansas. A couple years ago, people started calling this the Border War. Here's a border warrior.

BLAKE SCHRECK: I am a noncommissioned officer. Actually no, I'm actually just a soldier.

KING: That is Blake Schreck. He runs the Chamber of Commerce in Lenexa, Kan.. And if a company's looking to make a move, Blake takes them out to dinner. He talks real estate. And it's not as exciting, but he tells them about tax incentives.

He sells them on Kansas because Kansas wants jobs. Each new company means new jobs, even if those jobs come from just across the border in Missouri. If a company moves to Kansas, to him, that's job creation.

SCHRECK: Because if it's a new job to the state of Kansas, it's a new job to the state of Kansas whether it is from Mississippi or Missouri, and - because it's not our state.

KING: So you're creating jobs in the state of Kansas that were, like, stolen from across the street.

SCHRECK: No. Every time that somebody comes from, say, Missouri to Kansas, that is a new revenue stream that we create with payroll taxes and capital investment and all the things that go along with that that we didn't have before.

KING: Blake is on the Kansas side. But Missouri treats it the same way. And you can see where this leads. One state slashes taxes to get or keep a company. The other state has their offer. Meanwhile, they're digging themselves into a hole. They're giving up tax revenue that pays for things like schools and roads and police.

A local philanthropic group, the Hall Family Foundation, found that dueling tax incentive programs for job creation cost Kansas and Missouri half a billion dollars over five years. All that over 10,000 jobs that shuffled between the two states. The big winners are the companies, like CBIZ, who we heard from earlier. I asked Jeff Carlstedt, would he consider crossing the state line a third time?

CARLSTEDT: We would evaluate whatever makes the most sense. We can say that you would never say no to anything.

KING: Kansas and Missouri agree. This is not working. They've each proposed a truce. Now they're arguing over whose truce to sign. Noel King, NPR News. Transcript provided by NPR, Copyright NPR.