State’s Economic Development Agency Moves Ahead on Diversity Rules for Tax Credits

Liam Dillon, Los Angeles Times, July 4, 2016

The state agency in charge of handing out hundreds of millions of dollars in tax credits to companies that promise Californians jobs is moving closer to requiring those businesses to say how they plan to make their workforce more diverse.

Businesses soon will have to describe their hiring and recruiting practices to ensure women and people of color have equal access to jobs as part of their applications for tax dollars, according to a plan unveiled last month by GoBiz, the state’s economic development department. The new rules are expected to be in place by November.

The effort is in response to internal pressure made by Madeline Janis, who, as a member of the committee that hands out the tax credits, has pushed GoBiz in recent months on diversity issues.

Janis has wanted GoBiz to develop stricter rules for companies that receive state money with an eye toward the tech industry’s historic struggles with hiring a diverse workforce. Janis, who questioned app maker Snapchat Inc. and electric car company Faraday Future about their hiring practices at a tax credit hearing in April, believes state dollars could help incentivize businesses to focus on this issue.

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In the past year, the agency has awarded approximately $160 million to 259 companies, which GoBiz projects will create more than 20,000 jobs and deliver almost $3.2 billion in investments.

But in recent months, GoBiz has been criticized for not connecting with the California Black Chamber of Commerce and for dragging its feet on addressing diversity concerns during the tax credit process.

During an Assembly committee hearing in the spring, Aubry Stone, the head of the California Black Chamber of Commerce, said GoBiz executives had never contacted him to discuss the concerns in the black business community. Since then, Stone said in an interview, he’s had several meetings with GoBiz, but believed the agency could make its resources more available to black businesses.

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