Scott Walker & Wisconsin's Slow Job Growth

Following along the lines of a couple recent Brewtown Gumshoe entries (see further reading below), Marc V. Levine offers another take down of Scott Walker and his sycophants' drivel, Wisconsin's economy is nowhere near the 'head of the class'.

Wisconsin has consistently ranked in the 30s and 40s among states in the rate of annual employment growth since Scott Walker became governor in 2010, a major fall-off from the last year of the much-maligned Doyle administration, when Wisconsin ranked 14th. As I documented last year in a study, not only has Wisconsin's rate of employment growth consistently ranked toward the bottom of states since 2010, but all of the net job growth in Wisconsin since the end of the Great Recession has been in low-wage occupations, in jobs paying less than $12.50 an hour. 

Over the past four years, the state's economy has consistently lagged behind the national economy on key economic indicators. Since 2010, both Wisconsin's GDP growth and personal income growth have trailed the national rate. And employment growth in Wisconsin has underperformed the national rate by a staggering 50%. 

It has not always been this way. Between 1990 and 2010, employment growth in Wisconsin (19%) closely tracked the national rate (19.6%). In 2010, the year before Scott Walker took office, the rate of employment growth in Wisconsin was 40% higher than the national rate, thanks to an infusion of federal funds and the effects of the national macroeconomic stimulus. 

And now, while the Wisconsin economy continues to stagnate, the national economy is accelerating, with job growth during the final months of 2014 and early 2015 approaching the impressive rates of the 1990s. Wisconsin's pace of job growth continues to lag far behind the national rate; in 2014, according to the latest BLS numbers, employment grew in Wisconsin at less than three-quarters of the national rate.

For Further Reading:
Walker's Minions & Their Cherry-Picked Statistics
38th, For Republicans, Is Head Of The Class

Warren Fires Back At Wall Street

Elizabeth Warren Fires Back After Wall Street Threats 

Sen. Elizabeth Warren (D-Mass.) has a blunt message for the big Wall Street banks that may withhold campaign donations to Senate Democrats in hopes of quieting her calls to break up the banks. 

"It will not work," Warren said in a statement emailed to The Huffington Post... 

"They want a showy way to tell Democrats across the country to be scared of speaking out, to be timid about standing up, and to stay away from fighting for what’s right," Warren wrote. "... I’m not going to stop talking about the unprecedented grasp that Citigroup has on our government’s economic policymaking apparatus ... And I’m not going to pretend the work of financial reform is done, when the so-called 'too big to fail' banks are even bigger now than they were in 2008."

Percentage of U.S. Adults Without Health Insurance

Hidden Healthcare Horrors

One of the odder subplots of the health reform saga has been the almost pathetic efforts of Republicans to come up with Obamacare horror stories. You might think that given the complexity of the law and the almost unlimited resources of the propaganda machine, they’d be able to come up with someone to serve as the poster child of the law’s terrible effects on innocent Americans. As far as I know, however, we have yet to see a single credible example — all the characters featured in Koch brothers ads or GOP speeches have turned out to be potential beneficiaries of the Affordable Care Act, if only they were willing to look at their actual options. 

So Cathy McMorris Rodgers went on Facebook to ask for Obamacare horror stories — and instead got an avalanche of testimonials from people who got essential insurance and care thanks to the ACA. 

Why can’t the GOP find the horror stories it knows, just knows, must be out there? Matthew Yglesias gets at most of it by noting that Obamacare does, in fact, redistribute from the few to the many: 

[O]ne of the main things it does is raise taxes rather dramatically on a pretty small number of high-income people in order to give subsidized health insurance policies to a substantially larger number of low-income people. Indeed, this is one of the main things Republicans don’t like about it! 

But there’s a bit more to the story. Millionaires paying higher taxes aren’t the only people hurt, at least slightly, by the law. If you are a young. healthy person (especially if you’re male), living in a state that didn’t have community rating pre-ACA, you may have had a cheap policy that went up in price once the law went into effect; and if you’re affluent as well, you don’t receive subsidies. So there are victims out there. 

