IBM has exceeded state incentive requirements that it employ at least 800 workers at its Baton Rouge Client Innovation Center downtown, but fell short for the average number of employees in the contract year so it still must reimburse the state for some economic incentives.
IBM sought to avoid paying a $10,000 per job penalty for any shortfall by June 30, since its incentive contract with the state runs from July to June. But the average number of employees in the past contract year was only 656 workers, which is 144 employees short. So the expected penalty levied against IBM by the state would be $1.4 million.
To hit the 800-employee mark, the company had to hire more than 200 workers over the past year. It topped the required employment and reached 811 jobs by June 30, with expectations of hiring more workers, though at a slower pace, an official said Wednesday.
“We’re continuing to hire and we’re squeezing people into the building,” said Charles Masters, the IBM vice president for North America client innovation centers. “We expect to add another couple hundred more.”
The pace of hiring was about 100 new workers per quarter over the first half of this year, but that’s likely to slow to about two dozen per quarter. More demand from clients is what has been driving the most recent hiring spurt, Masters said.
IBM had up to 60 days to submit a progress report to the state after the June deadline. The tech giant committed to hire hundreds of workers inside a publicly funded building downtown in exchange for an economic incentive package worth $147 million over 17 years, which includes incentives for its building. IBM has received $23.7 million in incentives directly to date, according to the company. It has paid $124 million in employee payroll since 2013 and spent $600,000 in the past year in downtown restaurants and hotels.
Average starting salaries range from the mid-$40,000s to the mid-$60,000s for new professional jobs, according to IBM.
IBM's incentive agreement dates back to an initial deal in 2013 with former Gov. Bobby Jindal's administration to hire 800 workers by 2017 in exchange the state incentive package. IBM fell short of those goals and the contract was negotiated with Gov. John Bel Edwards to avoid penalties, but the new deal extending the full 800-job hiring requirement to 2019 increased the cost of penalties for any shortfall.
IBM narrowly met its hiring goal last year, when it had 575 workers at the company as of June 2018, just three more than what was required by the state.
IBM has included apprenticeships as full-time employees toward its goal of 800 jobs. It hired about 200 apprentices in the first year of the program. The company has hired 600 graduates of universities in Louisiana since it opened the Baton Rouge office, including 180 in the past year. The company held job fairs in New Orleans and as far away as Jackson, Mississippi, for the local office.
The state committed to pumping $14 million into colleges to bolster computer science programs in Louisiana, including LSU, as part of the incentive deal to help provide a pipeline of workers to the company. IBM says it has hired more than 300 LSU graduates since it opened in Baton Rouge.
Community colleges also have been a feeder for the company. Beyond that, IBM has invested in a program that prepares high school students for high-tech jobs.
Roughly 50% of the IBM employees hail from Louisiana, while the remainder have relocated from across the country from Chicago to New York City, according to the company.
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