Tuesday, May 8, 2018

Minnesota's economic dominance of Fitzwalkerstan gets national exposure

I've often harped on the fact that Wisconsin has consistently trailed Minnesota in economic outcomes over the last 7 years, and with good reason. The states are of similar size and demographics, and are right next to each other. Given that one state has had Republicans in charge in that time (Wisconsin) and one has had Democrats (Minnesota), it creates a good side-by-side comparison.

Well, today the Economic Policy Institute released a report on the two states, and showed that Minnesota has cleaned Wisconsin’s clock since the Age of Fitzwalkerstan began in 2011.

During his gubernatorial campaign, Scott Walker claimed that his policy agenda would create 250,000 new jobs in Wisconsin by the end of his first term in office (Associated Press 2011; Davey 2011). After taking office, the governor declared Wisconsin “open for business” and began implementing his agenda of deregulation, cuts to the public sector, and large tax cuts—with tax cuts for small businesses as well as cuts on capital gains taxes and individual income taxes (New Richmond News 2011). In Walker’s first term, Wisconsin cut taxes by $2 billion (Wisconsin Budget Project 2011; Stein 2013; Hovorka 2017). Nevertheless, the state did not come anywhere close to meeting Walker’s professed employment targets. In fact, as Walker nears the end of his second term, the state still has not reached the governor’s campaign goal.

Table 1 shows that Minnesota has had stronger job growth than Wisconsin since both governors took office. From December 2010 to December 2017, Wisconsin added 216,800 jobs—an increase of 7.9 percent. In contrast, Minnesota’s job growth from December 2010 to December 2017 was 11.0 percent, or a total of 292,100 jobs.

Wisconsin had lost 141,200 jobs (or 4.9 percent of total nonfarm employment) from the start of the recession (December 2007) to December 2010. Thus, by December 2017, Wisconsin had about 75,600 (or 2.6 percent) more jobs than it did a decade prior. Minnesota’s losses in the recession were not quite as severe, with the state losing 118,000 jobs (or 4.3 percent of employment) from December 2007 to December 2010. By December 2017, Minnesota had 174,100 (or 6.3 percent) more jobs than it did prior to the recession.
This underperformance also shows up in the Walker jobs gap, where Wisconsin is more than 130,000 jobs below the US rate since Walker took office in 2011. And that includes some sketchy claims of huge job gains in recent months by Walker’s Department of Workforce Development.

The wage side also looks bad for the Fitzwalkerstanis. Before they came to power, Wisconsin had seen decent gains in real wages throughout much of the 2000s, and the EPI says the gap with Minnesota for median wages had been cut in half between 2000 and 2010.

And then Walker took over, instituted anti-union policies such as Act 10 for public sector employees and right-to-work (for less) for private sector union members, and the results? Not so good.
After Walker and Dayton assumed office, the trends flipped: wages in Minnesota have taken off, while in Wisconsin, they have stagnated. Figure D2 shows that, since 2010, growth at every point in the wage distribution has been stronger in Minnesota than in Wisconsin. From 2010 to 2017, the median wage in Minnesota cumulatively rose 2.4 percent over and above inflation—meaning that middle-wage workers in Minnesota have had a measurable improvement in their living standards. Minnesota’s median wage growth was also stronger than the 1.6 percent the U.S. experienced as a whole over the same period. In contrast, from 2010 to 2017, the median wage in Wisconsin rose only 0.3 percent after inflation. In other words, middle-wage workers in Wisconsin are treading water, barely hanging on to the same buying power they had in 2010.
EPI also looks at the number of individuals with health insurance in both states. Like most places in America, both Wisconsin and Minnesota have seen their uninsured populations decline since the ACA has taken effect. But Minnesota cut their uninsured rates by a larger amount than Wisconsin, and didn’t spend hundreds of millions of extra state tax dollars to do so, because they took federal funds to expand Medicaid and set up their own state exchanges.
As shown in Figure G, from 2010 to 2016, the share of people without health insurance declined in both Minnesota and Wisconsin. This is not surprising given the improving health of the labor market—which, all else being equal, should allow more people to access employer-provided health care—as well as the creation of ACA insurance exchanges and the implementation of the individual mandate. However, the decline in the uninsured rate was markedly larger in Minnesota than in Wisconsin. In 2010 the share of the population without any health insurance was actually larger in Minnesota than in Wisconsin, at 9.8 percent and 9.4 percent, respectively (DeNavas-Walt, Proctor, and Smith 2011). But by 2016, Minnesota’s uninsured rate had fallen 5.7 percentage points to 4.1 percent, while Wisconsin’s uninsured rate fell 4.1 percentage points to 5.3 percent (Barnett and Berchick 2017). The difference between the two states may seem like a small gap, but if Wisconsin had the same coverage rate as Minnesota, it would mean an additional 70,000 Wisconsinites would have health insurance.

It is important to note also that Minnesota’s comparatively larger expansion of health insurance cannot be attributed solely to Governor Dayton’s decision to expand Medicaid under the ACA while Governor Walker did not. The share of people with public health insurance did rise more in Minnesota than in Wisconsin, by 3.6 and 1.8 percentage points, respectively. Yet at the same time, the share of the population with private health insurance also rose more in Minnesota (2.0 percentage points) than in Wisconsin (0.9 percentage points). In other words, denying low-income families in Wisconsin access to Medicaid did not appear to have led to any greater take-up of private health insurance.

Leave aside the corruption and numerous embarrassments to Wisconsin that have been part of the Reign of Error of Governor Dropout, and let me ask a simple question. How is getting our ass kicked by Minnesota in jobs, wages, and general quality of life acceptable in any way?

As I’ve said before in this space, if the Packers/Badgers were getting drilled by the Vikes/Gophers while staying below .500 overall, you wouldn’t give that coach a 4-year contract extension. YOU’D FIRE HIS ASS. So why shouldn’t Wisconsin do the same thing with Walker this November?

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