The problem for the GOP is that they’re the wrong kind of victims. What Republicans want are struggling, salt of the earth regular Americans, preferably older and with expensive medical conditions — not healthy, well-paid guys in their 20s. But the profile of the ideal Obamacare victim matches, pretty much exactly, the profile of the kind of person Obamacare was designed to help. 

And the inability of the GOP to come up with true horror stories is, in its own way, a demonstration that the law is working as intended.

Republican States Are More Dependent On Government

Republican States Are More Dependent On Government

That's according to a recent analysis from the personal finance site WalletHub, which ranked states based on how much they rely on Uncle Sam to support their state finances. 

To calculate states' dependence, WalletHub analyzed three metrics: how much a state gets in federal funding per every dollar it pays in federal income taxes, the percentage of state funding that comes from the federal government and the number of federal employees per capita, both military and civilian...

New Mexico is the most-dependent state in the U.S., according to WalletHub's data. The state gets $2.19 in federal funding for every dollar paid in federal income taxes. In contrast, New Jersey, which is the least-dependent state, gets only about 50 cents in federal funding for every dollar paid in taxes, WalletHub calculated. 

The analysis found that red states, or those that voted Republican in the 2012 presidential election, were much more likely to depend on the government than blue states. 

That's somewhat ironic, considering the Republican Party's general reluctance to support federally funded initiatives like Medicaid expansion, and its long-term dedication to across-the-board budget cuts to slash the federal deficit.

Walker's Assault On Workers Continues

Could Wisconsin's Scott Walker now abolish the weekend?

Legislators have introduced a bill to abolish employees' legal right to at least one day off per week.

State law currently allows factory or retail employees to work seven days or more in a row for a limited period, but they and their employer have to jointly petition the Department of Workforce Development for a waiver. These petitions apparently number a couple of hundred a year. The new proposal would allow workers to "voluntarily choose" to work without a day of rest. The state agency wouldn't have a say. 

It can't be a secret what "voluntarily" really means in this context. As Marquette University law professor Paul Secunda told the Nation, the measure "completely ignores the power dynamic in the workplace, where workers often have a proverbial gun to the head." Workers will know that if the boss demands it, they'll be volunteering or else.

Also from the article:

Walker would have a case to make to GOP voters if these policies yielded higher job growth. They haven't. Bloomberg economic analyst Christopher Flavelle wrote recently that as measured by improvement in "the living standards of the people he represents... Walker's tenure falls somewhere between lackluster and a failure." 

Since Walker took office, Wisconsin's economic performance has ranked a dismal 35th in Bloomberg's economic index of states. Private sector job growth lags behind such neighboring states as Minnesota and Michigan -- not to mention California, where labor and fiscal policies are at the opposite pole from Walker's. Bloomberg's index of share values for Wisconsin-based public companies shows they lag well behind Iowa, Minnesota and the median state. (See accompanying graphics package for details.) 

This week brought another dose of bad news for Walker: his state fell to 38th in the nation in job growth for the year ended Sept. 30, 2014, at 1.16%, according to the Bureau of Labor Statistics. (For comparison, California ranked seventh, at 3.1%.) 

Wisconsin's budget situation is dire, with state tax revenue increasing at a fraction of the rate of the median state--4% vs. 20%--in 2011-14. In February, the state announced it would delay a scheduled $108-million principal payment on its debt. Under Walker, Wisconsinites seem to be facing a double-whammy--lousy performance at the state level, and a continuing assault on their household income.

38th, For Republicans, Is The Head Of The Class

It was only a week ago Tom Hefty, writing in the Journal Sentinel, declared Wisconsin's economy was moving to the head of the class.

Yet, not even a week later, John Schmid and Kevin Crowe, also of the Journal Sentinel, found Wisconsin's job creation rank falls to 38th.

Maybe this is why the Wisconsin economy is trailing the rest of the nation - Republicans think ranking 38th is being at the head of the class.

