Despite Wisconsin Governor Scott Walker’s promise to revitalize a stagnant economy by creating 250,000 new jobs, Wisconsin is in a state of economic decline. According to recent economic reports, the Badger State has trailed the national pace of private-sector job creation for 26 consecutive months — almost exactly the length of time Walker has been in office.
The failed recall election in 2012, when Democrats and union supporters fell well short of ousting Walker, was hailed by many commentators as a triumph of neoliberal economic policies that slash union rights. Walker argued the policies would attract new jobs to the state, but it doesn’t appear to be working.
In fact, new data shows Wisconsin falling behind as the labor market continues to rebound, slowly, from the economic downturn that began in 2008.
No work for Wisconsin
“First off, we have to think about his promise. He promised to produce 250,000 jobs. There is no way he is going to achieve that. Some of that is outside his control,” said David Schultz, adjunct professor at Hamline University school of Law, in an interview with Mint Press News.
Wisconsin’s subpar growth is the subject of a recent report by Jack Norman, a consultant for the Institute for Wisconsin’s Future, an organization dedicated to “researching key state economic policies.” The report draws heavily from the most recent data from the U.S. Bureau of Labor Statistics.
“Every week come new details showing Wisconsin as a back-of-the-pack state for jobs and income,” Norman wrote.
Norman’s findings follow an article by the Milwaukee Journal Sentinel this week that found private sector wages in Wisconsin have fallen 2 percent annually, roughly twice the national average. Additionally, average wages in Wisconsin had the 45th-worst ranking out of 50 states.
It doesn’t bode well for Republican Gov. Scott Walker, who had promised an economic revival during his 2010 campaign.
He isn’t the only factor influencing the direction of economy, but some analysts and experts argue that his policies have contributed to an economy marked by decreasing wages and low economic growth.
Falling behind under Walker
“His plan is basically, anti-labor, anti-government and letting the market do what it is going to do. He is not doing the basics of what government should do, which is structuring markets. You are essentially seeing a state which isn’t doing anything to facilitate economic growth,” said Schultz, a nationally recognized expert in government, nonprofit and business ethics.
Walker’s administration recently announced a plan to sell off public property in order to reduce the state’s $8 billion deficit. His main target are prisons and the University of Wisconsin system, a network of 13 four-year campuses with about 1,900 buildings valued at roughly $11.5 billion in all.
Buildings constructed with student fees or donations for the improvement of campus life could be taken from public ownership and sold off. One of the biggest losses could be student unions, a key area on any university campus.
No sales have taken place, but the governor is promoting the action as part of a plan to reduce the state deficit. The proceeds from would be used first to pay off any remaining debt on the properties. Any leftover money would then be used to pay down other state debt.
“I really don’t think [Walker] thought this through and understands the negative impact this would have on the university,” said Sheldon Lubar, who served on the University of Wisconsin System Board of Regents from 1991 to 1998.
Union busting
The other major policy some believe has led to declining wages are policies that reduce collective bargaining rights for unions.
“It’s not simply deregulation of the labor market. It’s deregulation and hostility to labor, saying, ‘We are going to regulate and bust the unions. We are going to create a low-wage, low-benefit state to attract jobs.’ The jobs it is going to attract are low-wage, low-skill jobs. Family income is going to go down. We are not seeing a labor strategy that is attracting a high end labor market,” said Schultz.
Others contend that this is a shorter-term trend necessary for future economic growth.
“We are not doomed to slow growth, it’s just that it’s going to take time,” said Brian Jacobsen, a Milwaukee-area economist at Wells Fargo Bank and an economics lecturer at Wisconsin Lutheran College.
Shortly after taking office, Walker signed the budget repair bill, Wisconsin Act 10. The law limits collective bargaining, compensation, retirement, health insurance and sick leave for public sector employees.
It sparked a major uprising, drawing more than 100,000 union members and labor supporters to a protest in February. Some demanded that Walker be removed from office through a recall election, which was carried out but failed. After the votes were tallied from the June 5 recall election, Walker prevailed over Democratic challenger Tom Barrett with 53.1 percent of the vote.
“Scott Walker is merely the face but not the sole cause of the problems. The recall fails, not because they [voters] supported his positions but many didn’t support using recall to kick someone out of office,” Schultz said. “Part of the strategy is politics at this point. To the extent that the political process can control the economy, voters in Wisconsin need to realize it is about control of the Senate, the Assembly… It’s a variety of political strategies that often times come to bear in elections.”
Has neoliberalism failed?
The trends in Wisconsin are indicative of prevailing neoliberal economic policies that have resulted in a reduction of union rights, declining wages and the transition to a low-wage service economy.
The policy was championed by President Ronald Reagan, who notoriously fired nearly 13,000 members of the Professional Air Traffic Controllers Organization in 1981.
Since Reagan took office, national wealth has been disproportionately transferred to the hands of top income earners. According to a recent report by the Organization for Economic Cooperation and Development, income inequality increased more in the period between 2007 and 2010 than in the 12 years prior. The U.S. is home to one of the widest gaps among OECD countries.
Meanwhile, union membership has reached a 100-year low, according to a report released in January by the U.S. Bureau of Labor Statistics. Just 11.3 percent of the U.S. workforce is unionized, due largely to the proliferation of right-to-work legislation now present in 24 states.
In Wisconsin, public-sector union membership has dropped from 50 percent in 2011 to 37 percent in 2012.
For the past 30 years, real wages have fallen or remained stagnant for 90 percent of workers. The situation was made worse since the 2008 recession, as many middle-income jobs have been replaced by low-wage positions or part-time work.
Using these figures, Paul Buchheit of Alternet concludes that poverty in the U.S. is actually much higher than the 15 percent reported by the Census Bureau.
“Even the Census Bureau recognizes that its own figures under-represent the number of people in poverty,” Buchheit writes. “Its Supplemental Poverty Measure increases, by 50 percent, the number of Americans who earn between one-half and two times the poverty threshold.”