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Et tu, Principal?

November 19, 2008

Maybe there's a good reason the stock of Des Moines stalwart Principal Financial Group has skidded from over $70 to $14.31. Des Moines' largest employer is now taking its place in the federal bailout soupline.

Principal has also backed out of an economic development tax credit deal with Iowa to "create" 900 jobs:

"We made a judgment that the 900 jobs within the contract period of three years would be a challenge, considering the significant economic changes that have taken place," Merle Pederson, Principal Financial's counsel, said Monday.
Pederson notified the Iowa Department of Economic Development in an Oct. 24 e-mail that Principal would not pursue the state incentives. The company also cited "current projected future growth" for declining the tax breaks.

That at least provides some clarity. It's not the state that "creates" jobs; it's the business. If the jobs won't make the company money, they won't happen, no matter how much corporate welfare you throw at them. If the employees are needed, the employer doesn't need the tax credits, though it will happily take whatever cash the state is handing out.

Tags: corporate welfare.economic development.Principal.