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Wednesday, July 27, 2011

Walker's Job Creation Myth

Wisconsin falls behind our Midwestern neighbors

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Is Gov. Scott Walker really responsible for half of the new jobs created in the entire country last month, as his administration claimed?

Seriously, that's what Walker said when June's preliminary employment numbers were released by the state Department of Workforce Development.

Wisconsin had a net gain of 9,500 from May to June—many in the tourism industry. 

The country, overall, added 18,000 during the same month, according to the Bureau of Labor Statistics.

So is Walker really responsible for creating half of those jobs?

We wish that half of the new jobs in the country were created here in Wisconsin. But it's just not true.

Other states added far more jobs in June than Wisconsin. For example, Texas added 32,000 new jobs, while California added 28,000. Closer to home, both Michigan (with 18,000 new jobs) and Minnesota (with 13,200 new jobs) outperformed Walker's Wisconsin.

Those gains, of course, are wiped away by jobs being hemorrhaged in other parts of the country—for example, in Missouri, Tennessee and Virginia, states that suffered big losses in June. Even Illinois, which was hit hard by the Great Recession, lost 7,200 jobs in June, although it has added 97,200 net new jobs since January 2010.

So while we're happy that Wisconsin is adding private sector jobs, Walker simply cannot make the claim that half of all new jobs were created here. It is just not an honest analysis of the real numbers.

In addition, it's simply too early for Walker to take credit for any new jobs created. He took office in January. Hiring new workers is one of the last things an expanding company will do. If Wisconsin companies are growing it's because they began feeling more confident about their futures months ago—in many cases before Walker was even inaugurated.

Then, too, think about the long-term impacts of Walker's economic policies. He's crowed that "Wisconsin is open for business," but at the same time Walker is shutting out higher-paying jobs in green businesses; companies that rely on public transportation in Milwaukee, the state's economic engine; businesses that would be linked to Chicago and the rest of the Midwest on commuter and high-speed rail; and businesses that rely on graduates of excellent Wisconsin schools who want to stay in the state after they earn their diplomas. This is short-term thinking that will hurt Wisconsin's long-term future.

Instead, Walker's long-term economic policies are based on 1950s and 1960s concepts of economic development that forward-looking economists have long ago abandoned. Blanket tax-dollar giveaways to corporations in hopes of luring them to the state have long ago proven to be both very costly and ineffective. Instead, the policies that work are very targeted and tied to results. Businesses and high-skilled employees also need good public services and quality of life. But Walker's attack on public workers both weakens the state's infrastructure and suppresses wages, which in turn decreases spending at local businesses.

What Kind of Jobs Were Created?


Walker has claimed that the new jobs are due to the "rebirth of tourism in the state."

Once again, that's true. The state added 6,200 new leisure and hospitality jobs in June. More than half of those positions were in accommodation and food services.But it's also true that tourism enjoys a rebirth every June in Wisconsin. So it's no surprise that more Wisconsin residents were working in restaurants, hotels and theme parks last month. Walker wants to take credit for those new jobs, but the great weather we enjoyed is probably far more responsible for helping out the economy. For example, Summerfest's attendance was up 2.6% this year, or about 22,000 additional attendees, and its revenue was up 8%. If Walker believes that his policies encouraged more people to attend the festival and spend more money, then we've got a Hoan Bridge to sell him.

We also have to consider what kind of jobs were created last month. Were they permanent, family-sustaining jobs that will help lift Wisconsin out of the recession? Many were not. They were more apt to be short term, generally low-wage paying, and often didn't come with benefits.

The jobs that will sustain our economy are harder to add. An estimated 800 manufacturing jobs were created last month, not quite on track with the 15,900 new jobs in that sector created over the past 12 months. Jobs in finance and in professional, science and technical services—typically very high-paying jobs—also took a hit last month. So if Walker wants to take credit for creating 6,200 new low-paying summer jobs, he also has to take the blame for losing 1,900 high-quality jobs in those sectors.

But the sector that took the biggest hit was government employment, with 3,400 jobs lost last month, mostly state employees. Many state employees are professionals with advanced degrees. The average state worker's salary can be computed in various ways, but the number swings from $53,000 to more than $70,000, depending on how it's calculated, and these are steady, family-supporting, high-quality jobs. A big loss in this sector will have a long-lasting ripple effect on the state's economy and the quality of life for the rest of us who do not work for the state. If Walker is doing nothing to help these displaced, educated workers find new jobs, then his boasting about adding temporary low-wage jobs during a beautiful Wisconsin summer is just more empty rhetoric.