Job one: Fire the government

Christian Schneider tries to explain job growth, or lack thereof:

Conservatives tend to believe that Obama’s policies have cut off the air supply to the national economy, and states such as Wisconsin are left gasping for breath. This seems to ring a little more true, as the state economy tracks with the national economy — Wisconsin’s jobs numbers don’t drive the numbers around the country. But that doesn’t explain why Wisconsin’s private-sector job growth is slower than 43 other states, according to numbers released in late March.

Walker’s critics believe the governor’s collective bargaining reforms are to blame for the state only picking up 20,479 jobs between September 2011 and September 2012. Public workers, now forced to pay into their pension accounts and kick in more for health benefits, have less money to spend, creating less economic activity, they say. But the numbers belie this claim: According to the state Department of Revenue, state income and sales taxes are up 5% in 2013, and new business start-ups were up 8.4% in 2012, compared with 2011. People are spending and making money, but the jobs continue to lag behind other states. (Interesting that the “people have less money to spend” argument vanishes when the left argues for higher property taxes.) …

For one, although it’s hard to tell this to a Wisconsinite who has lost his or her job in the past four years, the bad economy didn’t damage Wisconsin as much as it did other states. The crash of 2008 eviscerated some states, while Wisconsin was able to hold fairly steady; since Wisconsin didn’t fall as far, it doesn’t have as far to snap back. Naturally, if Wisconsin is able to mitigate the effects of the downturn and remain on an even keel, it is going to look better during the bad times and worse during the good times.

The numbers tend to bear this out. Between January 2009 and January 2011, Wisconsin either was gaining more jobs than the national average or not losing as many as other states were nationally. Thus, while the state only gained jobs at a 0.9% clip in the last annual time period measured, it started at a much better place than other states.

Take, for example, Wisconsin’s neighbors, Michigan and Illinois – both of which were eviscerated by the recession. In January 2010, Michigan’s unemployment ballooned to 13.8%, while Illinois’ was 11.3%. As of September 2012 – the date of the most recent reliable numbers – Michigan’s unemployment rate was still at 9.2%, Illinois’ rate was 8.9% and Wisconsin’s was 6.9%.

Yet according to the jobs numbers just released, Michigan’s private-sector job growth in the last year was 2%, Illinois’ was 1.4% and Wisconsin’s was 0.9%. So Wisconsin lagged behind those two, but is still in total, in much better shape. Without question, the states hardest hit by the recession have to come back from much farther behind.

On the other hand, take a low-unemployment state such as Minnesota. The unemployment rate in Wisconsin’s neighbor to the west is 5.6% – and its recent private-sector job creation numbers only barely beat Wisconsin’s, 1% to 0.9%. Iowa’s unemployment rate is 5%, and its gained jobs at a pedestrian rate of 1.3%. It appears that states that didn’t lose a lot of jobs during the bad times tend to gain them back at a slower rate during the good times.

Further, some of Wisconsin’s sluggishness may have to do simply with demographics. According to the Wisconsin Taxpayers Alliance, Wisconsin routinely lags behind the nation in job creation – since 1996, Wisconsin has outperformed the national job growth average in only 28 of 102 months, or 27% of the time. …

The WTA posits that some of this slow growth may be attributable to the graying of the Wisconsin population. Between 2002 and 2011, the state’s working-age group grew by only 5.9%, compared to 9.3% nationally. Further, they point out that new firm creation in Wisconsin in 2011 was second to last in the nation, beating only Iowa. Without new businesses, the jobs can’t follow.

Schneider follows up by comparing unemployment rates and job creation numbers.

First point from his original column: Schneider lets off Obama entirely too easily, probably because his piece really isn’t about Obama. When 15 percent of the population is either unemployed, underemployed, or no longer looking for work (what economists call the U6 measure of unemployment), you as president are a gigantic steaming pile of failure, and you deserve every negative thing that happens to you.

As far as Wisconsin is concerned, however, there is more to the story. Much of it is history, but most of it is bad policy. Note that since 1996, Wisconsin has outperformed the national job growth average 27 percent of the time. Since the late 1970s, Wisconsin has also trailed the nation in per-capita personal income growth. Counting Walker, that’s five governors worth of economic fail.

There has been little fundamental change in state government over those 3½ decades, and even before that. We have too many units of government (3,120 at last count), too many government employees, too many laws and too many regulations, all of which are poisonous to business and economic growth. (Not surprisingly, we’re poor in economic freedom within North America.) We have too few job creators in this state (partly due to our historic antipathy toward wealth), with obvious and not-so-obvious consequences.

We have spent more than nearly every other state on education. Improving your own education is great to improve your own economic opportunity. Spending on education has not, however, been proven to improve a state’s economic performance. (If proof existed, Superintendent of Public Instruction Tony Evers would be screaming from the top of the Wisconsin Education Association Council building about how we must spend more on education to improve our economy, with proof attached. He does the former lacking evidence of the latter.)

When one improves his or her education, that does improve that person’s economic opportunity. That includes the opportunity to leave for somewhere with, in that person’s opinion, more economic opportunity. (Or weather that is not shitty.) Improving education is a microeconomic benefit, not a macroeconomic benefit.

Despite our rankings of (as of 2010 or 2011) 20th in gross state product (1.7 percent of gross domestic product), 29th in per capita gross state product, 21st in median household income (below the national average), and 21st in per capita personal income (again below the national average), we have the fifth highest state and local taxes in the country. If we had the fifth highest gross state product, we’d have 2½ times our present economic output. If we had the fifth highest median household income, each family would have nearly $12,500 more money each year. If we had the fifth highest per capita personal income, each of us would have $5,500 more every year.

The Walker administration has not fundamentally changed state government to make this state actually business-friendly. (For instance: Nearly all of the Doyle administration tax increases are still intact. And with all the Act 10 screaming, the state has as many government employees as it did under Doyle.) The Walker administration appears to be the 21st century answer to Dwight D. Eisenhower as president — do the same stuff the Democrats did, but do it better (you hope).

I see no interest in fundamentally different, much smaller government in this state. So don’t expect real improvement in the state’s economy, regardless of Obama’s criminal maladministration of the national economy. Apparently people here are satisfied with mediocrity in their pocketbooks and from their politicians.

3 responses to “Job one: Fire the government”

  1. Mike Avatar
    Mike

    Gov. Walker Campaigned on 250,000 new jobs. The scoreboard does not look good no matter how you spin it. If you put those 250,000 new jobs on top of the job rate when he made that promise we are even further behind. So far Gov. Walker’s promise is falling way behind.

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