For Further Reading:

Walker's Minions & Their Cherry-Picked Statistics

Hey Governors: You Didn't Build That

Walker's Minions & Their Cherry-Picked Statistics

Tom Hefty (conservative shill, Wisconsin Policy Research Institute affiliate and Journal Sentinel contributor), in an attempt to make Scott Walker's policies appear effective, cherry-picks statistics to make his point. Actually he just rattles off numerous surveys that say Wisconsin is headed in the right direction, Wisconsin is poised for job growth and Wisconsin has a bright job outlook. More or less, opinions masquerading as statistics.

Hefty, in the article, states, "Economic statistics are frequently complex, confusing and sometimes contradictory. Partisans cherry-pick statistics to make their points." Which is exactly what Hefty's article does.

David Dayen found:

According to the Census Bureau’s American Community Survey, median household income in Wisconsin is $51,467 a year, nearly $800 below the national average. And it has fallen consistently since the passage of the anti-union law in 2011, despite a small bounce-back nationally in 2013. The Bureau of Economic Analysis puts Wisconsin in the middle of the pack on earnings growth, despite a fairly tight labor market with a headline unemployment rate of 5.2 percent.

Moreover, the meager earnings growth that has come to Wisconsin has mostly gone to the top 1 percent of earners. Another Wisconsin Budget Project report shows that the state hit a record share of income going to the very top in 2012, a year after passage of the anti-union law. That doesn’t include the $2 billion in tax cuts Walker initiated in his first term, which went disproportionately to the highest wage earners. (This is precisely the agendaWalker is likely to run on in his presidential campaign.)

Walker proponents can talk of job growth and moving things forward, but that's all really just meaningless bluster if the jobs aren't decent paying. And, as the actual statistics show, Scott Walker's policies have led to declining household income for most Wisconsinites.

Republican Beliefs And Other Superstitions

Republicans subscribe to the disproven Trickle Down hypothesis:

An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors and entrepreneurs - can stimulate production in the overall economy. According to trickle-down theory proponents, this stimulus leads to economic growth and wealth creation that benefits everyone, not just those who pay the lower tax rates. 

President Reagan's economic policies, commonly referred to as "Reaganomics" or supply-side economics, were based on trickle-down theory. The idea is that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. Reagan initially slashed the top income-tax rate from 70% to 50%. Trickle-down policy’s detractors see the policy as tax cuts for the rich and don’t think the tax cuts benefit lower-income earners. 

A contrasting theory, Keynesianism, is based on stimulating demand through government spending and other government interventions. An increase in government spending necessitates an increase in income-tax rates – the opposite of what trickle-down theory advocates. Trickle-down theory does not support government intervention in the economy. 

According to the trickle-down theory, if tax rates are lower, people have an incentive to work more because they get to keep more of the income they earn. They then spend or invest that income, and either of these activities will improve everyone’s prosperity, not just the prosperity of those in the highest income brackets. What’s more, in the end, the government may actually collect more income tax despite the lower tax rates because of the additional work performed. The Laffer Curve shows how this relationship works. If the government taxes 0% of income or 100% of income, it takes in no money. In between these two extremes, tax revenues vary because different tax rates encourage people to work more or to take more leisure time.

Conservatives want society, as a whole, to allow the rich to "keep more of their money." Riches are then supposed to trickle down to the rest of society. When it doesn't trickle down 1) the citizens are uneducated, 2) the citizens aren't properly trained, 3) technology is replacing workers, and/or 4) the citizens are just lazy.

Larry Summers recently addressed these falsities:

The core problem is that there aren't enough jobs. If you help some people, you could help them get the jobs, but then someone else won't get the jobs. Unless you're doing things that have things that are effecting the demand for jobs, you're helping people win a race to get a finite number of jobs. […] 

Folks, wage inflation in the united states is 2%. It has not gone up in five years. There are not 3% of the economy where there's any evidence of hyper wage inflation of a kind that would go with worker shortages. The idea that you can just have better training and then there are all these jobs, all these places where there are shortages and we just need the train people is fundamentally an evasion. [...] 

I am concerned that if we allow the idea to take hold, that all we need to do is there are all these jobs with skills and if we can just train people a bit, then they'll be able to get into them and the whole problem will go away. I think that is fundamentally an evasion of a profound social challenge.

Timothy Taylor elaborates on the decline in on-the-job training:

Here's some evidence from the recently released 2015 Economic Report of the President, by the Council of Economic Advisers, showing a decline in employer-provided and on-the-job training in recent decades...

