Monday, November 9, 2015

Shouldn't Wisconsin's economic record be part of tomorrow's GOP debate?

As some of the nation’s eyes turn to Wisconsin for tomorrow night’s GOP debate in Milwaukee, it may be worthwhile for the national media to look around and see what’s going on in this state. After all, Wisconsin has been one of the biggest test cases for GOP policies since Scott Walker and the GOP took over power at the Capitol following the 2010 elections, and we should be seen as a preview of what a GOP-run America might look like should the Republicans win in 2016.

One thing that should be noticed is that Wisconsin has had a number of large-scale layoff announcements in recent weeks, including last week’s closing of the 1,250-employee Oscar Mayer plant in Madison. But Oscar Mayer is far from the only mass layoff here, as recent weeks have also seen a 300+ layoff at a cheese plant in Plymouth, nearly 300 more were put out of work at a cookie-making plant in Ripon, and just last week, we found out 175 white-collar jobs at S.C. Johnson are being moved from Racine to Chicago.

In all, Wisconsin is on pace to nearly double last year’s number of mass layoffs, and this chart from UW Professor Menzie Chinn at Econbrowser shows that this gap has been persistent throughout 2015 in Wisconsin, but that it has been growing in recent months.

Walker has shifted his tone with these news of these recent layoffs, from insisting that government policy is something that can make Wisconsin “open for business”, to shrugging his shoulders and claiming that S.C. Johnson moved those jobs to Chicago because “it could better compete” for the sales and marketing positions in Chitown than in Wisconsin (there’s a vote of confidence in your state!). Walker also penned a whiny, angry letter to "Democrat legislators" after the Dems asked why the Walker Administration and the Walker-created Wisconsin Economic Development Corporation (WEDC) seemed to be caught by surprise with the news of Oscar Mayer leaving. In doing so, Walker claimed that there wasn’t a lot that the state could have done to prevent Oscar Mayer from closing, and instead tried to prop up the current state of Wisconsin’s economy.
Overall, the State of Wisconsin is moving in the right direction. The unemployment rate in Wisconsin is down to 4.3 percent, which is a 14-year low. The labor participation rate is 67.4 percent, which is five points better than the national rate. And the unemployment rate in Dane County is 2.7 percent — the lowest in the state.
Sounds good on the surface, but Bruce Thompson at Urban Milwaukee dug deeper than Gov Dropout, and had a great write-up on Wisconsin’s economic record and status last week. In this column, Thompson asks why Wisconsin has lagged most of its neighbors for job growth since Walker and WisGOP came to power in 2011, as shown by this chart.

In addition, Thompson noted the real reason for the lower unemployment rate that Walker promotes - a drop in the state’s labor force, in contrast to a US labor that continues to grow in 2015.

Thompson also notes that Wisconsin has been one of the state’s that has bowed to the Koch Brothers sued the Environmental Protection Agency on its new Clean Power Plan that is intended to replace coal-based electrical plants with alternative sources. This makes him ask if this is a symptom of a state that refuses to innovate and try a new industrial model, not just in energy production, but other industries.
As I’ve written previously, even if past predictions of conservative opponents to the EPA proposal were taken at face value, the impact amounts to about one-third of one percent of the total U.S. economy and about two months of job growth for Wisconsin and the Midwest.

Meanwhile, what about the opportunity to be had [to adjust to the new standards]? Take the upper end of the estimate from the [Public Service Commission] –$13.4 billion. Much of it will be spent hiring people to build the systems needed to meet the new emission standards. A quick and dirty calculation indicates that translates into about 15,000 jobs.

Wisconsin is only a small part of the total spending, and thus the total employment generated. Where will those jobs be? Will they be in China, or California? Certainly they will not be in Kentucky given the public attitudes there. And how likely is it that solar, wind, or other companies whose strategy is countering global warming will try to expand operations in Wisconsin?

This suggests a possible explanation for why Wisconsin has underperformed. We have become a “can’t do” state. We have become fixated on costs, including sunk costs, not opportunity. A number of recent actions—including turning down the federal rail grant, attempts to sabotage the Milwaukee street car, and refusing to expand Medicaid—suggest that Wisconsin should be numbered among the can’t do states, obsessed with cost rather than looking for opportunity.
In addition, with GOP presidential hopefuls being likely to say they back further tax cuts, it might be useful to point out that Walker and the WisGOP Legislature have signed off on billions in tax cuts and unfunded spending on credits to reduce property taxes that go toward schools. Not only did these tax cuts fail to make Wisconsin a job-creating machine, it also has led to continual budget deficits that resulted in repeated cuts to K-12 and higher education, and caused hundreds of school districts around the state to go to referendum to raise their own taxes just to keep the lights on and buildings from falling down. (by the way, WisGOP legislators now want to limit that option as well, because they care more about the image of lower taxes than following the voice of the people. So much for being the “party of local control.”)

There has also been a deterioration of infrastructure to the point that Wisconsin’s roads are now rated the 3rd-worst in America by the US Department of Transportation. Just last week, the Legislature’s Joint Finance Committee went along with Gov Walker’s request to borrow another $350 million just to keep the state from falling even further behind on road projects, an effect of the refusal of Walker and the GOPs in the Legislature to raise gas taxes or registration fees to pay for those repairs.

And that’s not even going into the union-busting and wage suppression that have been a cornerstone of Walker/WisGOP’s economic "strategy," and how that has caused large shortages in the skilled trades and the classrooms, since the pay isn’t high enough to attract talent to those positions. Not that I’m counting on Neil Cavuto and company to give those facts to the GOP candidates or the viewing audience, but the low pay and low job prospects are an everyday fact for a large segment of Wisconsinites in the Age of Fitzwalkerstan, and many are simply leaving for a better chance elsewhere.

I’ll generally avoid watching the absurdity of Milwaukee’s GOP debate tomorrow, but I’d love to find out that the case of Scott Walker’s Wisconsin was brought up to these jokers hopefuls. Particularly, I’d love to hear the following question be asked:

"If the approach of cutting taxes, cutting regulations, and cutting wages is so successful, why is Wisconsin doing so poorly at adding jobs, and facing constant budget deficits? And why would we want to take that approach nationwide?"


  1. Would you include Wisconsin's 4.3 unemployment rate? Happens to be the lowest in 14 years. I remember Doyle saying 4.5 was "full" employment. Guess you don't want to include that caus it does fit your hatred for our governor.

    1. See that "labor force" chart? There's your answer. I wouldn't call making workers flee the state a positive accomplishment.

      You dead-enders make it so easy.