Despite the decline in family supporting jobs across Wisconsin, Gov. Scott Walker and conservative politicians have told us for years that there is no money for big new job-creation initiatives. Wielding the false premise that “Wisconsin is broke,” they have damaged the economy by making devastating cuts to our public schools, colleges, and universities, and enacted policies designed to drive down wages for Wisconsin workers.
At a White House event with President Donald Trump, Walker changed course by announcing a secretly negotiated deal that would hand out $3 billion to Foxconn. The multinational corporation is notorious for reneging on its commitments, exploiting child labor, calling its own workers animals, and creating conditions so wretched that one of its factories had to be outfitted with suicide nets.
Because Walker and conservative legislators have already virtually eliminated taxes for manufacturers, they propose to cut huge checks of up to $311 million per year to Foxconn for 15 years.
I sat through the nearly 10-hour Assembly hearing on the Foxconn deal and came away shocked that not one of its supporters provided any research establishing this as the best way to spend $3 billion to expand economic opportunity.
Once you actually dig into the actual numbers, this looks like the biggest swindle in Wisconsin history.
First, the notion that corporate subsidies increase employment or raise wages is not evidence-based. A comprehensive study by the W.E. Upjohn Institute for Employment Research, which analyzed corporate subsidies data going back to 1990, found that “incentives do not have a large correlation with a state’s current or past unemployment or income levels, or with future economic growth.”
Second, there is very good reason to doubt that Foxconn will be held accountable for creating the jobs it is promising. The deal was negotiated in secret by the CEO of the Wisconsin Economic Development Corporation, Walker’s scandal-ridden economic development agency. WEDC will be in charge of verifying the the jobs Foxconn is promising to create, but a recent state audit found that WEDC is still unable (or unwilling) to accurately track whether the jobs they are paying corporations to create actually exist. How can we rely on WEDC to manage an economic development deal 50 times bigger than any in Wisconsin history?
Third, the numbers reveal a one-sided deal that is stacked against Wisconsin. If you look at the average state payment for job-creation subsidies (according to the Upjohn Institute), and compare that to the amount paid per job in the best-case scenario for the Foxconn deal (according to calculations by the Wisconsin Budget Project), you’ll find that, at minimum, Walker proposes to pay at least six times more per job than is typical in other states.
In other words, if Walker and WEDC were competent enough to pay Foxconn the average amount paid by other states per job in typical subsidy deals, Wisconsin could create not the 13,000 direct jobs they are touting, but over 78,000 jobs! It’s like paying $900,000 for a $150,000 house you might not get to live in. Based on his own analysis of the numbers, distinguished professor of economics Michael Hicks said the Foxconn deal “isn’t just bad, it might well be the worst large economic development deal in history.”
Fourth, even if we accept the rosy projections put forward by Walker, there are much better ways to create good jobs all across Wisconsin than allowing ourselves to be fleeced by Foxconn. Walker asserts that the Foxconn deal would create 13,000 direct jobs and an additional 22,000 jobs in the supply chain, for a total of 35,000 jobs. But according to a University of Massachusetts study, a $3 billion investment in education would create on average 87,300 jobs, in health care 58,800 jobs, and in renewable energy 51,300 jobs.
The Foxconn deal exposes the utter bankruptcy of the notion that we can create a strong economy by bribing corporations with sweetheart economic development deals. If we say “no” to the Foxconn deal, Wisconsin has the resources to take control of our own economic future by making exciting new investments to create prosperity across our great state.
Robert Kraig is executive director of Citizen Action of Wisconsin, a statewide membership organization that advocates for expanding opportunity, guaranteeing affordable health care, and building the power of democracy to shape our future.
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