Steady job losses under Walker’s budget: predicted and predictable

Let’s take a little walk down Memory Lane. Last March 18, I said:

“Sucking money out of local economies all over the state is not an effective way to grow jobs. What it really does is diminish the capacity of those economies to create wealth for most of the players involved in them. It makes the pie smaller. The hundreds of millions of dollars in revenue cuts being absorbed by counties, municipalities, school districts and public employees across Wisconsin through smaller paychecks won’t be redirected to other purposes in those communities. They’re just going to be gone. Taking more out of employee paychecks isn’t going to make your taxes go down. The poor will be poorer, services will be diminished, college tuition will be higher and some of the money that used to recirculate around your community will have disappeared like a corporate bailout.”

Two days later on March 20, we saw the same thing repeated in a Wisconsin State Journal report, with a genuine economist doing the talking:

“Gov. Scott Walker’s plans to balance the state budget by cutting spending and public workers’ take-home pay will slow the state’s economic recovery, according to projections by a UW-Madison economist. An estimated 21,843 jobs will be lost over the next year or two as public agencies and workers are able to spend less in their communities, said Steven Deller, a professor of applied economics who studied the ripple effects of Walker’s budget-repair bill and two-year budget proposal.”

Read more: http://host.madison.com/wsj/news/local/govt-and-politics/article_8c50dc92-52f7-11e0-993d-001cc4c03286.html#ixzz1geDdbQVc

Fast forward to now and the Milwaukee Journal-Sentinel reported on Thursday that Wisconsin lost 11,700 private sector jobs last month:

The state lost an estimated 11,700 private-sector jobs in November from October, the deepest since April 2009 when the nation was in the throes of the recession, according to the Department of Workforce Development. The figures are based on a monthly government survey of employers and adjusted to smooth out recurring seasonal factors, such as winter-related slowdowns in construction or holiday hiring by retailers.

All told, the state lost an estimated 14,600 non-farm jobs when the losses in the private sector are combined with the losses in the public sector.

* * *

Wisconsin has lost jobs every single month since the Walker budget began in July and we now know that Professor Deller may have been low on his estimate of job losses last March. In fairness, we can’t attribute every job lost to Walker’s policies any more than we could give him credit every time a net job is gained. But if I’m Scott Walker, I’m plenty concerned about nearly 35,000 Wisconsin jobs turning up AWOL in the first five months of the “It’s Working” budget. It’s working, alright — and tens of thousands more people aren’t.

The facts: Wisconsin’s job totals aren’t comparing favorably to what is going on in other states and around the nation. It’s been nothing but net job losses in the Badger State in every month since the Walker budget took effect in July. The supposed property tax bonanza of hundreds of dollars per homeowner isn’t showing up for most people. Keep in mind that Walker also had the advantage of a two percent cut on Social Security payroll taxes this year to counterbalance some of the negative impact of his policies. It’s a tax cut that his GOP friends on the Hill are having trouble supporting for the coming election year because they’re afraid that President Obama will get the credit for it. Here’s hoping that some wise men show up in the east by Christmas.

Facts are stubborn things and millions of dollars of advertising claiming that “it’s working” won’t change the impact of many hundreds of millions of dollars missing from Wisconsin’s local economies, along with tens of thousands of jobs. It won’t change the fact that in the face of an underperforming economy, the Walker administration had to press many more tens of millions of dollars in cuts less than four months into his first state budget. It’s no wonder that more than a half million people have already signed petitions for a chance to stuff a lump of coal into Governor Walker’s stocking barely more than 10 months into his term.

JR

Millionaire’s Island: Why Rich People Don’t Create Jobs:

http://articles.businessinsider.com/2011-12-15/news/30519344_1_entrepreneurs-and-investors-jobs-property-rights 

Analysis shows how Walker budget is costing Wisconsin jobs:

http://host.madison.com/ct/business/biz_beat/biz-beat-walker-s-budget-cuts-are-costing-state-private/article_d831175c-2b4c-11e1-89e9-001871e3ce6c.html

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5 Responses to “Steady job losses under Walker’s budget: predicted and predictable”

  1. Jim, nice job of laying out the facts. You were right earlier in the year and you’re right today. Recall Walker!

  2. There seems to be a very fundamental disconnect on the right about the difference between productive investments and activities that recirculate money productively in the economy vs. unproductive and even counterproductive wealth transfers in the economy. It stems from the belief that government activities are inherently unproductive and a drain. But the pursuit of economic success through wholesale and indiscriminate public sector austerity is destined to be a loser’s game unless adequate counterbalances are thoughtfully measured and adequately provided for in the equation. Blind faith that any tax or public sector spending cuts will necessarily result in a more productive environment for private sector job growth has already been proven to be a false hope.

  3. It being “that time of the year” where I am not sure if I am coming or going (or both)… I haven’t had time to dig a little deeper (add that to the fact that I don’t care as long as I am ready for the revolution)

    Also… keeping mind I am no fan of Walker or his policies, I voted for the other guy in both the primary and general election – HOWEVER also keeping in mind that I consider myself a fiscal conservative……

    So… there is less money feeding our Wisconsin economy because public employees have less money to spend, or there are simply fewer public employees… In theory, in the zero-sum game model… if the government is spending less, taxes will be down, and therfore that loss in public employees disposable income is then offset by an increase in the disposable income of the rest of us.

    And… being a member of the so called “rest of us” group, I am a big fan of that. However… I am not seeing my taxes go down any. I just got my property tax bills and although my bills for the city of Wausau went down an iddy bitty bit, every other bill went up. Sales tax is what it was… and the same amount of income tax is coming out of my check… so… like Jim says… we took from one but did not give to the other.

    But… my question that I ask not because I am setting anyone up.. but because I am honestly curious…. how does this budget affect the state deficit overall? Is the reason why the rest of us arent seeing the benefit of the cut to public employee wages because we were running a negative and to redistribute those funds = still negative?

    Have we “stopped” the bleeding so to speak so that going forward, we have a budget where revenues and expenses even out (versus spending much more money than is coming in)? If that is the case, are we not somewhat better off long term though we must survive the short term pain?

    Again… I have no agenda – as I plan on declaring myself “Switzerland” in the upcoming revolution…. however… there has to be some kind of up-side of this whole thing for so many people to be so passionately in favor of the Walker budget.

  4. Well, there are several problems. A big one is the propensity of the GOP to give tax cuts for no discernible benefit and an example is of that doing away with provisions in the corporate tax structure that allow — make that ENCOURAGE — multi-state companies to ship profits out of state to escape Wisconsin taxes. What we get for this is ostensibly “a better business climate,” but what we really get is shafted. There were other tax breaks, too — but they didn’t necessarily create jobs or economic activity and there is plenty of room for free riders that blunt the efficiency of these, uh, tools.

    It’s important to remember that after all of the slash and burn with public employees, school districts, muncipalities, counties and the UW System, the state budget isn’t lower. It’s higher. You’ve got a lot of property, so you can tell me if your property taxes went down. Mine did — about $1.10 a month. Personal income taxes going down? Negative. Tuition increases at state colleges and universities far outstrip inflation, yet programs still need to be cut. And for all of this, our county alone gave up tens of millions in lost state revenue and reduced public employee wages. Much of that would have been feeding into the local economy. It’s gone with little or no counterbalancing local benefit and that’s why this budget is a negative drag on jobs.

    We could still luck out. A rising tide nationwide could lift boats here. The stock market could spiral upward. Oil prices could go down and buoy discretionary income. But it won’t change the fact that we’re dragging an anchor and it will take more tailwind to move forward.

  5. A rising tide will not help a sinking ship.

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