Saturday, December 5, 2015

Damage of low-wage WisGOP policy, Great Recession obvious

There has been quite a bit of attention given to a new release from the U.S. Census Bureau which gave a huge number of economic statistics, and in particular, some of the stories have centered on the deteriorating state of things in Wisconsin. I wanted to go into a bit more detail on this, and what those figures may really mean.

What the many news articles are referencing are the 5-year estimates form the Census Bureau, which came out on Wednesday and ran an aggregate figure from 2010-2014. Many then compared those figures with the figures from the first 5-year ACS, which went from 2005-2009. In most cases, the state and the country seemed better from 2005-09 than it did from 2010-14, and it leads people to ask why.

Needless to say, things were a lot better in 2005 and 2006 than they were in 2009, while things are (generally) better in 2014 than they were in 2010. So it’s not really an apples-to-apples comparison, although it is a good indicator of the type of damage done by the Recession and the slow climb out of the hole in the 2010s. Here’s the Journal-Sentinel’s relatively in-depth write-up of the release, and it notes that rural Wisconsin took some of the hardest hits. It is important to note that when comparing the two surveys, most of these dollar figures for 2005-09 will be adjusted for inflation to compare using 2014 dollars.
Vilas County saw the most significant decline, falling by 13.3% to $40,501.

In all, median household income fell by at least 10% in 10 counties. It increased in two: Adams ($45,366) and Florence ($49,703). Incomes remained relatively unchanged in 23 counties.

The figures are discouraging, but not surprising, said Brian Jacobsen, chief portfolio strategist with Wells Fargo Funds Management.

"It's been such a weak economic recovery," he said. "Up to this point, it seemed like median incomes were at best keeping up with inflation."

Falling incomes translate into increased poverty down the line. In Milwaukee County, the percentage of people living in poverty increased by 3.9 points to 21.9%. More than half of the counties in the state saw increases in the portions of people living in poverty.
You can dial up any area's information from the state to county level at this link, and see how they measure up to each other. There’s also a good data page where you can click a number of links for the 5-year survey, and it’ll give a lot of pretty maps that show all the counties in America, with the data being quite easy to figure out.

The writing in the Journal-Sentinel article is good on the topline numbers, but is a bit confusing when it says median incomes were “relatively unchanged” in 23 counties. That phrase is a reference to statistical significance at the 90% level, and the “no change” areas did have changes in the number compared to the 2005-2009 figure- it was just not enough of a difference to beat the margin of error

As you will see in this chart, all Midwestern states outside of Iowa had a notable drop in inflation-adjusted median household income between the 2005-09 survey and the 2010-14 one. But what’s disturbing about Wisconsin’s decline is that the difference between us and the neighboring states of Minnesota and Illinois grew in the same time period, with the gap with Illinois growing by nearly $400, and the gap with Minnesota growing from $6,000 in the 2005-09 survey, to more than $8,000 today.

This indicates the fact that Wisconsin’s drop in inflation-adjusted household income was larger than most of our neighbors. In fact, only the Recession-wrecked state of Michigan had a larger drop over these 5 years than Wisconsin.

Change in real median household income, 2005-09 vs 2010-2014
Mich -$4,650 (-8.65%)
Wis. -$4,165 (-7.32%)
Ill. -$3,767 (-6.18%)
Ind. -$3,637 (-6.94%)
Ohio -$3,171 (-6.10%)
Minn -$2,075 (-3.30%)
Iowa -$306 (-0.58%)

So what has our legislature done in light of this situation in 2015? TRY TO KEEP THE DECLINE GOING! Whether it’s the continued damage from Act 10 and no real salary increases budgeted for state employees, (right-to) work-for-less legislation, repealing prevailing wage, or even trying to pay lower wages on highway projects by changing the source of funds, Scott Walker and the WisGOP Legislature have been determined to keep incomes down for the vast majority of Wisconsin workers.

And what did we get from these low wage policies? Lagging job growth, talent fleeing the state, and spiraling budget deficits due to a lack of income tax revenue. Not that any of this should surprise those of you living above ground, but isn’t it obvious that these GOP policies don’t help anyone except the handful of oligarchs who keep extracting profits off of Wisconsinites’ hard work, and the puppet politicians they pay for?

THAT’S the real story of the American Community Survey figures that came out this week. It shows just how the average worker has lost ground over the last decade, and why many of those people haven’t felt much of a recovery after the damage of the Great Recession. That economic meltdown left many in a massive ditch, and in many places like Wisconsin, it feels like that ditch has gotten deeper, despite more people working and the overall stats looking good (like with today’s report of 211,000 new jobs being added).

This is why Democrats running for office need to concentrate on one key word for 2016, and that word is WAGES. It continues to lag, and in ALEC-owned states like ours, it’s something that is intentionally being suppressed, leaving the average person frustrated and feeling left behind. Raising wages across the bottom 4/5ths of the income scale should be the primary economic platform and concentration for any Dem running for office next year, because with jobs coming back, it’s the last piece of the puzzle needed to make the Obama Recovery become reality to more people.


  1. Jake, Just want to say how much I enjoy reading your articles. Keep up the good work.

    As far as talent leaving the state. I have had two daughters graduate from college in the last four years. Both work/live out of state. In their circle of friends who have graduated approximately 70% found jobs outside of Wisconsin.

    1. Sadly this doesn't surprise me. But thanks for reading, and thanks for sharing.

      Funny how encouraging brain power and paying good wages attracts TALENT, isn't it?

  2. Even the pro-Walker Politi-"fact" calls out Scotty for lying about Wisconsin incomes. In particular, Scotty was trying to ignore inflation, and got caught on it.