Wisconsin lost 3,900 private sector jobs in December according to data released Thursday by the state Department of Workforce Development. In the same month, the United States gained an estimated 212,000 jobs.
In the public sector, government agencies at the state level shed jobs last month while city and county employers showed job gains. Losses in the private sector and changes in government staffing left the state with an estimated net loss of 1,700 non-farm jobs for December. .
Wisconsin has lost jobs for six consecutive months and has lost more jobs than any state in the nation since Governor Scott Walker's budget went into effect in July 2011. The graph by the Philadelphia Reserve Board below documents this.
Wisconsin is continuing to hemorrhage jobs because of Governor Walker's one-sided reliance on spending cuts to balance the state budget. That is because demand creates jobs. Consumers account for almost 70 % of the economy. Yet Walker's budget cuts have caused the demand for goods and services to decline in Wisconsin.
Wisconsin shed more state government jobs than any state in the nation in 2011. When workers lose their jobs, their incomes decline and they buy less. In addition, the disposable incomes of virtually all of Wisconsin's public workers declined as health care premiums increased and pension contributions increased to 5.8% of income. The result a decline in aggregate demand that has caused Wisconsin to shed jobs even as the national economy is adding them.
The lesson of Walker's first year is that you cannot cut your way to job growth and prosperity.
Austerity has been a failure where ever it has been tried.
In a recent paper for the International Monetary Fund, Laurence Ball, Daniel Leigh and Prakash Loungani look at 173 episodes of fiscal austerity over the past 30 years—with the average deficit cut amounting to 1 percent of GDP. Their verdict? Austerity “lowers incomes in the short term, with wage-earners taking more of a hit than others; it also raises unemployment, particularly long-term unemployment.”
Let's take a quick look at the unemployment rates in those nations that have responded to budget deficits with austerity. In Ireland the unemployment rate has soared to 14.3%. It would be even higher but tens of thousands have migrated abroad. England's unemployment rate is 8.4%, the highest in sixteen years and Spain's has soared to 22.9%.
As Reuter's reports: "Europe's worsening sovereign debt crisis and governments' tough cost-cutting response appear to be driving the 17-nation currency bloc back into recession following the 2008-2009 global financial crisis, while the number of people out of work is rising."
Austerity does not promote growth or job creation. Walker's tools are not working. It is time for a new approach in Wisconsin.
