Thursday, September 18, 2014

"Value meal" tax breaks don't create jobs in Wisconsin -- and the latest jobs report proves it

Latest “gold standard” numbers proves that a strong consumer base is required to grow jobs.

The QCEW jobs survey -- called the “gold standard” of jobs surveys in the past by Gov. Scott Walker and his administration -- came out today. Once again, we see that Wisconsin performed poorly when it came to job creation. And when you look over the entire tenure of Walker’s time in office, it paints an even worse picture.

First quarter annual job growth (from March 2013 to March 2014) grew at 28,712 jobs. That puts Wisconsin 33rd in the nation in growth, below the national average and 10th out of 12 states in the Midwest over the year.

Compare that to the QCEW report from the first quarter in 2011, when 41,350 jobs were created, and it’s clear to see that the state is slowing down.

Our ranking then? 16th in the nation.

Those 41,350 jobs in 2011 were created during a combination of the last nine months of former Gov. Jim Doyle’s term and the first three months of Walker’s first term. However, Doyle’s budget was still in play during 100 percent of that time, and Walker’s signature law, the union-busting Act 10, was passed after the end of it.

Without missing a beat, on Thursday Walker once again cited the protests and the recall elections as reasons for why jobs lagged in the state.

“I think any objective observer would tell you or if you talk to employers around the state that between the protests, the recalls and the next wave of recalls, that kind of froze out business in the state,” Walker said to reporters on Thursday.

But in 2012, the jobs numbers were similar -- short of the Doyle numbers, for sure, but a very close 39,756 created from March 2011 to March 2012. That year saw the best first quarter annual job growth of Walker’s tenure, and was also when the bulk of the recall elections (all of the “first wave” state senatorial and half of the “second wave” gubernatorial) occurred.

If the recall elections and protests hurt job creation so much, why did jobs grow at a similar rate during them? Walker’s argument makes no sense.

After March 2012, it was all downhill for Wisconsin. Act 10 was fully implemented, as were Walker’s tax cuts, which benefited mainly the wealthy. Billions of dollars in tax breaks to corporations were also rewarded, and tax increases to Wisconsin’s working poor were put into place through partial elimination of the Earned Income Tax Credit.

Since then, we haven’t seen a year of job growth during that time frame go above 30,000. In fact, since those jobs numbers of March 2011, Wisconsin has experienced a growth rate of 4.27 in three years of jobs surveys -- a rate that’s 25 percent slower than Q1 2010-11.

How does that compare to other states? Again, Wisconsin is lagging.

Wisconsin's jobs rate sits behind all of its neighbors -- three-year rates in Minnesota (5.4 percent), Iowa (5.4 percent), and Michigan (8.55 percent) are all faster than Wisconsin. We’re even behind Illinois (4.28 percent), a state that Walker and company had frequently chided early on in his term while trying to lure business here.

Things aren’t working in Wisconsin, and it’s simply because Walker doesn’t understand how to grow jobs. It doesn’t happen from the top-down: it requires a strong consumer class to grow demand. When more capital is earned by workers, when their earnings can be used on purchases in the marketplace, it creates a chain reaction of growth.

Walker doesn’t get that. Tax breaks are great, but they don’t generate significant growth on their own. Even in his latest ad, where Walker celebrates $300 in yearly tax breaks for the average family, it’s a drop in the bucket of what’s really needed to grow demand -- consumers need more than $5 in additional weekly expenditures to generate growth.

An increase in the minimum wage would grow consumers’ pocketbooks in significant ways. So would accepting federal funds for health care, which would allow more income in the hands of consumers and less swept away by health costs.

Tax breaks that amount to an additional fast-food value per week won’t do a thing for Wisconsin. Walker needs to wake up to that fact, the sooner the better.

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