Jobs & the Economy in Wisconsin
Joel Rogers, UW-Madison
Prepared for 2012 Wisconsin Economics Association Conference,
Stevens Point, November 9, 2012
What I’m going to talk about
• Tell you a bit about COWS
• Then focus on what’s been happening in
Wisconsin over the past few years
… and the past decade
… and to WI and the US over the past 40 years
• And what we might do about it
COWS?
COWS
Equity
Sustainability
Democracy
And a lot of data on
Wisconsin’s economy.
www.cows.org
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COWS
Building
the High Road
Any way we can. 
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STOP
I made some slides for you
Like this slide
And this one
I do wonder about PowerPoint
Power corrupts
Absolute power corrupts absolutely
Absolute PowerPoint just can’t be good
Hahahahahaha
ha…teeheeteeheeteehee
PAST FEW YEARS: THE GREAT
RECESSION
Popped housing bubble
Public debt and private deleveraging
Blame Republicans
Sort of amusing, instructive, depressing
Party Debt Clock
No ordinary recession
www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf
National picture on job quality
“Balance sheet recessions” are prolonged
www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf
% Change in WI jobs 12/7-7/12
WI Jobs Deficit @ 8/12: 220K
80K
140K
What’s disputed and what’s not
Unemployment and involuntary part-tim
doubled, long-term tripled
WI Employment Status 2000 & 2011
AA’s really nailed (worst in nation), young too
African Americans
Workers Age 16-24
No Jobs Bowl for Bucky!
If Bucky’s conference win rate turned on proportionate job
numbers by state of opponent
Sept 29 WI 37,183 @ Nebraska
56,745 L
Oct 6
42,349 L
WI 37,183
Illinois
Oct 13 WI 37,183 @ Purdue
60,280 L
Oct 20 WI 37,183
Minnesota 55,869 L
Oct 27 WI 37,183
Mich State 74,317 L
Nov 10 WI 37,183 @ Indiana
Nov 17 WI 37,183
60,280 L
Ohio State 59,262 L
Nov 24 WI 37,183 @ Penn State 41,035 L
THE LOST DECADE, AND MORE
Median Hourly Wages,
Wisconsin and U.S., 1979-2011
Share of Wisconsin Workers Earning
Poverty Wages, 1979-2011
Wisconsin Coverage by
Employer-Provided Benefits, 2008-2009
Wisconsin Union Membership, 1983-2011
Wisconsin Median Hourly Wages
by Sector and Union Status, 2011
Lost Decade for Four-Person Families
Share of Wisconsin Students Who Qualify
for Free and Reduced-Price School Lunch,
2001 and 2012
2001
2012
BIGGER PICTURE
Social contract broken
Source: BLS
Almost nobody escapes
Source: BLS, Census
Growing together, growing apart
End of shared prosperity
Gilded Age
New Gilded Age
Great compression
Great divergence
2007
Middle class America
Internationalization
Active labor force (millions)
Rest of World
China, India, former Soviet bloc
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1980
2000
Capital/labor ratios roughly halved. Internet and higher investments outside US
in education equip much less-well-compensated workers with skills and
technology.
Top 10 percent income share
More or less unique to U.S.
U.S.
Income gains to the top (PTPT, 1979-2007)
NB: The increase for top 1% equals total income of the bottom 40%
Top Incomes Share
Pretax
income (not capital gains!) of top 1 percent, selected countries, in
Shares of top 1% incomes in otal pre-tax incomes (excluding capital gains)
and
most
recent
in country
19901990
to most
recent
year
(most year
recent(indicated
year indicated
in countrylegend)
label)
20
1990
18
16
14
12
10
8
6
4
2
0
Source: World Top Incomes Database
most recent
Change in actual income
Inflation-adjusted post-transfer-post-tax income (in $K’s), averaged within each group,
were, for 1979 & 2007 respectively, 15.5 & 17.5 for bottom 20%; 44 & 57 for middle 60%;
350 & 1,300 for top 1%
Real action at the tippy tippy top
• Share of pretax income earned by top 0.1% increased over
last 30 years from 2.7% to 12.3%
• Rest of upper 1% increased their share from 5.3% to 5.7%
• So could have had a ≈ 10% income increase among all others,
including the rest of the 1%, if .01% share had been constant
• Wealth of course is worse. Richest 400 Americans own more
than the bottom 155 million combined.
Winner-take-all politics
•
The top 1% aren’t just getting most of the economic gains. They’re using politics to
enrich themselves further.
•
Congress is composed of rich people.
– The median net worth of American families is $120K. Among members of Congress, it’s
$912K. If you’re a member of Congress, chance are better than 10 to 1 greater than other
Americans of being a millionaire.