Looking at the overall pattern, a decline in employer-sponsored and on-the-job training suggest that workers who wish to keep building their skills are getting less support from their employers.

Here again we have more Republican beliefs shown to be nothing more than self-serving blather and bullshit.

Scott Walker: The Opposite of Anything Good

Scott Walker continued his political legacy of claiming his policies are accomplishing the exact opposite of what reality is telling us they are actually doing. He's got Wisconsin open for business, he's cutting taxes, he's growing jobs, etc.

President Barack Obama commented on Scott Walker's passage of right-to-work in Wisconsin:

"Wisconsin is a state built by labor, with a proud pro-worker past," Obama said. "So even as its governor claims victory over working Americans, I’d encourage him to try and score a victory for working Americans -- by taking meaningful action to raise their wages and offer them the security of paid leave. That’s how you give hardworking middle-class families a fair shot in the new economy -- not by stripping their rights in the workplace, but by offering them all the tools they need to get ahead."

Walker replied:

"On the heels of vetoing Keystone pipeline legislation, which would have paved the way to create thousands of quality, middle-class jobs, the president should be looking to states, like Wisconsin, as an example for how to grow our economy...Despite a stagnant national economy and a lack of leadership in Washington, since we took office, Wisconsin's unemployment rate is down to 5%, and more than 100,000 jobs and 30,000 businesses have been created," Walker told National Review Online. 

As usual, all of Walker's boasts are completely bogus! As Politifact reported, regarding Keystone XL, "The State Department expects that the project would only result in only a few permanent jobs that last past construction." Keystone is not only bad for the environment, it is also not the job-creator its proponents claim.

The Journal Sentinel noted, "Wisconsin's job creation remained sluggish in the latest 12-month report."

Speaking of jobs, Jelly Belly Candy is closing their Kenosha operation. Haven't they heard Wisconsin is open for business? And, we're also right-to-work! Businesses should be stumbling over each other trying to get in here, at least according to the (misguided) logic Republicans keep selling.

As a glaring example of Walker's misplaced priorities, even though Walker likes to use the City of Milwaukee as a convenient whipping-boy, City Center - Including Milwaukee - Noted For Growth In New Jobs:

In Milwaukee, the city-center employment gain averaged 1.4% per year — nearly three times the figure for the 41 cities as a whole. The rest of the four-county metropolitan area, meanwhile, lost 1.3% of its jobs annually, according to the report.

Right-to-work - yet another Orwellian-termed boondoggle being sold across the country by Republicans. Common sense tells us we're not going to get better work conditions or better pay by limiting our leverage (strength in numbers).

Florence Jaumotte and Carolina Osorio Buitron wrote, "The decline in unionization in recent decades has fed the rise in incomes at the top."

Also (probably not hard to believe), Unions that backed Scott Walker are faring better than others. Pay-to-play and cronyism are top priorities of the Republican Party platform.

Right-to-work is a pet policy of the Monied Republican Influence Peddlers right now, thus Walker wanted to get on board so he could get the campaign money that goes along with boosterism for right-to-work.

Even John Torinus, conservative and former Journal Sentinel columnist, was taken aback by Walker and the Republicans push for right-to-work:

Another example: a low-key issue during the campaign was right-to-work legislation. Gov. Walker said it would be “a distraction” in his second term. A few legislators teed up the issue in their campaigns. But it was a minor issue at best, even though many voters guessed it would become a major GOP issue if the party controlled both houses and the governor’s chair. 

Even though low priority, it has become a page-one issue. Call it a head fake. It’s now high priority for the GOP, even though only 8% of the state’s private work force is unionized. Non-union high growth startup companies, which will define the state’s future economy, also don’t care.

Jon Peacock discovered "Right to Work" Bill Would Suppress Wisconsin's Already Anemic Wages. He cites recent research by Marquette's Dr. Abdur Chowdhury, economics professor:

The potential net loss in direct income to Wisconsin workers and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $7.23 billion annually. Based upon the two estimates of lost incomes and an overall effective tax rate of 4.0%, the economic loss in state income taxes is estimated between $234 and $289 million per year...

