The best way to create jobs and build a broad-based prosperity in Wisconsin is to invest in excellent schools, safe communities, and a solid transportation network.
But a new report released today takes a different approach, claiming that giving big tax cuts to the rich and raising taxes for others would help the Wisconsin economy. The report, released by the conservative Wisconsin Policy Research Institute, repeats the myth that tax cuts create jobs, despite growing evidence to the contrary.
The report advocates changing the state’s tax mix to rely less on the income tax and more on the sales tax, a change the group says would boost the state’s economy. But what the report fails to mention is that the result would be big tax cuts for people with the highest incomes and higher taxes for everyone else. If Wisconsin eliminated the income tax and raised the sales tax to make up for the resulting revenue loss, the top 1% of earners in Wisconsin – a group with an average income of $1.1 million – would get a tax cut of a whopping $44,000 on average. Read more
New Report Takes Comprehensive Look at Weaknesses, Strengths of Wisconsin’s Labor Market
Wisconsin’s economy is adding jobs at a slow pace, wage growth has stalled, and many workers don’t have the security and opportunity they need to get ahead, according to a new Labor Day report released from the Center on Wisconsin Strategy (COWS).
The report, “The State of Working Wisconsin, 2014,” provides a thorough examination of Wisconsin job numbers, wages, poverty, and job quality.
The information on Wisconsin job growth that is included in this report is helpful in deciphering the claims of political candidates who have helped bring a great deal of attention to jobs figures. The report notes that in many ways the hardships for Wisconsin workers mirror the troubles in the national economy. But beginning in 2011, rates of job growth in Wisconsin have fallen behind the national average:
“From January 2011 to June 2014, Wisconsin gained 109,200 jobs, posting growth in the labor market of 4.0 percent.
Conservatives Critique “Tax Cronyism,” and Progressives Critique the ALEC Report
I was pleasantly surprised to learn recently that the American Legislative Exchange Council (ALEC) has issued a report calling on policymakers to end the wasteful subsidies given to corporations by state and local governments. Their report titled The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth criticizes special tax breaks for certain companies, which it points out tend to increase the tax burden on other companies and put them at a competitive disadvantage.
Corporations are very good at extorting costly subsidies from state and local officials, but some of those corporations and a growing number of policymakers are realizing that these incentives aren’t an effective way to promote economic growth. As WCCF intern Jelicia Diggs wrote in a recent WI Budget Project blog post, a number of businesses in the Kansas City area have prevailed on Missouri legislators to call a ceasefire to the use of incentives for pirating corporations across the border with Kansas. Read more
New Report: How Wisconsin Lawmakers Have Broken with Tradition and Undermined a Legacy of Investment
Four years ago Wisconsin was made a promise. The promise was that the best way to generate economic growth was through significant tax and spending cuts. The tax and spending cuts have occurred, but unfortunately for all of us, the promised job growth has not.
That’s the conclusion of a new Budget Project report released today, called “Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future.” The new report reviews the many changes policymakers have made recently in how Wisconsin supports it schools, communities, and workforce.
Lawmakers have made dramatic tax cuts since 2011, totaling $1.9 billion over four years. But the value of the tax cuts was not equitably distributed. Half the value of the major tax cuts packages in 2013 and 2014 went to the top 20% of taxpayers by income, and the remaining 80% shared the other half.
The tax cuts have contributed to deep cuts to public schools and higher education in Wisconsin. Read more
Immigrants are playing a very important role in boosting cities in Wisconsin and across the Midwest, according to a report issued last month. The recent report, written by the Chicago Council on Global Affairs, analyzed 2000 and 2010 decennial census data and found that the arrival of immigrants over the last decade helped reverse a trend of declining populations in cities throughout the Midwest.
Here are some of the highlights of the report, “Growing the Heartland: How Immigrants Offset Population Decline and an Aging Workforce in Midwest Metropolitan Areas,” pertaining to Midwest metropolitan areas:
- Over the last decade alone, the region’s foreign born population rose 27.4% (from 3.5 million to 4.5 million).
- Immigrant population growth accounts for 38% of metropolitan area growth in the Midwest.
