Frontier airlines became the third major employer in Milwaukee to announce major layoffs this week when it announced plans to layoff almost 450 employees. Earlier, C and D Technologies and Thermo Fischer said they would be moving jobs to Reynosa, Mexico.
Frontier's announcement illustrates the bankruptcy of Wisconsin Governor Scott Walker's business climate strategy that relies on reducing tax rates and eliminating environmental and labor regulations.
Shortly after he was inaugurated, Walker declared: "Wisconsin is open for business."
The Wisconsin Manufacturers and Commerce (WMC) press release entitled "Wisconsin Business Climate Improves in 2011, Manufacturing Income Tax Phase Out Fosters High-wage Job
Creation" boasted: "Wisconsin’s business climate improved dramatically this year as Governor Scott
Walker and the Legislature approved historic pro-growth reforms that will foster
long-term economic growth."
Yet, since Walker's budget was enacted on July 1, 2011, Wisconsin has lost jobs for six straight months, a dismal record that is unmatched by any other state.
The business climate strategy is based on the false assumption that marginal cuts in business costs drive investment and job creation.
But businesses don't invest or create jobs because state government cuts marginal tax rates or eliminates regulations. Firms invest and hire in response to increased demand for their products or services. Or, like Frontier, they cutback when they lose market share.
The Walker administration, by enacting an austerity budget that reduces wages and public employment, has caused demand to decline in Wisconsin. As a result, Wisconsin has lost jobs for six straight months even as the national economy has added 3.7 million payroll jobs over the last twenty-three months.
Walker's draconian cuts to local government and to public schools ($1.2 billion), technical colleges (30%) and the university system ($250 million) have reduced public employment as workers are laid off and positions go unfilled.
Last year Wisconsin lost a higher percentage of its state government employees than any other state, according to the federal Bureau of Labor Statistics. As public employment declines as a result of layoffs and retirements, discretionary income and demand have also declined.
Finally, Act 10, Walker's anti-union budget repair bill, dramatically reduced the take home pay of all public employees, reducing demand and consumption by more than $700 million-a-year.
The Federal Reserve of Philadelphia released the leading indexes for the 50 states for December 2011. The indexes are a six-month forecast. Forty-four state coincident indexes are projected to grow over the next six months, while only six including Wisconsin are projected to decrease.
Wisconsin's job losses and economic trajectory stand in sharp contrast to the national economy that created 225,000 jobs last month alone. This graph from Econbrowser demonstrates how poorly Wisconsin compares to the U.S economy.
Wisconsin Governor Walker based his campaign for Governor on a promise to create 250,000 private sector jobs.
Walker's policies are not working.