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Friday, March 28, 2014

Issue of the Week: Walker’s Austerity Agenda Is Killing Job Creation

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The Journal Sentinel seems to be giving Gov. Scott Walker a pass on his lackluster job-creation record, with no real investigation of why Wisconsin is yet again lagging behind the rest of the nation in jobs. Last week, new jobs data showed that Walker’s Wisconsin created a mere 28,351 jobs from September 2012 to September 2013, landing us in 35th place of the 50 states. Our 1.2% growth is about half the nation’s 2.1% increase in jobs.

The state’s largest newspaper leads with the headline about 28,351 jobs created which sounds good until you find out that was for an entire year and more than two thirds of the other states are doing better. The real story that the Journal Sentinel seems unwilling to discuss is that with all of Walker’s right-wing policies—like his attacks on unions and his tax cuts for the wealthy that were carried out in the name of job creation—Wisconsin is in the lowest third among states in job creation. His policies don’t create jobs, but rather shifts wealth from the middle and lower classes to the top few percent. If we didn’t take money out of the pockets of the average working Wisconsin resident, they would have more money to spend in their local economies and that is how jobs are created. Demand creates jobs, not tax cuts for the wealthy. 

But a new report from Marc Levine, Catherine Madison and Nadège Rolland of UW-Milwaukee’s Center for Economic Development found that Wisconsin’s sluggish job-creation rate didn’t happen by magic. Rather, it’s likely due to the triple-whammy of the outsourcing of manufacturing jobs to China and Mexico coupled with austerity policies at the federal and state levels. While Wisconsin’s job growth typically lagged behind other states in the past decade, it jumped to #13 in September 2010. Why? The stimulus, Levine and his team found. Pre-Walker Wisconsin was able to snare a disproportionate share of American Recovery and Reinvestment Act (ARRA) funding, which juiced our job growth.

“There is little else that could plausibly explain the surge in Wisconsin’s ranking among the states and significant outperformance of the national growth rate in 2010,” the authors wrote. “Indeed, the Wisconsin case looks like a classic validation of the Keynesian prescription of expansionary fiscal policy during downturns in the business cycle.”

Unfortunately, that boom went bust when ARRA funds ran out, federal sequestration cut spending, and Walker slashed state spending and turned away more than $1 billion in federal investment in Wisconsin.

“Far from enabling the state’s economy to ‘take off like a rocket,’ as one state lawmaker predicted, the austerity policies of the past three years have produced sluggish job growth in Wisconsin, in much the same way as the International Monetary Fund has concluded that austerity policies have produced economic stagnation and slow job growth around the world,” the Levine report concludes.

Let’s face it: Wisconsin’s anemic job growth is due to decisions made at the top. Walker would rather cling to the advice of his tea party billionaire benefactors than do what’s right for the state.