A bill aimed at relocating higher-income remote workers to Kentucky could cost the state up to $200 million and widen inequality without necessarily drawing many people to Kentucky who aren’t already planning to move here.
House Bill 152, known as the “Taxpayer Transplant Program,” gives eligible private recruiting companies up to $8 million each year for up to 25 years to subsidize remote workers moving to the commonwealth, for a total potential cost to the state of $200 million. To participate in the program, recruiting companies would only have to invest at least $10 million in grants for people moving here and in activities like advertising. That’s a big cost to the state for little private skin in the game, and a questionable investment even if every employee subsidized through the program wouldn’t come to Kentucky otherwise. But with about 46,000 households moving to Kentucky each year anyway, the program provides ample opportunity for these companies to profit off relocation they didn’t cause.
The program would also widen existing inequities by targeting only the top 17% of income earners and by investing in people currently not in the state rather than existing Kentuckians, who would benefit far more from using the lost resources for needed quality of life improvements.
Many people move to Kentucky each year anyway, HB 152 allows private companies to profit off that with public dollars
HB 152 would allow companies that invest at least $10 million in their efforts to recruit workers to Kentucky and that spend an average of at least $7,500 per employee moving to the state to be eligible for annual disbursements of state dollars of up to $8 million a year in total. The disbursements would be equal to 4% of the annual wages of “relocated” employees residing in larger population counties, and 5.5% of annual wages for those living in smaller counties.
The companies can receive these disbursements for any employee making at least $75,000 a year who does not work at an employer’s physical location and who relocated within five years of the program’s inception. Companies could continue to collect the disbursements for those employees each year they remain employed, even if the contract is canceled by the state, and the program can last up to 25 years. That means a maximum cost of the program to the state of $200 million — a massive return on only $10 million in required private investment.
The language of the bill says qualified employees must “relocate to this state as a result of the contracted company’s Taxpayer Transplant Program.” But in reality practically no one moves to a state solely because of a recruiter. People most often relocate because of in-state job opportunities, family considerations, housing costs, better weather or quality of life issues. Paying or subsidizing moving costs or providing a stipend or other type of subsidy simply would not be an adequate inducement on its own for someone to relocate. And there is no way to know the real reasons people relocate, yet both the recruiting company and the relocating person receiving a grant from the company would have an incentive to claim the benefits provided through the program as the cause.
Internal Revenue Service data tracks both the number of people who move between states each year and their incomes. Over the last five years, an average of 46,479 households containing 91,403 people moved to Kentucky each year. Of those households, average adjusted gross income was $55,102 a year.
It would be easy for a recruiter company to get state dollars through the program for subsidizing a small share of people already planning to move here. For example, over the program’s five-year recruitment period, a company would only have to find 1% of the households moving here already who have an employee that makes more than $75,000 a year and meets the definition of a remote worker (according to one estimate, 64%-75% of those making more than $75,000 can work remotely full- or part-time). If you assume those employees’ average wage is $85,000, and that they all moved to a larger population county (and therefore qualified the recruiter to receive the smaller disbursement equal to 4% of their wages), it would make the recruiter company fully eligible for the $8 million in maximum annual state payments despite not actually being the reason for the relocation.
Recruiting companies would have to spend an average of $7,500 per employee, but would receive state disbursements every year that would exceed that up-front cost in approximately three years, and could be received for up to 25 years even if the contract is terminated by the state.
The major loophole of being able to subsidize people moving here anyway is a key flaw of such programs, and is why few of the relocation programs that have popped up in other places in recent years are paid for with scarce public dollars. As the Vermont auditor said in a recent article, “grants to those who would have come anyway are a waste of taxpayer funds.” These programs largely rely on private philanthropy instead, and have not been shown to be cost-effective.
Program adds to inequality and takes resources from quality of life investments
HB 152 does not invest in existing Kentuckians, instead giving money to those who do not now live in the state. The bill targets remote workers rather than in-person occupations where Kentucky is facing actual shortages, like teachers and nurses. And it gives grants only to higher-income people – those who make more than $75,000 a year – rather than people whose lives would be helped the most by financial support. The minimum threshold of $75,000 in annual wages is more than approximately 83% of Kentuckians received in 2022, according to Economic Policy Institute analysis of Current Population Survey data.
With the median Black Kentucky worker making only $0.82 for every $1 the median white Kentucky worker makes, those subsidized under HB 152 are likely to be disproportionately white. In addition, while HB 152 gives a slightly bigger subsidy to recruiter companies that recruit people to live in counties with less than 100,000 people, there is no requirement that any of the transplants move to those more rural counties. Recruiter companies could receive the $8 million annually from the program without any people they’ve claimed to recruit moving to a rural community that needs in-migration.
By costing up to $8 million a year and up to $200 million over the life of the program, the bill will take resources from other investments that could actually make Kentucky a better place to live. The state needs money for health improvement, educational advancement, affordable housing and other public amenities and quality of life improvements. Those investments are far more important to people choosing to stay in Kentucky or move to the state than the spending in HB 152.
