WRAL TechWire conducted an interview by email with Prof. John Quinterno, Visiting Professor of the Practice in the Sanford School of Public Policy at Duke University, about Apple’s plans for a $1 billion campus and 3,000 jobs in the Triangle. He is also the founder and principal of South by North Strategies Ltd., a research consultancy specializing in economic and social policy. Recently Quinterno also expressed concerns about the impact of Google’s new engineering hub in Durham.

Monday’s announcement about Apple’s decision to locate a new research and development campus in the Research Triangle Park is significant. Should the project come to pass at the scale outlined today, it would have transformative effects on the region.

Those effects would not be uniform, however, and as with any economic development package of this magnitude, there would be clear winners and clear losers.

As a baseline issue, it is important to recognize that announced projects like this don’t necessarily materialize. Various studies of North Carolina’s past use of Job Development Investment Grants, like this one, have shown that most incented projects never achieve the stated employment figures. This project may prove to be different, but it is important to watch what actually happens going forward instead of just relying on the company’s brand and reputation.

Apple deal comes with clear winners – and clear losers – for Triangle, economists warn

Regarding who may benefit from the direct Apple jobs, should they materialize, it does seem like the assumption is that many will be filled by outsiders. In her remarks, Secretary of Commerce Machelle Baker Sanders talked about an “influx of people relocating.” Ideally, many of the jobs will be filled by North Carolinians, many of whom are graduates of local colleges and universities, but if most of the best jobs go to transplants, which is not unusual in these circumstances, the employment benefits to regular North Carolinians will be limited.

Additionally, a project of this potential type and scale has the potential to benefit many people ranging for real estate developers to future employees, but it also has the ability to exacerbate economic and social inequalities.

Research has shown that many tech-based development projects can result in a good number of high-paying jobs supported by even larger numbers of low-paying support and service jobs. To the extent that the new high-paying earners use their resources to bid up the costs of essential services like housing, those people in lower-paying jobs will struggle to make ends meet even if they have a “new” job that is induced by the Apple project. Their well-being can deteriorate and they may find themselves being displaced. This is not an unusual development in big tech centers.

Another factor to consider is the amount of public subsidy involved.

The Department of Commerce said that this project could potentially receive as much as $846 million in Job Development Incentive Grants over a 39-year period. That is a transfer of taxpayer resources from all North Carolinians for the benefit of one publicly traded company and, at most, potentially 3,000 people who may directly work for the company in one specific region of the state. That is a benefit that Apple and its employees will get that no other existing tech firm gets.

Google’s engineering hub will have consequences for Durham, warns Duke professor

And the public funds redirected toward Apple is money that will not be available for schools, roads, and other public investments in communities, both in the Triangle and far from it. While the Triangle may benefit from the modeled benefits such as the direct jobs, the spillover ones in linked industries, and the induced ones, places far from the Triangle may not benefit.

A project of this scale has the potential to widen regional disparities within the state, leading the rich regions to grow richer, the poor regions, poorer.

It is important to note that the test to be used in judging public subsidies is the “but for” test. So would Apple build this campus “but for” the subsidy package? While that is a difficult question to answer from the outside, if the firm would undertake the project anyway, then the public funds essentially are being wasted.