Right-to-work legislation would provide no discernible overall economic advantage to Wisconsin, but it does impose significant social and economic costs. The benefits of right to work enjoyed by some prospective employers are overshadowed by the costs borne by other employers and the state as a whole. Low wages would weaken consumption. Higher rates of labor turnover and adversarial labor-management relations would decrease productivity. And low-wage employment would burden the state with “mop up” costs (including social services, housing assistance, subsidized day care, school lunch programs, etc).

Even the NFL Players Association issued a press release against Walker's passage of right-to-work legislation:

Devoted food and commercial workers who spend their Sundays servicing our players and fans at Lambeau Field will have their wellbeing and livelihood jeopardized by Right to Work. Governor Scott Walker may not value these vital employees, but as union members, we do. We understand how devastating it would be if they lost the ability to have their workplace conditions and wages guaranteed through collective bargaining. We do not have to look any further than our own CBA to see that a band of workers, joined together as a union, can overcome decades of poor workplace conditions and drastically improve pensions and benefits...

The U.S. Bureau of Labor Statistics found that average wages across all industries in right-to-work states were $4 per hour lower than those in non-right-to-work states. One study determined that Wisconsin would see a net loss of between $3.89 and $4.82 billion annually in workers’ incomes. In fact, Governor Walker’s anti-union efforts have resulted in Wisconsin leading the nation in job losses for two months in a row. 

This proposed legislation unfairly risks the health and safety of employees by depriving them of on-the-job protections that unions have historically defended.

Minnesota's Republican billionaire (heir to the Target fortune) governor taxed the rich and increased the minimum wage. He took office with a $6.7 billion budget deficit and a 7 percent unemployment rate. By late 2013, Minnesota was the 5th fastest growing state in the United States. Forbes ranked Minnesota the 9th best state for business (Wisconsin was 32nd). Minnesota's current unemployment rate in 3.6 percent.

Derek Thompson, at The Atlantic, details one of Minnesota's star cities in The Miracle of Minneapolis:

In the 1960s, local districts and towns in the Twin Cities region offered competing tax breaks to lure in new businesses, diminishing their revenues and depleting their social services in an effort to steal jobs from elsewhere within the area. In 1971, the region came up with an ingenious plan that would help halt this race to the bottom, and also address widening inequality. The Minnesota state legislature passed a law requiring all of the region’s local governments—in Minneapolis and St. Paul and throughout their ring of suburbs—to contribute almost half of the growth in their commercial tax revenues to a regional pool, from which the money would be distributed to tax-poor areas. Today, business taxes are used to enrich some of the region’s poorest communities.

Republicans prefer the opposite strategy - Increasing Taxes on the Poor and Cutting Them for the Affluent. And based on this strategy, the New York Times found, "The bottom fifth of earners pay more than 10 percent of their income in state and local taxes, the top 1 percent pays closer to 5 percent."

Showing his care for women's issues and income inequality, in general, Scott Walker repealed Wisconsin's Equal Pay Law. The gender wage-gap in Wisconsin is predicted to be closed around 2068. Just 53 more year ladies!

If Scott Walker wants to help the economy and increase revenues for Wisconsin he could address our inequitable tax code. The Keystone Research Center and Good Jobs First report Tax Fairness: An Answer to State Budget Problems found, "If the top one percent were taxed at the same rate as the middle 20 percent, states and localities would raise $68 billion per year. Similarly, if the top 20 percent paid the same as the middle 20 percent, states and localities would generate $128 billion each year."

The Wisconsin Budget Project noticed the highest earners in Wisconsin already pay the smallest share of income paid in state and local taxes.

Walker's education cuts and tax cuts for the highest earners have not created anywhere near the number of jobs they claimed they would. In the end, these policies have lost revenue for the State.

Experience and the latest research point a pretty clear path for public policy and job growth in Wisconsin; if we care to actually follow such. Sadly, Scott Walker is only concerned with personal opportunity and the wishes of his paymasters. When it comes to policies that would be best for Wisconsin, Mr. Walker prefers to do the opposite.