Capital One Takes $200K in State Money and Runs

When Capital One expanded its call center in Sioux Falls in 2012, all of South Dakota’s leading lights came to cheer:

Capital One Sioux Falls ribbon cutting: (L to R) Slater Barr, U.S. Rep. Kristi Noem, Mayor Mike Huether, Gov. Dennis Daugaard, Curt Milroy (VP, Operations), Dan Mortensen (SVP, corporate real estate & HR operations), U.S. Sen. Tim Johnson, U.S. Sen. John Thune, Barb Stork and Evan Nolte. Photo from Sioux Falls Area Chamber of Commerce, May 2012.
Capital One Sioux Falls ribbon cutting: (L to R) Slater Barr, U.S. Rep. Kristi Noem, Mayor Mike Huether, Gov. Dennis Daugaard, Curt Milroy (VP, Operations), Dan Mortensen (SVP, corporate real estate & HR operations), U.S. Sen. Tim Johnson, U.S. Sen. John Thune, Barb Stork and Evan Nolte. Photo from Sioux Falls Area Chamber of Commerce, May 2012.

Recall that the people in this picture hyperventilated once upon a time that President Barack Obama would kill jobs like these with the Credit Card Reform Act. Desperate to live up to their own fabricated fears, that Governor’s Office of Economic Development handed Capital One a $200,000 workforce training grant… which is funny, because at the time, both Governor Dennis Daugaard and Capital One CEO Richard Fairbanks said Sioux Falls landed those new jobs because of South Dakota’s already excellent workforce:

The South Dakota Governor’s Office of Economic Development helped recruit Capital One to Sioux Falls, and offered the company a $200,000 grant to assist with the cost of training new employees in Sioux Falls. “It’s great news to hear that Capital One is bringing hundreds of solid-paying jobs with good benefits to our state,” said Gov. Daugaard. “It’s clear that our workforce and regulatory environment are helping strengthen our financial services industry. This is the kind of company we like to see in South Dakota, and I’m pleased to welcome Capital One to our state.”

“The strength and resilience of Capital One’s business model has served us well through the recession. As we invest in our business, we appreciate the importance of growing and investing wisely in our communities and in our people,” said Richard D. Fairbank, Chairman and CEO of Capital One. “I have worked with my long-time friend Chairman Tim Johnson for many years and we are excited to come to South Dakota. We know that there is an experienced and talented workforce to tap into here, and we are very pleased to be able to bring new, high quality jobs to the state. We appreciate the partnership and support we have received from Governor Daugaard and the South Dakota congressional delegation” [emphasis mine; Governor’s Office of Economic Development, “Capital One Commits to Maintaining Sioux Falls Jobs and Adds 400 New Jobs” 2011.11.15].

Did that headline say “Commit”? Less than four years after South Dakota committed to that corporate handout (and remind me: just how much training does one need to answer the phone?), Capital One is shutting down its Sioux Falls call center, giving 750 employees 90 days to find a new job. Capital One is blaming its departure on our lacking workforce:

The company told state officials that it can’t retain or attract enough employees now because once the recession ended, the worker shortage in South Dakota began.

“But as we recovered, the workforce demands, not only for Capital One, but for a lot of employers across the state became more challenging, and apparently for Capital One they decided it was more difficult than they could bear,” Costello said [Angela Kennecke, “Capital One Blames Worker Shortage for Closure,”, 2015.07.23].

Steve Sibson properly identifies Capital One’s skipping town as a predictable failure of crony capitalism:

Don’t expect a thank you note from Capital One stockholders. They will just take the money and run.

Only “smart communities” would take money away from taxpayers and give to big corporate special interests in order to create jobs that are not needed. I wonder how much the GOED offered Capital One to not make the decision to leave South Dakota? I wonder if the Governor will now spend less of our taxes on subsidizing  recruiting costs for private business interests, since we have 750 less jobs to fill? Perhaps someone should tell the Blue Ribbon task force that we can pay teachers more by paying corporations less by stop subsidizing their expansions via TIFs and other so-called economic development grants, by stop subsidizing their recruitment costs, and by stop subsidizing their training costs [Steve Sibson, “Capital One Leaving Sioux Falls Is the Latest Failure of Crony Capitalism,” Sibby Online, 2015.07.24].

But don’t expect crony capitalist GOED chief Pat Costello to learn from this mistake:

“Hindsight is always 20/20, but if I was back in 2012 and had the opportunity to incentivize 700 new jobs for $200,000 for the state, I’d do that again,” Pat Costello said [Kennecke, 2015.07.23].

We get fleeced, and Costello says he’d back his fuzzy bottom up to the shears all over again. Come and get it, Corporate America!

23 Responses to Capital One Takes $200K in State Money and Runs

  1. Call center work is a high stress job which results in a high turnover rate. The majority of the calls you take are pleasant. However, others are beyond obnoxious. One kind of has to have the “patience of a saint”. Companies often have strict standards regarding call times. Hours and days off can fluctuate on a week to week basis. Makes it hard to plan ahead. The company may tell the employee they are are guaranteed a certain number of hours per week, but if calls are slow, they will send people home before their shift ends. Without pay. For someone working to support a family, it is not the most reliable job. Apparently, Capital One is closing an Oregon call center as well. I wonder where these jobs are going?

  2. Porter Lansing

    Apparently “tapping into” a workforce has the current common meaning.

