Gov. Scott Walker, who talks big about boosting private-sector jobs in Wisconsin, is so far doing just the opposite: costing the state private-sector jobs. A Milwaukee think tank puts at 10,000 the number of jobs that sector would lose were Walker’s plan to cut compensation for public-sector workers to go into effect.
Yes, you heard right. Cuts in public employment hurt private employment – which is the exact opposite of the mindless mantra beaten into our heads over the last two decades: to wit, cuts in public employment help private employment.
What that mantra ignores is that public-sector pay checks stir the same economic ripples as private-sector pay checks. In other words, $50 spent at the local supermarket from a government payroll has the same impact as $50 spent there from a company payroll. Both equally enable the supermarket to meet its own payroll. The fewer dollars that come in, whether from public or private salaries, the less money the supermarket can spend on its payroll and the more likely the supermarket will have to lay off workers.
Walker is trying to crush the public employees unions in Wisconsin. He is seeking to eviscerate their bargaining rights. His diabolical plan also includes unilaterally reducing the take-home pay of union members by having them step up contributions to their benefits. That element is what an analysis by the Institute for Wisconsin’s Future addresses. The analysis also factors in reduction in pay from planned furloughs
The institute concludes that Walker’s plan would lead to the the loss of $660 million a year in economic production in the private sector, eliminate $46 million in property taxes or shift them to other taxpayers, noticably boost the state’s unemployment rate and wipe out 9,900 private sector jobs.
Yes, there are a couple of counterarguments, which I put to the institute’s Jack Norman, the author of the report:
Sure, public employees won’t spend as much, but the cuts mean taxpayers will gain spending money. So won’t the state’s taxpayers make up for the loss in expenditures by the state’s public employees?
Well, the idea of the cuts is to reduce the budget deficit. So the savings wouldn’t go back to taxpayers.
In light of the dire budget situation, doesn't Walker have no choice but to enact the cuts, whether they hurt the economy or not?
If he has no choice, why then did he give money away in a special session last month through the enactment of new or expanded tax breaks.
Even before he took office Walker killed a federally financed high speed rail project that would have led to thousands of temporary and permanent jobs for state residents. Despite his highfalutin rhetoric about creating jobs, Walker is starting his governorship as a job killer, not a job booster.
“An Update on State Budget Cuts,” Center on Budget and Policy Priorities