Wisconsin’s declining economic vitality is rooted in the failure of our political and business leaders to develop a serious strategy for expanding economic opportunity.
Corporate leaders and conservative politicians like to blame workers for Wisconsin’s precipitous economic decline. To the contrary, the primary problem is not work ethic of average Wisconsinites, which is alive and well, but a growing shortage of good jobs which will continue to deepen unless we take bold and forceful action. It does not matter how hard workers strive if we do not generate enough good jobs to meet the demand.
Wisconsin Economic Development Corporation or WEDC, Governor Walker’s discredited jobs agency, mistakenly assumes that giving aid to well-connected corporations will trickle down to workers. But what is good for a handful of politically influential CEOs is not necessarily good for workers. Handing over our state’s economic policies to multinational corporations engaged in outsourcing and converting middle class jobs into poverty wage jobs is driving Wisconsin’s economy into the ground.
Wisconsin’s economic prosperity has been driven off the road and into a ditch. As more and more Wisconsin families struggle to afford the basics, they have less and less to spend in their local communities, perpetuating a downward economic spiral. Poverty wage jobs are not only bad for individuals who work full time and still struggle to make ends meet, these jobs are economy-busters which drain prosperity from our communities.
A prosperous and fair economy is something we can only build together!
Citizen Action of Wisconsin’s Economic Opportunity Agenda lays the framework for a common sense strategy for expanding economic opportunity for everyone in Wisconsin.
Wisconsin’s Economic Challenge
Wisconsin has a deepening good jobs crisis, and is on a trajectory for the situation to get much worse over the next decade. The stark warning signs are being ignored by the handful of conservative politicians and corporate leaders who dominate our economic policy.
The middle class in Wisconsin has shrunk more than in any other state, according to the Pew Charitable Trust. Since 2000 median adjusted household income in Wisconsin has fallen 14.7% when adjusted for inflation, from $60,344 to $51,467.
Wisconsin is missing over 90,000 jobs, according to the Center on Wisconsin Strategy (COWS). That is the number of additional jobs that would have been created in Wisconsin if we merely had kept pace with national job growth since 2011.
African American unemployment in Wisconsin is the highest in the nation, and over 4x higher than white unemployment, according to COWS.
Latino unemployment is over double the rate for whites, according to COWS.
During the Great Recession Wisconsin lost mostly middle class jobs. During the upturn only low wage jobs are increasing in supply and the number of middle income and high wage jobs are continuing to decline, according to the UWM Center for Economic Development.
According to state numbers, 9 of 10 of the fastest growing job classifications in Wisconsin are in low wage occupations.
Wisconsin women still make only 81 cents for every dollar men make, according to COWS.
Because of the dramatic decline in job quality, poverty rates in Wisconsin are actually increasing even as employment increases, according to the UW-Madison Institute for Research on Poverty.
Large regional disparities in unemployment, median income, and poverty are not addressed by Wisconsin economic development policies. Northern Wisconsin, for example, is virtually ignored compared to Madison, according to a report by the Wisconsin Center for Investigative Journalism.
These trends are not blips on the screen, they represent a fundamental change in the structure of the Wisconsin economy which is dramatically reducing economic opportunity across the state.
Wisconsin Needs an Economic Strategy
What is needed to reverse the dangerous trajectory of Wisconsin’s economy is a bold economic strategy focused like a laser beam on creating more family supporting jobs
The only way we can halt the decline of the middle class, and expand opportunity to all those who are currently shut out, is to make creating good family supporting jobs the singular purpose of Wisconsin economic development policy. No large corporation or CEO has any rightful claim on public dollars, unless they are in turn expanding real economic opportunity for Wisconsin workers.
What follow are the core elements of a common sense economic opportunity agenda for Wisconsin. This agenda focuses on economic development policy, by which we mean how state and local government can generate more family supporting jobs in every corner of Wisconsin. This is the demand side of the equation, how many family supporting jobs are available for workers in all parts of the state. Other education and labor policies not elaborated here are also essential.*
An Economic Opportunity Agenda for Wisconsin
Strategy 1: The discredited WEDC should be replaced with a fully accountable public agency, the Wisconsin Department of Economic Opportunity, with the sole mission of creating family supporting jobs, and a special focus on the areas with the largest gap between job seekers and the supply of high quality jobs. This must include a specific strategy to close the shocking racial disparities that plague Wisconsin.
