Oklahoma's Smart Job-Creation Strategy

During the '30s, waves of Oklahomans moved to California to flee the Dust Bowl and find work. Now the exodus has reversed. Each year since 2000, Oklahoma has added several thousand net migrants from California, making the Golden State the primary pipeline for new Sooners; the flow is a big part of the reason that Oklahoma ranked eighth nationally in net migration last year. In the past two decades, Oklahoma has added about 600 new companies or divisions, including part of Boeing, which last month moved 550 jobs from Long Beach, Calif., to Oklahoma City.

The secret to the shift: a one-of-a-kind incentive program. To transition to a manufacturing economy in the early '90s, Oklahoma gave companies 5 percent cash back on payrolls for creating new jobs. It was the only state to offer a "cash in hand" policy, rebating money without telling CEOs how to spend it. The result has been 400,000 new jobs since 1993. And now state officials want to use the same trick to add more knowledge-based jobs. Last fall they doubled the payroll benefit for companies offering average annual salaries of at least $94,000, three times the state average. Boeing is the latest big get. Unless other states can match the incentive, it probably won't be the last.