•
It’s supported by rich people
– 90+ % of individual campaign contributions come from the top 2 percent of American
households
– Unions are the only major non-business PACs, and they’re outspent by business interests at
least 10 to 1 (about to go up, with Citizens United decision
•
It’s advised by rich people
– Annual direct lobbying by corporations outpaces lobbying by public interest groups by
about 30 to 1 ($3 billion vs. $100 million)
•
And it does the work of rich people
– Regressive tax reform, deregulation, union busting, no industrial policy, etc.
The US is not a high tax nation
People often feel like they’re paying more taxes. Actually,
they’re not (we used to spend about $11 per $100 of
income, now we spend $10). But it feels worse because our
incomes aren’t going up, and things that employers used to
pay for (e.g. health insurance) are now paid by workers, and
their cost has skyrocketed.
Regressive tax reform
Average (not top marginal) rate for $1M+ households has been cut in half
As share of federal revenues, corporate taxes down two-thirds, while payroll
taxes (capped at $106.8K) have quadrupled
Beneficiaries of Bush tax cuts
Low level of public goods
Country
Total taxes
as % of GDP
Country
Total taxes
as % of GDP
Australia
30.6
Luxembourg
41.8
Austria
43.9
Mexico
16.0
Belgium
45.7
Netherlands
42.1
Canada
38.2
New Zealand
35.6
Czech Republic
40.4
Norway
41.6
Denmark
50.4
35.2
Finland
46.2
Poland
Portugal
France
45.8
Slovak Republic
35.3
Germany
37.7
Spain
35.1
Greece
37.1
Sweden
52.2
Hungary
39.2
Switzerland
34.4
Iceland
36.3
Turkey
31.3
Ireland
32.3
United Kingdom
36.3
Italy
43.3
United States
28.9
Japan
26.2
EU average
41.6
Korea
23.6
OECD average
37.3
34.3
Voting
National elections
Off year elections
US Union Density 1973-2011
All wage & Sal Emp
Private Sector
Public Sector
45
40
Percent of workforce in sector
35
30
25
20
15
10
5
0
1973
1978
1983
1988
1993
1998
2003
2008
Union membership and coverage
Source: 1960-2010 ICTWSS data from Amsterdam Institute for Advanced Labour Studies (AIAS).
Concentrated influence of money
.026 percent
account for
68 percent of all contributions
.05 percent give the max to any congressional candidate
.01 percent give more than $10,000 in a election cycle
.0000061 percent (196 people) account for 4/5ths of new super PAC money
Lessig 2012
US an extreme example of decay
•
•
•
•
•
•
•
•
Highest economic inequality in the developed world
Political system most driven by private money
Weakest public-interested media institutions
Lowest voting, weakest labor movement
Weakest affirmative state, under unrelenting attack
Reactionary federalism
Intense, dysfunctional, rightward polarization
Eating its seed corn, declining competitiveness, etc.
HOW TO GET OUT OF THIS
What makes a place rich?
In the end, a place’s wealth is determined by the productivity of
its human, physical, and natural capital. Productivity is a function
of the value ($) of goods and services produced (itself a function
of their uniqueness or performance) and the efficiency of that
production (i.e., output per unit of input). Productivity should be
measured by value per unit of input, not output per unit.
What matters is not what industries a place competes in but how
firms compete in those industries. Firm variation is much more
important than sectoral variation.
Ownership per se also not important, though its concentration
and diversity certainly is.
What makes it worth fighting for?
Democracy: a community of free equals, enjoying equal
protection, equal opportunity, equal political power
Shared prosperity: high and rising living standards; with the
benefits of increased productivity widely shared (through labor
compensation, more equitable private wealth, or progressive
public goods) and with fair opportunity to contribute to and
receive those shares
Sustainability: both achieved in a way that doesn’t limit future
welfare
Two ways to compete: high road and low
road. One’s good for workers and the
other’s not. One’s sustainable and the
other’s not. One’s socially accountable and
the other’s not. Both can be profitable.
High road is a strategy
“High road” refers to a (universally available and
scalable) strategy to achieve progressive values under
competitive market conditions.
Values – Equity, sustainability, democracy
Strategy – Use democratic organization to
–
–
–
–
Reduce waste
Add value
Capture and share the benefits of doing both
Learn from what you just did, and repeat
High road choice for firms
Low Road
Compete on price, resulting in
•
•
•
•
•
Economic insecurity
Rising inequality
Poisonous labor relations
Little firm commitment to
place
Environmental damage
High Road
Compete on productivity, requiring
•
•
•
•
Continuous improvement
Better trained and equipped workers
System-wide reduction in waste
Public goods to get these things
and producing
•
•
•
Higher worker incomes & profits
Reduced environmental damage
Greater firm commitment to place
High road choice for communities
“the wealth of networks”
Exclusion
Waste
Divestment
Inclusion
Reuse
Investment
Connectedness
High road
Poverty
Wealth
Low road
Isolation
But is it really possible?
