Monday, February 6, 2012

Cuts to workers' pay (predictably) responsible for job losses in Wisconsin

Study from a year ago foresaw job losses coming from Act 10

In March of 2011, shortly after Gov. Scott Walker and his Republican allies in the legislature forcibly passed Act 10 into law, UW economist Steven Deller predicted that the reduced purchasing power of state employees would create a loss of more than 20,000 jobs within the state of Wisconsin in the next year or two.

Following the publication of that study, there were three months of job gains and six months of continuous job losses. The net result was 20,400 jobs gone since the study's release, including 35,600 jobs lost since June.

It should also be noted that the three months of job gains came about during a time when Walker's predecessor's budget was still in play. Net job losses began in July, the first month that Walker's own budget was implemented.

It was also the first full month that paychecks for state workers saw diminished wages, following a three-month court battle over whether Act 10 was passed in a legal manner or not. After that court ruling, state workers had to contribute more of their own income towards their pension and health plans, both of which were already supplied by differed payments to those workers. The result of that reduction in pay contributed greatly towards a loss in jobs in the state overall.

In other words, the premonitions of Deller seem to have been fulfilled (or exceeded), regardless of whether you start from March, when the law was passed, or July, when it was implemented. Jobs have been lost, and a big reason why is because of the cuts in pay to state workers, which has in turn diminished their purchasing power.

It was clear from the beginning that Walker's "reforms" wouldn't do a thing for job creation, would actually have a negative impact towards the economy in the state. Neither tax breaks for corporations nor pay decreases for state employees can create jobs for Wisconsin -- demand for work is stifled by both.

Economist Steven Deller knew this right off the bat, but it doesn't take a doctorate in economics to see, right now, that things AREN'T working under Gov. Walker's watch.


  1. It also didn't take an economist to see it before, when Doyle implemented his fake "furloughs" -- read, pay cuts. (Some state workers got days off, but many did not and were ordered to not reduce any work hours, tasks, etc.)

    The state is the largest single employer in the state, so guess what happened when all workers for the largest single employer in the state had their pay reduced by more than 3 percent? The next year's income revenue for the state went down by the same amount. And that forced reductions in state spending, with impact on all of us who are state suppliers. And that furthered the downward cycle that kept going down.

    Now, we have not only numerous public workers let go but also the massive number of state workers (and some others) taking home about 10 percent less than they did last year. That means they spend less in their locales, and that means less income for businesses that rely on them, and that means less revenue for the state . . . and the downward cycle keeps spinning downward even faster.

    Again, let's be clear that the same thing would happen if a private business was the single largest employer in the state and took these steps. We'd be seeing reductions in state income revenue, reduced spending by the employees in their communities (and in the case of the state, that means many communities all across the state, whereever there is a state office building, a DNR office, a UW campus, etc.).

    And this is the way Wisconsinites wanted it, with no will to do what it takes to turn this around. So the cycle will keep spinning downward -- or even accelerate as public workers retire, leave, and take their savings with them.

  2. And this will only continue to get worse since many public employees haven't yet had the full effect of Act 10 because they had existing and in some cases extended contracts. When those contracts expire there will be more lost income and the downward spiral Milwaukeean describes will accelerate. But it's all good though since Wisconsin is open for business. No customers, but that's just a detail.

  3. And let's not forget what's REALLY going on in some parts of State service. I have worked as a State correctional officer for 17 years - and, off topic, the STARTING wage for a recent Fond du Lac County Jail employment notice starts at 80 cents LESS than what I make, for doing the same type of job...after 17 YEARS as a "public servant". My real take home pay is now close to $300 dollars less than what is was before Walker's "reforms".

    That aside, let me tell you what is happening in the DOC currently. The Administration has introduced about 12 new changes concerning our policies and procedures (we honestly can't keep track of how many anymore - new ones are coming out on almost a weekly basis, it seems). These aren't minor changes. Everything from overtime selection to job signings is being changed.

    Another thing: coming in two weeks we are losing our off post breaks (it's almost funny how, in the new Directives, the "Professional Classes", you know, the ones who make 60 to more than a 100 thousand dollars per year still have their break periods left intact. Of course, it a lot easier to replace a "Union Thug" than it is to replace Psychiatrists and RN's when they can make more than 1.5x their wages in the Private Sector.) Anyone who has ever worked in an extremely high-stress and hostile job environment realizes that sometimes it's nice to "get away from the action" during the course of a day.

    How does eliminating our breaks save the State a buck? The only way would be to eliminate staff positions, and - at least at Dodge Correctional Institution, where I work - we already have approximately 30 posts open between all shifts.

    I can only think of three reasons:

    A. The State wants to "force" as many "old-timers" out of State service as possible, to be replaced with a younger, cheaper, and less-intelligent and less-experienced work force (and one that has never known a union).

    B. To destroy as many "gains" as possible that were acquired through the union, in the small chance that we would ever have it reinstated (a possibility none of us in the prison system believes will ever happen...)

    or, C. To damage the function and integrity of the State Correctional System so badly, that Walker can make a case to try and privatize it, thereby eliminating a HUGE cost to the Wisconsin taxpayers.

    I honestly don't know what anyone in "Madison" is thinking - I believe they're not - but how would you feel if your whole career is starting to take a nosedive - through an intentional Government act - all the while Walker and DOC Secretary Hamblin "praise" us for doing such great jobs, as they're bending us over and the public is basically saying "be glad you have jobs"?

    By the way, the DOC is hiring as we speak...apply now...