MADISON- Governor Walker’s economic policies are failing. The recent opportunity for a Foxconn plant to come to Wisconsin, with all of the incentives that Wisconsin’s leaders have assembled for the company, illustrates this fact. Walker and the state GOP are clinging to an old vision of America, where manufacturing can lead to high employment and livable wages. Foxconn has a record of paying its workers starvation wages and maintaining unsafe working conditions at their plants.
More fundamentally though, Walker’s policies have tried to give handouts to companies like Foxconn while ignoring the fact that the economic landscape is changing. Most manufacturing jobs have left because of automation, and automation is not stopping anytime soon.
The GOP is not willing to support workers displaced by automation, and is not willing to invest in jobs for the 21st century. The GOP is only willing to support the companies that do not pay workers enough. The GOP is only willing to support the companies that expose workers to danger.
Columnist Bruce Murphy at Urban Milwaukee writes:
Those looking for symbolism about which way Wisconsin is headed might want to consider the current hubbub over a possible Foxconn plant in Wisconsin. This is a company that is infamous for its poverty-level wages and horrible working conditions, with riots, worker suicides and violence at the Foxconn plant in China.
Yes, the company is likely to offer better pay and working conditions in America, but this is a contract manufacturer that specializes in cutting labor costs. How many of its jobs will pay a family-supporting wage?
The hope is that Foxconn could bring 10,000 jobs to the state, but other sources suggest the company could build plants in several states (five are under consideration) that each employ several thousand people.
Yet Wisconsin’s political leaders are scrambling to provide a package of incentives that could include “property tax abatements, income tax abatements, job creation tax incentives, infrastructure improvements, etc.” as the Milwaukee Business Journal reported.
It’s all part of a continuing strategy by Gov. Scott Walker and Republican legislators to blindly throw money at companies in hopes it will lead to more jobs. The emphasis, moreover, has generally been on incentives for the manufacturing sector, which has been in decline in Wisconsin and across American for decades.
The classic example is the Manufacturing & Agriculture Tax Credit, which slashed the effective rate of state corporate taxes for manufacturers to almost zero — from 7.9 percent to 0.4 percent. This will cost the state $206 million in lost revenue in 2016 and is expected to cost $299 million in 2017, according to the Wisconsin Budget Project. Nearly all of the tax break goes to the very wealthy, with just 7 percent going to those who earned less than $250,000, its analysis found. “In fact, just 11 claimants, all of which had incomes of $30 million or more, receive an estimated combined tax break of $22 million in 2017.”
And the impact on jobs? In the two years prior to adding the tax credit, total jobs in manufacturing rose 2.1 percent. In the two years after the credit, manufacturing jobs rose by exactly the same rate, 2.1 percent.
Or take the Wisconsin Economic Development Corporation, which has been mired in endless problems since its creation in 2011. Once again the strategy has amounted to throwing money at companies, and once again manufacturing companies have gotten much of the money. And the results?
A May 2017 Legislative Audit Bureau report found that of hundreds of millions in tax credits, grants and loans authorized since 2011, the agency “cannot be certain about the number of jobs actually created or retained as a result of any awards.” In fact only 12.5 percent of contract awards “even had an expected result of job creation or retention.”
Read more at Urban Milwaukee.
