A careful analysis of the four most prominent “business climate” ratings of state tax systems finds them to be “deeply flawed and of no value to informing state policy.”  A report published today by Good Jobs First (“Grading Places: What Do the Business Climate Rankings Really Tell Us?”) concludes that business climate studies are actually “politicized grab-bags of data” that contradict each other wildly.

The “Grading Places” report is authored by Dr. Peter Fisher, an economist who has written extensively on economic development.  According to Dr. Fisher:

“When we scrutinized the business climate methodologies, we found profound and elementary errors.  We found effects presented as causes.  We found factors that have no empirically proven relationship to economic growth.  And we found scores that ignore major differences among state tax systems.”

You can find the complete report and the executive summary here.

Jon Peacock Read more

Like many other governors, Scott Walker is frequently talking up the state economy and trying to take credit for any recent bit of positive economic news. That’s perfectly understandable. It’s also becoming increasingly difficult.

The income tax cut proposed for Wisconsin is more likely to hurt, rather than help the state economy, if past history in other states continues to hold true.

Critics of the income tax cut have raised a number of concerns about the proposal, including:

• Half of the benefit of the tax cut accrues to the top 20% of earners, even though its proponents have described the tax cut as being targeted at the middle class.
• Most workers earning $30,000 a year or less would not receive an income tax cut. These workers pay a higher share of their income in state and local taxes than the best off.
• The tax cut reduces state revenue by about $170 million per year, and is partly responsible for the projected re-opening of the state’s structural deficit in the coming years.

Added to this list of concerns is the fact that the tax cut is not likely to help Wisconsin’s economy, and in fact could do the opposite. Read more

States that follow the economic policy agenda promoted by ALEC risk weakening state economies and harming middle class families. That’s the message of a new report by the Center on Budget and Policy Priorities, which outlines American Legislative Exchange Council’s policy recommendations and their negative effects.

ALEC is a network of conservative state legislators and lobbyists that works to influence state legislation in a variety of policy areas, including budget and tax policy. According to CBPP, ALEC’s proposals would:

 cut taxes deeply for wealthy individuals, investors, and corporations; shift tax burdens substantially from well-to-do to middle- and low-income households; and impose strict constitutional or legal limits on revenues or spending that would severely limit states’ ability to provide adequate funds for education, health care, and other priorities, and impair state economic growth.

Many of the recent changes made to Wisconsin’s tax and budget system follow ALEC’s recommendations. For example, the Wisconsin state legislature has passed several new tax cuts that primarily benefit corporations and well-off individuals. Read more

Last week, Wisconsin was named as having the 13th best business climate among the states. Great, right? What’s not to love about an indication that Wisconsin may be becoming a better place for businesses to grow and thrive?

A lot, it turns out. A close look at the most recent business climate ranking sheds light on a variety of problems it shares with other, similar rankings on business climates. All too often, business tax climate rankings are quasi-scientific mish-mashes that tell us very little about environments favorable for businesses to grow and thrive. This most recent ranking is no exception.

Let’s take a closer look at how that #13 ranking for Wisconsin was compiled by Site Selection, “the magazine of corporate real estate strategy and area economic development.” States were assigned points based on a variety of factors, with half the points coming from simply asking corporate site selectors what they thought of the climate in the states. Read more

Several sets of data released late this week provide positive news on economic growth, but not the sort of vigorous growth that all of us would prefer to see.   This afternoon the Dept. of Revenue issued a report on tax collections in the first three months of the current fiscal year, and yesterday the Dept. of Workforce Development issued the September data from two surveys by the Bureau of Labor Statistics (BLS), known as the Current Employment Statistics and the Local Area Unemployment Statistics. 

Tax collections were up 2.1% in the July through September period, compared to the same quarter of the previous fiscal year (after adjusting for a difference in the timing of the September income tax withholding).  Although that isn’t exactly a robust start to the new fiscal year, it amounts to a $55 million increase compared to the same period in 2011, and tax revenue only needs to grow by a total of $160 million (1.2%) during the full fiscal year  to reach the projection made in May 2012. Read more

A report issued over the Labor Day weekend paints a troubling picture of trends for Wisconsin workers.  The new State of Working Wisconsin report by the Center on Wisconsin Strategy (COWS) contains a wealth of information about trends in the state and national economies.

The report notes that the sluggish recovery from the long and deep recession has been disappointing nationally, and even more so in Wisconsin last year as our state “fell off the weak national and regional pace of job growth.”  Although the state’s poor job performance in 2011 triggered debate about which source of jobs data to use, the COWS report says that regardless of the data source, “our job market is a national and regional laggard.”

Analyzing the data source recommended by the Governor and Department of Workforce Development, COWS researchers found the following:

• Wisconsin’s rate of job growth in 2011 was the lowest in the Midwest.

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DWD Reports 6.7 Percent Wage Growth, Compared to First Quarter of 2011

There was a bit of good economic news in our state Friday.  The Department of Workforce Development (DWD) issued a press release noting that, “Wisconsin wage earners received record 1st quarter wages of $27.6 billion, up 6.7 percent or $1.75 billion from the first quarter in 2011.”  The new figures come from the state’s very comprehensive Unemployment Insurance system database. 

I think the recent Wisconsin wage growth is cause for a little celebration, but before you pop the cork on the good champagne I’d urge you to consider a couple of factors. First, keep in mind that Wisconsin’s job and wage numbers have been so depressed for the past few years that a bit of progress in regaining lost ground (compared to the U.S. average) is a big jump from where we’ve been.  That seems to help explain the new wage numbers. 

In a report issued a week ago, the Center on Wisconsin Strategy (COWS) analyzed the wage and job numbers for all states in 2011, and they found that average weekly wages in our state fell 2.4 percent from the fourth quarter of 2010 to the fourth quarter of 2011. Read more

Are you ready for another twist in the saga of Wisconsin jobs figures?

Governor Walker has placed a great deal of emphasis on job creation in Wisconsin. But month-to-month jobs figures released by the federal Bureau of Labor Statistics (BLS) have shown that job growth in Wisconsin is flat.

In May 2012, the Walker Administration released jobs figures from a different source, called the Quarterly Census of Employment and Wages (QCEW). These figures showed that Wisconsin made modest job gains in 2011. At the time, Department of Workforce Development Secretary Reggie Newson said that the administration had released the figures ahead of schedule because “employers, job creators and job seekers need to know the truth about the actual job picture in Wisconsin so they can make informed decisions.” With the figures available at the time, it was not possible to make comparisons between Wisconsin and other states using the QCEW.

That changed today, when complete figures were released. Read more

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Last week, with little fanfare, the Department of Revenue (DOR) finally issued a new installment in the series of documents Formerly Known as the Quarterly Economic Outlook Reports. The new report reinforces the conclusion that Wisconsin has experienced lackluster growth over the last 18 months, and regrettably the forecast for the next few years isn’t much better. The anemic economic progress is illustrated by the following numbers from the report:

• From Nov. 2009 through May 2012, Wisconsin recovered only 10.6% of the 172,000 jobs lost in the past recession.
• DOR expects private nonfarm employment to grow by 138,500 jobs from 2010 to 2014, which is less than 55% of the 250,000 private sector jobs that the Governor pledged would be created during his first term.
• The preliminary figures on state Gross Domestic Product (GDP) show real (inflation-adjusted) growth of just 1.1% in Wisconsin in 2011, compared to 1.4% in the Great Lakes region and 1.5% growth nationally (and 4.0% in Wisconsin in 2010).

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