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Wednesday, Oct. 2, 2013

Gov. Walker: Where Are the Jobs?

Wisconsin can’t even keep up with weak national growth

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Last week, the new data showed that Wisconsin’s private sector added just 24,305 new jobs between March 2012 and March 2013, growing 1.1%, well below the 2% national job growth during that period.

That places Wisconsin 34th nationally and nowhere near Gov. Scott Walker’s goal of creating 250,000 new jobs in his first term.

Although the ranking is based on the federal Quarterly Census of Employment and Wages, a survey that Walker has called the “gold standard,” the governor now seems to be disputing its findings by claiming that Wisconsin’s job growth is 22nd nationally in terms of the absolute number of jobs created. Even that generous claim would put Wisconsin behind the curve, since the Badger State is the 20th most populous state in the nation.

Walker and the corporate lobbying group Wisconsin Manufacturers and Commerce (WMC), which has bought more than $800,000 worth of airtime for their pro-Walker ads, have highlighted other economic rankings, such as the Federal Reserve Bank of Philadelphia’s view in June that Wisconsin is second in “potential economic growth” for the next six months. But officials at the Philadelphia Fed told the Capital Times that they don’t believe that the statistics Walker and the WMC are touting can be used for comparing and ranking states’ potential growth.

Also questioning Walker’s claims is economist Menzie Chinn, a professor of public affairs at UW-Madison, who found that not only is Wisconsin underperforming when viewed against national trends going forward, but it’s being outperformed by neighboring Minnesota and once-struggling California.

 

Walker’s Austerity Has Stalled the Recovery

The big question is, why?

Walker has claimed that the uncertainty caused by the Capitol protests in 2011 and the 2012 recalls stalled Wisconsin’s economy.

Chinn has a different view, and cites Walker’s own austerity-style policies, such as slicing public employees’ pay, cutting taxes so that spending has to be cut further to balance the budget, and the heightened uncertainty caused by Walker’s controversial public employee union changes. Walker and legislative Republicans’ focus on conservative social issues, such as placing new restrictions on abortion providers, likely doesn’t make the state more attractive to potential entrepreneurs and residents, either, Chinn argued.

“What is true is that Wisconsin is growing noticeably more slowly than the nation and other regional neighbors, such as Minnesota, ever since Gov. Walker’s inauguration,” Chinn emailed the Shepherd. “This could be complete coincidence in terms of timing, but simple statistical tests indicate that the difference in growth is statistically significant.”

Economist Laura Dresser, associate director of the Center on Wisconsin Strategy (COWS), said that while state governors don’t have the fiscal tools that a president has to stimulate the economy and spur job growth, Walker and the Legislature could provide a short-term boost to the economy by attracting more federal dollars to the state.

Unfortunately, Walker rejected more than $800 million in federal funds to build high-speed rail, as well as $489 million to expand Medicaid in 2013-2015. Walker’s alternative Medicaid reform will cost the state taxpayers $119 million during those years. Walker’s acceptance of those rail and Medicaid dollars would have created thousands of temporary, permanent and related jobs. 

Dresser noted that Walker is using some federal funds for his just-announced worker-training initiative, but “that’s rare in this administration.”

Dresser also cited the weak national economy and the new slump in manufacturing as other factors affecting Wisconsin’s economy.

“We’re doing a little bit worse than a pretty bad national trend,” Dresser said. “And we are continuing to do a little worse.”

She also scoffed at Walker’s claim that the recalls were to blame for the state’s stunted job growth, saying that other states were running deficits following the Great Recession, but only Walker chose to gut public employees’ rights in such a divisive way and reduce their paychecks. That uncertainty likely influenced people’s spending habits and hiring decisions.

“If you’re taking on a fight in the state in a time of economic trouble, that creates another thing that makes people worried,” Dresser said. “But that’s not the recall’s fault.”

 

Stagnant Wages and Productivity

Besides the job data released last week, Wisconsin’s economy is showing additional signs of sluggishness, including:

Personal Income: In July, the state Department of Revenue forecast that Wisconsin’s economy would grow at a “moderate” pace, or 1.1%. Personal income of state residents rose 2.7% in 2012, but that’s lower than the 3.6% growth in personal income nationally that same year.

Income Gap Is Growing: The nonpartisan Wisconsin Tax Alliance (WTA) found that although Wisconsin’s wages have been below the national average for more than 40 years, the gap began closing in 2009 but is widening again. In 2008, Wisconsin’s wages were 6.8% below the national average; in 2009, 4.6% below; in 2010, 4.5% below; in 2011, 4.8% below; in 2012, 5.1% below the national average. Wisconsin’s wages are lower than all four surrounding states, except for Michigan’s, the WTA found.

It Takes Two to Support a Household: The WTA noted that while Wisconsin’s personal income is lower than the national average, the state’s household income is 4% higher than the national average. Why? “Wisconsinites compensate for lower wages by having relatively more women working to supplement household income,” the WTA wrote.

Milwaukee County Is Struggling: According to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), Milwaukee County’s employment and wages are not keeping up with the national standard. The BLS noted that between March 2012 and March 2013, national job growth was 1.6%; Milwaukee County’s was 0.6%. Nationally, wages increased 0.6% to $989 per week; Milwaukee County’s workers saw absolutely no increase in their wages between March 2012 and March 2103, with wages stagnant at $975.

Waukesha Isn’t Doing So Hot, Either: Waukesha County’s workers aren’t seeing healthy gains, either. According to the BLS, Waukesha’s job growth between March 2012 and March 2013 was 1.1%, compared to 1.6% nationally. That said, weekly wages increased 1.5% to $971 during that period, compared to 0.6% nationally. But that welcome growth still didn’t bring weekly wages up to the national average of $989.

Productivity Is Slumping: According to data from the Bureau of Economic Analysis (BEA), Wisconsin isn’t keeping up with the 2.5% increase in national gross domestic product (GDP) in 2012. We’re not even keeping up with neighboring Midwestern states. The BEA found that Wisconsin’s GDP growth in 2012 was 1.5%, a full percentage point below the national average. Compare that to gains in Minnesota (3.5%), Indiana (3.3%), Iowa (2.4%), Michigan and Ohio (2.2%) and Illinois (1.9%).

 

State Rankings Are Flat

While the state-based WMC has been touting its support for Walker’s agenda, other more neutral groups feel that Wisconsin’s future isn’t quite so bright:

Wisconsin Is #41 in Forbes’ Best States for Business: The business magazine looked at business costs, labor supply, regulatory environment, economic climate, growth prospects and quality of life. Wisconsin ranked #41, although it nudged a little higher to #37 in growth prospects. But the Badger State trailed our neighbors Minnesota (#8), Iowa (#12), Indiana (#16), Ohio (#29) and Illinois (#38).

Wisconsin Is a Blip in Business Site Selection Review: The trade magazine Business Facilities evaluated the states for variables important to corporate site selectors, such as infrastructure, energy sources (including alternative energy sources), economic growth potential, employment and strength in various industries. Unfortunately, Wisconsin only appears once in the top 10 rankings, as #9 in the ranking of ethanol leaders (behind neighboring Iowa, Illinois, Indiana, Minnesota and Ohio). Other Midwestern states seem to impress corporate site selectors far more, even among the categories that Walker is striving to change. Indiana has the sixth best overall business climate. Ohio is #7 in economic growth potential and tops the list of states with the most improved business climate, while Minnesota ranks #4 for improvement. Iowa and Minnesota are among the top 10 employment leaders.