- Only 67% of native-born Midwesterners live in metro-areas, compared to 88% of immigrants.
- Although this region’s native-born population in the 35-to-44 age group saw a 20.6% decrease between 2000 and 2010, the immigrant population in that age range experienced a 44.2% increase.
Wisconsin isn’t the only state that has made deep tax cuts on the premise of boosting the economy, only to find out that the promised job growth has not materialized. Kansas and North Carolina also passed large tax cuts and have experienced disappointing job growth. As a result of the tax cuts, these states have fewer resources to support investments in public schools, higher education, and a healthy workforce – investments that have a proven track record for creating jobs.
The term “border wars” has taken on a new meaning for many states and cities across the United States that have been engaged in the practice of job piracy. However, a number of areas in the country are shifting away from this practice of luring jobs over state borders after recognizing that it is inefficient and does little to fuel job growth. Wisconsin policymakers should learn from the experiences in those states and localities and from the remedial actions they are taking.
On July 9th Good Jobs First released a new report exploring the issue of job piracy, also called job poaching, which wastefully exhausts economic development subsidies without incentivizing new job creation. The report, “Ending Job Piracy, Building Regional Prosperity,” provides examples of failing models of job piracy, including the border war that has been raging between Missouri and Kansas.
Missouri legislators have gradually come to the realization that job piracy is a zero sum game that is wastefully exhausting the economic development resources of both states. Read more
Wisconsin continues to perform poorly in private sector job growth, according to new employment figures released today.
The number of private sector jobs in Wisconsin grew by 1.2% in 2013, compared to 2.1% nationally. The new jobs figures come from the Quarter Census of Employment and Wages, which this Milwaukee Journal Sentinel article calls “the most credible and comprehensive” figures available.
Wisconsin job growth has been slower than that in neighboring states, according to the Journal Sentinel:
“In the first three years of Walker’s term, the data show that Wisconsin ranked 35th of 50 states in the rate of private-sector job growth. That puts it behind the nearby states of Michigan (sixth of 50), which is bouncing back from a searing downturn in the auto industry; Indiana (15); Minnesota (20); Ohio (25); Iowa (28), and Illinois (33).”
State lawmakers have passed dozens of tax cuts since 2011, but that hasn’t spurred job growth. Read more
After more than six years from the start of the Great Recession, the U.S. at long last has more jobs than it did before the recession. For Wisconsin though, that achievement is likely to be a few months in the future.
As of April 2014, there are still 27,700 fewer jobs in Wisconsin than there were in January 2008, according to the Bureau of Labor Statistics. At the current rate of job growth, it means that Wisconsin won’t achieve pre-recession job levels until sometime this fall.
Once Wisconsin returns to pre-recession employment levels, additional jobs will need to be added to make up for the population growth that occurred during the recession. Wisconsin still needs to add more than 100,000 additional jobs just to keep up with growth in the working age population, according to the Center on Wisconsin Strategy.
Employment in Wisconsin may be nearing pre-recession levels, but the type of jobs has changed. Read more
A Few Cracks Begin to Show in GOP Opposition
In late April, shortly before a scheduled U.S. Senate vote on the matter, former Minnesota Gov. Tim Pawlenty (R) said Republicans should support increasing the minimum wage. Mitt Romney and former Pennsylvania GOP Sen. Rick Santorum have made similar comments – which seem to reflect a growing unease among some Republicans in opposing such a politically popular policy choice.
Republicans in Michigan may have been influenced by that sort of advice this week, when the GOP-controlled legislature approved a bill raising that state’s minimum wage to $9.25 per hour by 2018 (from the current level of $7.40). Once it reaches $9.25, the minimum will generally be adjusted annually for inflation, provided the unemployment rate is below 8.5%.
Political pragmatism seems to have played a significant role in the passage of the Michigan bill, which their GOP governor quickly signed, because its enactment is expected to weaken support for a November ballot initiative that would raise their minimum wage even more — to $10.10 an hour, with adjustments every year for inflation, and with a significant improvement to the lower minimum wage for tipped employees. Read more