Trying to “lure” jobs from other states won’t produce meaningful jobs growthA report released earlier this month laid out some important truths about job creation, namely that trying to lure jobs from other states isn’t the route to go.
According to the Center on Budget and Policy Priorities, “poaching” from other states fails to produce the highest yield for creating a large number of jobs. Instead, states should focus on policies that help startups and already-established smaller companies, which the organization cited as most responsible for job growth.
The group points out that 87 percent of new job growth “comes from startups and expansion of businesses already established in a state,” according to a recent Cap Times article. Conversely, trying to poach jobs from other states produced at best 4 percent of all new job growth, according to the study.
This could help explain why Wisconsin, which has had minimal jobs growth since Gov. Scott Walker took office, has struggled when compared to its neighbors and the rest of the nation.
Walker made it publicly known early on in his tenure that he intended to try and get jobs from elsewhere to migrate to the state. For example, in 2012 fresh off of his recall victory, the Walker administration spent half a million dollars in advertising alone within Minnesota and Illinois, urging companies in those two states to give Wisconsin a shot.
Unfortunately for Wisconsin, Walker’s plans fell short. Way short.
From Walker’s recall election in June of 2012 to June 2015, Wisconsin grew private sector jobs at a slower pace than both Illinois and Minnesota (data derived from the Bureau of Labor Statistics). Illinois had an 11 percent faster rate of job growth, while Minnesota had a 42 percent rate advantage over Wisconsin.
Walker promoted tax cuts as a way to produce more jobs within the state as well. But when families earning less than $60,000 a year receive a tax cut of at most $117 (that’s less than $10 a month), that income can do very little to help promote growth.
What’s a better way to produce more jobs? Produce more income for workers. A $10 an hour minimum wage, for example, would put $110 per week more in the pockets of a worker earning the current minimum wage rate of $7.25, or almost $500 per month in extra income into that working family’s hands.
More income means more purchases, which allows for companies in Wisconsin to earn more profits, which allows for more hiring of workers to keep up with the demand for goods and services being sought after.
Tax cuts for big businesses, on the other hand, produce higher profits but lack the demand for more production. Without that demand, there is no incentive for companies to spend money on hiring. It’s simple economics.
Scott Walker’s policies were meant to try and lure jobs away from neighboring states and to grow jobs through failed trickle-down economics. The Center on Budget and Policy Priorities study shows quite clearly that those methods don’t work.
Wisconsin needs a change in direction if it ever hopes to revive its economy. That may require a change in government leadership.