Sears to cut 220 workers in Hoffman Estates

Sears to cut 220 workers in Hoffman Estates

The struggling retailer’s latest, immediate cuts come less than a year after it shed 400 jobs in June 2017.

Sears Holdings Corp. laid off 220 employees on Jan. 31, effective immediately, according to the Chicago Tribune. The bulk of the laid-off workers are white-collar employees at Sears’ corporate headquarters in Hoffman Estates, Illinois.

The famous Illinois retailer is undergoing a massive restructuring effort in order to reduce costs, according to the Tribune. This most recent set of layoffs comes on the heels of Sears cutting 400 jobs in June 2017. Sears says it will provide severance pay and transition assistance to qualifying employees and has not said how many workers it will retain at its corporate headquarters.

“The company will continue to take decisive actions to restructure our operations, targeting at least $200 million in cost savings on an annualized basis in 2018 unrelated to store closures,” Sears Spokesman Howard Reifs told the Tribune in an email.

Sears has been shedding jobs for years, despite generous state and local tax breaks. After its layoffs in June 2017, the company dropped below the employee threshold necessary for it to maintain eligibility for a special tax credit deal with the state.

Brokered in 2011, the carve-out was a special iteration of the Economic Development for a Growing Economy, or EDGE, tax credit program and called for Sears to maintain 4,250 jobs and commit to capital investments in exchange for future tax credits.

These deals typically allow companies to receive tax credits regardless of whether they even owed taxes in a given year, according to the Tribune. In addition to Sears, Motorola and Navistar also have enjoyed such special EDGE deals with the state.

The state no longer offers that type of EDGE deal.

Sears also benefitted after its Hoffman Estates location was deemed an “Economic Development Area” in 1989, giving the company a lucrative property tax break. The offer was extended in an effort to get Sears to stay in Illinois and go to Hoffman Estates instead of North Carolina. The deal provided tax incentives to Sears in exchange for maintaining 2,000 jobs in Illinois.

Sears’ continued hemorrhaging of jobs is proof that special tax break programs such as EDGE are not sustainable or effective models for jobs growth. Sears’ woes should serve as a lesson for state and local governments to refrain from picking which businesses to support.

Such policies yield few winners and plenty of losers.

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