A New Review of Economic Patterns Shows Why Wisconsin’s Job Creation Strategies Haven’t been as Effective as Hoped
Cutting taxes and luring companies from other states won’t do much to boost job creation in Wisconsin, according to the findings of a new research report released this week that examines which businesses create jobs and where they create them.
Wisconsin state lawmakers, including Governor Walker, have emphasized the importance of creating new jobs in Wisconsin, and have argued that tax cuts are the path to achieving that goal. With that in mind, they have enacted nearly $5 billion in tax cuts over six years, including a tax cut that nearly wipes out any income tax liability for manufacturers, and a tax cut for multi-state corporations that makes it easier for them to shift income from one state to another.
According to the theory, lower taxes will spur business to create more jobs. But despite deep tax cuts in Wisconsin, the pace of job growth in the state continues to lag the national average. Read more
Good Jobs First (GJF) announced today that Wisconsin taxpayers can now access nine years of economic development subsidy data in the organization’s searchable Subsidy Tracker database. The enhanced and expanded database developed by GJF now includes information about nearly 2,200 state and local subsidies for businesses in Wisconsin, totaling more than $1.8 billion.
The updated database adds nearly 30,000 new entries across the U.S. from 160 state and local programs, and 138 federal ones. Access to the database is free and unrestricted at: goodjobsfirst.org/subsidy-tracker. Read more
A national survey of small business leaders reveals that they overwhelmingly believe that state economic development incentives favor big businesses, and they say small businesses interests in economic development are not well represented in their state capitols.
The survey of 41 leaders of small business organizations representing 24,000 member businesses in 25 states found they think that states are overspending on large individual deals and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. Almost three-fourths (72%) do not believe their state’s current incentive policies are effective in promoting economic growth.
Wisconsin Should Do More to Build On This Success
The federal government made a big difference in the lives of struggling people in 2014, showing the powerful role governments can play in creating opportunity and helping people build a more secure future. An analysis of new data from the Census Bureau demonstrates the success of federal programs and underscores the need for Wisconsin to do more to build on that success through its own opportunity-expanding policies, such as increasing the minimum wage and reversing cuts to the state’s Earned Income Tax Credit.
Almost one in five Wisconsin children live in families that made so little in 2014 that they were below the federal poverty level, according to new Census Bureau data released last week – meaning that they couldn’t afford basic necessities. The poverty level is currently $11,770 for a single person and $24,250 for a family of four. Fortunately, key safety net supports are keeping millions from living in dire circumstances, something not captured in the official poverty measure. Read more
A new report issued in conjunction with the Labor Day weekend by COWS provides a thorough examination of Wisconsin job numbers, wages, poverty, and job quality, and it provides a sobering assessment of how working people in Wisconsin are doing:
“Wisconsin faces slow growth, extreme racial disparity in unemployment, long-term stagnation in wages, and one-fourth of workers struggling in poverty-wage jobs.”
The new COWS report – The State of Working Wisconsin 2015 – illustrates that as the national economy has gradually rebounded following the Great Recession, Wisconsin’s job growth has lagged behind. COWS’ analysis concludes that “if Wisconsin had enjoyed the same rate of job growth as the rest of the nation across the course of the recovery, the state would have 90,000 more jobs today.” The national growth rate from January 2011 through June of this year was 60% faster than the job growth Wisconsin experienced during that time.. Read more
The Governor’s Math Uses the Wrong Numbers and Wrong Question
As the legislature nears a vote this week on using taxpayer dollars to help build a new Bucks arena, the Governor’s primary argument for subsidizing the Bucks continues to be the contention that it’s “cheaper to keep them.” That isn’t exactly an uplifting slogan, but it seems to be the strongest argument the Governor can muster. With that in mind, let’s review the arguments about the cost-effectiveness of public subsidies for the proposed arena.
There have been a number of excellent columns, blog posts and other commentaries about the arena issue. Among those, my favorite is a critique of the “cheaper to keep them” argument by Republican Representative Dean Knudson.
In a guest column he wrote in mid-June, Knudson skewers each of the three major points that the Governor and others have made to support the argument that the proposed public subsidies will be less expensive than the costs to be incurred if the Bucks leave Milwaukee: Read more
Compensation of CEOs at major U.S. firms continues to skyrocket, according to a new report by the Economic Policy Institute. To some extent that trend can probably be attributed to broad economic forces, but policy choices at the national and state level also contribute to the huge disparities in income and wealth.
The EPI report was interesting reading today – against the backdrop of Assembly GOP leaders announcing a plan for substantially reducing the prevailing wage law for public sector projects and releasing the details of a Bucks arena plan that will be a boon to the team’s very wealthy owners and players. Those two issue areas are great illustrations of how public policy decisions can exacerbate the widening income gap. And once the budget process resumes, we will learn whether legislative leaders plan to compound the problem by proceeding with a proposal to reduce taxes on very high income Wisconsinites by reducing or eliminating the alternative minimum tax – even as the budget makes cuts that will hurt low-income state residents. Read more
Wisconsin lawmakers on the legislature’s budget committee will probably meet this week to make decisions about a proposed income tax cut for high earners and other changes to Wisconsin’s tax system, among other issues. They should keep in mind that new evidence shows that no state that passed large income tax cuts in recent years has seen its economy grow faster than the national average. Read more