  3. Porter Lansing

    @SDBlue… An often overlooked aspect of the Obama Economic Recovery is that USA voters are no longer over-extended on credit card debt to the point of distress. We are saving more now and buying less on credit than when the Bush Administration survived mostly on encouraging refinancing schemes and credit noose policies. The current economy is highly authentic, finally. People are saving up for a large purchase and that’s bad news for the predatory Capital One’s of the financial picture.

  4. Roger Elgersma

    People using credit cards less is a great improvement over the Bush years. Capital One did not move these jobs to somewhere else as far as I have heard so far.

  5. Roger Elgersma

    A couple of years ago the state budget included having the votech at Mitchell teach people to be John Deere mechanics. The farm economy had been great for a few years both from the standpoint of crop prices and rainfall in South Dakota. John Deere charges huge prices for tractors and then were standing there with their hand out asking for financial help from the Republicans who happily helped them since they are rich businesspeople. The hypocracy does not stop when someone wants to help the rich and cuts the schools to bare bones and skip helping with health care. This is opposite of the parable of the good Samaritan.

  6. grudznick disagrees with giving money away to corporate persons. That limp could have gone to bonus good math and science teachers but it should not be used as ongoing raise money.

  7. Porter Lansing

    My point, exactly Mike. The genre of business being courted by Republican give-aways are the companies that have already shipped off to China. Attracting commerce with low wages and even lower regulations has already been done, overseas. Sodak could be the next Washington where businesses want to put down roots not just pull up carrots. It starts with cleaning house in Pierre, putting some regulations on employee and income equality and showing a liberal mindset that attracts liberal jobs. What has the Conservative paradigm done for you lately?

  8. Workforce schmerkforce, says the Sioux Falls Development Foundation, which suspects Capital One is moving for internal corporate reasons:

    But hundreds of workers will have to clean out their desks when Capital One leaves. The company blames a worker shortage in Sioux Falls. But Mary Medema of the Sioux Falls Development Foundation thinks Capital One’s closing has more to do with corporate restructuring than problems with the local job market.

    “It could have made us more of a target. Do I think it’s the reason? Not really. They have 750 excellent employees out there and in that business, you do not take that lightly,” Medema said [Perry Groten, “Capital One Building’s ‘Credit History’,”, 2015.07.24].

  9. Is Thune gonna be here to turn out the lights? He never seems to pass on a photo op! Then again, these things never seem to draw the same attention as the “grand opening”!

  10. When SD state govt is giving away taxpayer money to these companies, are there stipulations that a business has to be here a certain amount of time before they move elsewhere?
    Having been in SD only three years before outsourcing its jobs is just wrong in my opinion. Corporations know how to use GOED to their advantage and are laughing their way to the bank.

  11. Nick Nemec

    Sibson makes a good point that the $200,000 in tax money gifted to Capital One could have been put to better use for better purposes, including paying SD teachers more.

  12. Douglas Wiken

    What will be the fallout from the state dumping something like $8 million into a land development near Sioux Falls? That makes $200,000 look like chump change.

  13. No, Mr. Nemec. That money cannot go to pay all teachers more money. But it could have gone for some nice bonuses to the best 50 science and math teachers in the state.

  14. yeah, grudz pay 50 0f the thousands deserving more money, a pittance.

  15. As much as I dislike corporate welfare, I can see Pat Costello’s point on this one. The state has given a whole lot more to others and gotten a whole lot less in return. Look at the tens of millions they let the Joopster make off with. Look at the hundreds of thousands the state threw at Manpower, Inc. to hire a few transitory out-of-staters to work a few months at Trail King.

    Capital One has not only provided hundreds of jobs in SF for 3 years, they also have supported local charities. And they will pay more in severance for their employees than what the state paid to train those employees.

    Do I like that Capital One is probably outsourcing these jobs to the Philippines? Not a bit. But the $200,000 the state gave the company was ostensibly to provide skills to workers who will remain here in the SD job market. Sounds to me like a good investment by the state.

  16. “sounds like a good investment”? what sort of accounting standard is “sounds like”?
    If you made a little money in your IRA for three years then lost nearly everything it’s doubtful that “sounds like a good investment”.

    The state needs a rolling independent third-party accounting of its corporate socialist welfare schemes to determine the real return on investment to the state.

  17. try telling that to the people who will shortly be out of jobs Rorschach. Make these same people understand what a good investment it was for South Dakota. Explain how they are going to make their mortgage payments or feed their families while they try to find another job like 750 other people look as well.

    I’ve been through what these people are going through and believe me it’s not fun.

    If South Dakota is going to invest in companies how about we invest in ones that care about South Dakotans and really commit to us.

  18. mike from iowa

    750 phone answerers is probably more than unemployment office can hire at one time. WalMart greeters don’t need phone skills. Police dispatcher job,maybe? Not all 750. Guess they will need to be re-trained.

  19. mike from iowa

    I wonder if Cap One brought in any Filipinos so the outgoing workers could train their replacememts?

  20. I agree with you , Jenny, your question and your statements especially about laughing all the way to the bank!! I’m sick of hearing legislators claiming we can’t fund education or teacher pay or expanding Medicaid but they can always find money for these corporate welfare handouts in the guise of “economic development”!! the hypocrisy is stunning!!

  21. Lars Aanning

    Wonder what values drive a company to outsource its jobs from America to overseas?

  22. The values are obvious, Lars: capitalism and shareholder profit unmoored from morality.