1. We know it’s possible to increase productivity dramatically,
increasing returns to new investment
2. We know it’s possible to eliminate large amounts of waste,
increasing disposable income
3. We know the economy is largely regional, and that it’s
possible to organize regional productive infrastructure
4. Doing (1) & (2) in (3) will attract capital while grounding it.
That permits bargaining over division of surplus and direction
of future investment. And starting local doesn’t mean you’ll
stop there.
Within-sector firm variation in productivity
Not related to establishment size
140
75th Percentile
25th Percentile
Median
Value-added per FTE ($000)
120
100
80
60
40
20
0
Establishment size
20-49
50-99
100-249
Small Companies
250-499
20-49
50-99
100-249
250-499
Large Companies
500+
Very Large
Companies
Middle quintile ($36,070-$57,944) consumption
Other
19%
Housing
25%
Food away from home
6%
Food at home
9%
Transportation
18%
Pension and social
security
8%
Health care
7%
Utilities
8%
≈60% of household necessities (housing, transportation, energy,
healthcare) in areas of obvious waste
A chance to rebuild America
131.4 billion new
square feet
213.4 billion new
square feet of built
space
82.0 billion new square
feet from replacement
295.6 billion square
feet in 2000
Source: A.C. Nelson 2004
427.3 billion square
feet in 2030
Annual savings from one less car
Source: Bailey, Linda (2007) “Public Transportation and Petroleum Savings in the U.S.: Reducing Dependence on Oil”. ICF International. p.19.
[available at: http://www.apta.com/resources/reportsandpublications/Documents/apta_public_transportation_fuel_savings_final_010807.pdf]
Exceptional waste in energy
Source: https://flowcharts.llnl.gov/content/energy/energy_archive/energy_flow_2010/LLNLUSEnergy2010.png
Exceptional waste in health care
Health Expenditure per capita
2011 or most recent year (2010 ppp dollars)
12,000
10,000
United States
8,000
6,000
Switzerland
4,000
Luxembourg
Norway
Canada
France
Sweden
2,000
0
0
10,000
20,000
30,000
40,000
50,000
GDP per capita
Sorce: OECD Health Data 2012, and OECD iLabrary
60,000
70,000
80,000
90,000
100,000
100 US Metros: 75 % of GDP
Get smart and unapologetic about cities
•
•
•
•
•
•
An Iron Law of Urban Decay?
Incomes rise and investment moves out
Revenues decline
Public goods deteriorate
Middle class flees
Tax base erodes
Poverty concentrates
Or a wasting of obvious assets?
E.g.: size, location advantages, density, key infrastructure,
appeal for new industries, eds and meds foundation, more skilled
workers, younger workers, immigrants, key infrastructure,
greater energy efficiency, tax base for public goods, political
tolerance, higher wages and productivity, more easily organized
The world’s not flat, it’s spiky
Urban shares of GWP, top 130 cities
Metro % of Global Growth
50% of World Pop, 2007
70% of Population, 2050
Two views of Chicago
Getting on the high road
1. Map your economy and offer a new deal to employers: We’ll give you almost
anything to get you on the high road and almost nothing if you want to stay on
the low-road
2. Lower the cost of living by cutting energy, housing, and transportation costs
through smarter growth
3. Build skills to meet higher value-adding demand; reform education system to
be seamless, integrated, modularized, open, lifelong, demand-driven
4. Promote regional capital pools and easier worker savings for increased withinregion investment
5. Raise the social wage (insurance against loss to health, wages, housing) and
basic public goods (education, transportation, research, recreation)
6. Reform government to be cleaner, smarter, more accountable, more opensource in problem-solving
7. Pay for increased public investment in the simplest and most progressive way
possible, evaluated by final distribution of government spending, not just
revenue incidence
Low road
High road
What did we learn (or relearn) last spring?
Act boldly defend our rights and values. Have the courage of our convictions, speak from our
hearts, take our own side in the argument, go on offense. It’s a lot more fun than waiting
for somebody to kick you in the teeth again.
Show unity of purpose. That’s the key to our strength and makes almost anything possible.
We were able to assemble as broad coalition because it was clear what we’re against –
Walker’s agenda – and what we’re for – fairness, a future, and the democracy needed to
get them both. What we have in common is far greater than anything that might separate
or divide us. We’re in this together.
Collective action is crucial. It can change the terms of debate, throw opponents on the
defensive, inspire and activate friends, call out the best in old ones. It changes political
dynamics (to our advantage) and builds our power. This should be positive, peaceful, and
confident. It should take on the forms we need – electoral and non-electoral, street
theater, mass protests, rallies and house-parties.
Organizing, done strategically, is our real power. The vision that brings us unity translates into
collective action only through organizing. And we saw that new platforms like social media
and the internet can complement tried-and-true methods to educate, agitate and
mobilize our masses.
And we learned that our opponents are in this to win, to crush us, and that we have to
organize ourselves for a long struggle, turning a moment into a movement.