Seven years after receiving millions of dollars in tax breaks to create jobs in New York, Pfizer is eliminating up to 1,400 workers amid a vast consolidation that was accelerated by its $68 billion purchase last year of Wyeth. Along with the cuts and musical job chairs, which come on top of 2,000 other positions already eliminated, the drugmaker is also putting a midtown office building up for sale, The New York Times notes.

Pfizer will retain its midtown headquarters on East 42nd Street, as well as 4,400 employees, but now faces an angry and embarassed Bloomberg administration, which wants to recover twice the $12 million in tax breaks awarded in 2003. A spokesman for the city’s Economic Development Corporation tells the paper the city can pursue twice the amount of breaks if Pfizer eliminates more than 450 jobs. This is not a new issue - a columnist for The Daily News wrote here that the city was getting soaked.

Indeed, Pfizer layoffs keep on coming (see here and here), underscoring that the impetus to offer tax breaks to companies in hopes of retaining or creating jobs can clearly backfire, especially in industries undergoing consolidation. Some critics decry the notion as corporate welfare and the practice may come under pressure in some places, such as New Jersey, where budgets are strained (see this).

Some background: Back in 2003, when Pfizer was about to buy Pharmacia, then New York Governor George E. Pataki and Mayor Michael Bloomberg announced the drugmaker would invest $1 billion in New York City over 15 years, buy and renovate a building at 685 Third Avenue, create 2,000 jobs and retain 5,500 workers in New York, the Times writes. In return, the city and the state provided breaks and other incentives worth up to $47 million, although only $12 million were used.

Pfizer’s New York City payroll reached a high of 6,500 in June 2005, the Times writes, citing city officials, but has since declined. In 2008, Pfizer closed its longtime manufacturing plant in Brooklyn. That same year, the city ended the tax breaks because of low employment levels and forced the company to return $2.7 million in benefits.