Wisconsin Department of Economic Opportunity Functions and Outcomes:
Replace current rudderless and ad hoc approach to economic development with proactive strategies to dramatically increase economic opportunity for Wisconsin workers. These strategies should directly address the challenge that most of the fastest growing occupations provide mostly poverty-wage jobs.
Close outsourcing loopholes, by excluding firms which outsource and receive state economic development funds from receiving public assistance for a period of five years.
Replace economic development cheerleading with an evidenced-based approach focused on concrete benchmarks and goals, such as dramatically increasing the percentage of jobs in Wisconsin that are family supporting and include benefits, lowering the poverty rate, dramatically reducing racial disparities, and creating opportunity in areas of deep and concentrated poverty. The agency will be responsible for developing regular progress reports which provide realistic assessments, not public relations spin.
Make closing race-based economic opportunity disparities a specific and accountable goal which will be used to measure the effectiveness of state economic programs and policies.
Launch a 72 county economic development strategy, making expanding economic opportunity in every region of Wisconsin, not just a few economic hot spots, a specific goal which is used to measure the effectiveness of economic development policy.
Demand Full accountability to the public for all economic development investments. This includes careful tracking of benchmarks in real time, compliance with all federal and state laws, and “clawbacks” when firms fail to create promised good jobs.
Establish job quality standards which hold firms receiving economic development funds accountable for creating family supporting jobs which include health benefits, retirement benefits, and paid leave and other family-friendly policies. Expand programs to include incentives to convert existing poverty wage jobs into family supporting jobs.
Focus on creating new family supporting jobs, rather than moving existing jobs across state borders, which does not create more opportunity and generates bidding wars which degrade the revenue base for state and local government. Seek compacts with surrounding states to prevent the poaching of jobs across borders. Prohibit Wisconsin localities from offering incentives for firms to move within Wisconsin’s borders.
Demand fully transparent operations, where the average Wisconsin citizen can determine on an easily understandable website what each firm has promised in terms of job creation in return for grants, loans, and tax credits, and clearly understandable real time reporting on their progress towards these objectives.
Establish a ten year goal of creating a full employment economy in Wisconsin so that every Wisconsin worker who wants a job can find one. Set clear global benchmarks for measuring progress toward full employment, and provide recommendations to the Legislature on the combination evidence-based investments and strategies that will be needed to achieve full employment.
Strategy 2: Repeal Huge Corporate Tax Giveaway and Invest Money in Expanding Economic Opportunity.
The money is there for a large scale economic opportunity agenda, but conservatives lawmakers are giving it away with no strings attached.
Governor Walker’s Manufacturing and Agriculture Tax credit is ballooning in cost to $285 million per year, more than twice what was promised, yet it is not targeted to job creation. As the Wisconsin Budget Project points out, “It’s an ineffective tax break because any manufacturer that has profits in Wisconsin can qualify for the credit, regardless of whether they are adding jobs or eliminating them.” In fact, a corporation could be engaged in outsourcing Wisconsin jobs while claiming this tax credit. As the Wisconsin Budget Project concludes: “In contrast to other tax credits that are tied to job creation, this one isn’t tied to anything. Corporations can get the tax cut even if they are laying off workers or sending jobs overseas.”
This corporate tax giveaway is undercutting the revenue base the state needs to fund economic opportunity investments such as education. It is also making economic development tools such as tax credits for creating jobs irrelevant because companies have no tax liability.
The Manufacturing and Agriculture Tax Credit embodies the failed notion that dolling out money to large corporations with no strings attached will trickle down to workers. If we repeal this unaccountable corporate tax giveaway, it would free up over half a billion dollars in subsequent state budgets for real investments in guaranteeing economic opportunity for everyone in Wisconsin.
*Additional policies that should be pursued include investments and reforms guaranteeing world class public education to every child, raising the wage floor to $15 per hour, guaranteed affordable health care, access to an affordable technical college and university education, restoring union rights to put upward pressure on wages, expanding the Earned Income Tax Credit, providing transitional jobs for those who can not find private employment, reforms that expand access to a secure retirement, and policies that help breadwinners retain employment and care for their families such as paid leave and sick days.