Tuesday, February 9, 2010

Wisconsin's unemployed need jobs

If you lost your job last year, you're not alone. There are now 15.3 million Americans who are officially unemployed, up from 7.5 million in December 2007. A record 40% have been unemployed for more than six months.

Wisconsin's unemployment rate surged to 8.7% in December from 8.2% in November.

The state lost a total of 163,000 jobs in 2009, more than 26,000 in December alone.

The four-county metro Milwaukee area has been particularly hard hit losing 48,200 jobs (5.7% of total employment), the third-deepest percentage loss in the nation. Only Las Vegas, where employment levels fell 7.4% and Detroit, which fell 6.2%, lost a greater percentage of their jobs .

The employment picture is even worse than the official data suggests.

In the past year 82,840 workers dropped out of the Wisconsin labor market, 13,400 in December alone.

If discouraged workers are counted, Wisconsin's unemployment rate jumps to 11.4%. And if you include people who are working part-time only because they cannot find full-time employment the rate jumps 13.2%.

Wisconsin's working people are hurting. Job loss is undermining families and communities across the state.

Bankruptcies have soared, 30% last year, following a 35% increase the year before contributing to a record number foreclosure filings as job cuts make it difficult for homeowners to keep up with their monthly mortgage payments.

Preliminary figures show there were 30,624 foreclosure filings in the state last year, up almost 20% from a record 25,541 in 2008, Madison-based ForeclosureAlarm.com, which tracks foreclosures through court documents, reported. Milwaukee leads the way with more than 5,800 foreclosure filings.

The Wisconsin Senate Republican response to these alarming numbers is to propose more of the very same policies-reducing regulations and taxes - that caused the Great Recession.

Their press release says nothing they haven't said for the past thirty years. No matter what ails the economy and despite all the evidence, including massive job loss and declining real wages, Wisconsin's Republican leadership prescribes the same failed medicine.

Their tax cut proposals, like eliminating capital gains, corporate taxes and combined reporting, are the least effective form of economic stimulus. Upper income, capital gains and dividend tax cuts were the centerpiece of the Bush administration's economic agenda. The result-anemic growth, no net job creation, the most unequal distribution of income since 1929 and soaring deficits.

Republican insistence that tax cuts be one third of the $787 billion stimulus package and President Obama's acquiescence significantly undermined its effectiveness according to a recent Congressional Research Service (CRS) report .

The report notes that the February 2009 economic stimulus package included $286 billion in tax cuts, many directed towards business. It concludes that "the evidence ... suggests that a business tax subsidy may not necessarily be the best choice for fiscal stimulus" because "product demand appears to be the primary determinant of hiring."

When firms are saddled with excess capacity which is currently a low 72%, investment tax credits will not stimulate investment.

Businesses and their advocacy organizations like the MMAC and WMC will always seek taxpayer subsidies, and apparently the Wisconsin's Republican Party will always help them, because profit margins increase when taxes are reduced. But these taxpayer funded subsidies do not create jobs.

Unfortunately, the state's Democratic leadership hasn't offered much help to the Wisconsin's workers either. It recently passed legislation that includes a post secondary education tax credit for businesses, higher annual limits on angel investment tax credits and other provisions, but nothing that will help put the Wisconsin's 251,000 unemployed workers back to work.

The Obama administration's failure to enact a stimulus package large enough and targeted to create jobs led to the Democrats stunning defeat in Massachusetts.

Wisconsin workers need work. Is anybody listening?

2 comments:

Anonymous said...

Professor Rosen is exactly on target.

I have yet to hear any prominent politician propose a genuine way to retain or return blue collar or white collar jobs. Their emphasis is on the ultimately empty benefit of TRYING to create new jobs, which are not guaranteed to be immune to eventual export.

A front page article about Best Jobs and Worst Jobs in the January 18, 2010 Milwaukee Journal Sentinel reported on conclusions published at CareerCast.com. Of the Ten Best Jobs, dental hygienist is the only non-exportable job. Of the remainder, those jobs that engage the most people have been being moved offshore in big numbers for many years already. Of the Ten Worst Jobs, none of them are exportable. Those workers probably do not regard themselves as disadvantaged.

Tax credits are not going to create jobs in the numbers needed, and will do nothing to retain or return jobs. Education for new or emerging industries is posed as a panacea, but if the career target is exportable, education turns out to be a cruel trick and a wasted investment of time and money.

Until something is done to prevent job export, the best education will remain that which prepares one for a job that inherently must be rendered in-person and on-site.

Tax credits remind me of the tax-phobic Republican solution to nearly every need: the tax-free savings account. People can save to meet a need in the future only if: (a) their need can be deferred long enough; and (b) they earn so much money that they can save enough to cover all of the possible different deferrable needs.

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