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Wisconsin Losing Jobs

Ah, the economic news from right-wing, Republican-controlled states just keeps getting better and better. First it was Arizona facing huge losses in revenue because Hispanic business owners and families left the state rather than face the harassment of the new “papers please” law. Then, when Georgia passed a similar law, crops were left to rot in the fields when migrant workers refused to work in the state. Then, Alabama found that two mistaken detentions of foreign nationals because of their anti-immigration law has foreign companies rethinking plans to build in that state. Now, comes news of an adverse economic impact that has nothing to do with immigration laws….Wisconsin.

Governor Scott Walker was elected on a promise to rein in the state’s deficits and create jobs. His version of curing the state’s budget problems was to cut $1 billion from the funds for local and county governments, cut taxes on the rich by $1 billion, and gouge state workers by legislating them out of their collective bargaining rights for no reason whatsoever. He had already won increased worker contributions to health care and pensions. The collective bargaining thing was just meanness on his part.

The Republican economic mantra hasn’t changed since the days of Ronald Reagan – cut government spending, cut taxes on the rich and the economy will boom. It’s called supply-side economics, a theory of “if we build it, they will buy it.” It’s also called “trickle-down economics” and “voodoo economics.” The basic premise is that anything that increases the bottom line for business and increases the personal income of the wealthiest will trickle down and benefit all of us. History shows, however, that the only thing that has ever trickled down from the mansions on the hill is sewage.

The loss of manufacturing jobs and growth of box store chain retail has significantly reduced our middle class. The greatest source of middle class incomes is public sector jobs like teaching and public works, though there is something incredibly ironic about teaching providing a middle class income.

The Institute for Wisonsin’s Future (which The Capital Times – “Your Progressive Voice” – reporter Mike Ivey characterized as “liberal leaning”) has issued a report about the state of the state and it is not good for Scott Walker. It shows a loss of jobs and gross domestic product.

Well, duh. When people go from taking home paychecks to taking home unemployment benefits, they have less money to spend, so retail establishments receive less income, and pay less in taxes, which reduces the state’s revenues. It’s a direct line of loss – bang, bang, bang.

The IWF laid out the numbers. Jack Norman, their research director, said that if the state had matched the national job growth rate, there would be 34,000 more jobs in the state. Wisconsin would have had an additional 10,500 jobs if the Walker administration hadn’t shut down plans for a high-speed rail system worth $1.3 billion and an additional $800 million to improve the existing rail system. Instead of gaining jobs, Wisconsin is losing them. Wisconsin’s Department of Labor jobs listing was showing jobs in Indiana because there were so few in Wisconsin, all while Walker was bragging about the jobs listings.

Steve Deller, an economics professor at the University of Wisconsin, Madison, explained that “Economic modeling shows taht the extreme cuts to state and local programs cost thousands of jobs and put Wisconsin in a weak position to create jobs.” Just the increases in public sector employees’ contributions to their health care and pension systems took $700 million in discretionary income of our Wisconsin, from 260,000 state and local workers. That cost almost 7,000 private sector jobs. The estimates of job losses are based upon the Implan 3 economic simulation software, which is used in government, industry and universities. It estimates the direct and indirect effects of changes to the economy. More direct evidence was given in August. During the recall election night, a young man from a small town in northern Wisconsin spoke with Ed Schultz on MSNBC. He had driven down to Madison to offer moral support for the recall effort, though there was no election in his home district. He told Schultz that his small local school had to lay off half their employees because of the state’s cuts in funding to local governments. Classes had to be combined, services were cut, education was suffering.

When people have less money to spend, the state’s gross domestic product – the total of all the goods and services created – drops. A lower GDP leads to lower tax revenue. It becomes a cycle of loss.

With all apologies to those who are suffering, the fact is that the more bad economic news comes out of Republican-controlled states, the better the chances of taking back our economy. Trickle down economics has never worked. Policies that favored the rich over the middle class were responsible for the Great Depression and every recession since then. The super-rich increase their incomes by reducing the incomes of those who work for them, either through lowering work forces or replacing higher-earning employees with entry-level employees. What we have seen in the past three years is a program of hoarding among the super rich and big corporations. The businesses are showing record-breaking profits, but using those profits to buy back stock instead of increasing their workforces or expanding their businesses. Getting more out of fewer employees is the principle economic theory driving American business today.

Governor Walker’s budget cuts have not helped Wisconsin’s economy, but harmed it. He is not creating jobs, but losing them. Is it any wonder that the effort to recall him has set speed records for collecting signatures?

 

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