A Tale of Two States

“It’s the economy stupid.”

James Carville, aide to Bill Clinton in the 1992 presidential race.

In the Wisconsin election for governor the state of the economy is a big issue. Governor Scott Walker claims to be improving the state’s economy and making Wisconsin “open for business” with his conservative policies. But prosperity has not trickled down to many working people or to many areas of the state. Minnesota took a different path and the results have been better. Who gets elected does make a difference in the lives of people. Wisconsin voters should take note of these differences.

Wisconsin and Minnesota are very similar in many ways beyond loving football and beer. They have similar size populations, demographics, and climates. They have a similar history and ethnic background. In the past they had similar politics and were both considered liberal states with clean government and family supporting policies.

But this changed in 2010. The Badger State elected Republican Scott Walker governor and gave control of the legislature to Republicans. The Gopher State made Democrat Mark Dayton governor and in 2012 elected a Democratic legislature. Since then there has been a stark difference in economic policies between the two states.

Wisconsin under Walker has been a laboratory for Republican free market, trickle-down economic policies. Walker cut taxes by $4.7 billion mostly for the wealthy and large businesses. He promoted economic growth with tax breaks and cutting of business regulations. Mining laws were re-written to favor one company (but the proposed mine still did not happen). The legislature delivered severe cuts to the state budget. Walker’s budget cut $782 million from K-12 education, the largest cut in the state’s history.

The university system was cut $300 million. Other social services, healthcare, and environmental programs were cut. Teachers and public employers were vilified and required to pay more for their healthcare and retirement. State employees were stripped of their collective bargaining rights. But the Milwaukee Bucks got a $200 million loan to build a stadium. One out-of-state multinational company has been given tax breaks and incentives worth billions of dollars to locate a manufacturing plant in Wisconsin.

In contrast Minnesota under Governor Dayton followed an agenda of investing in people, increased school funding, promoted public healthcare, and raising taxes on the well off. Minnesota did not have contentious battles over public employees bargaining rights. Minnesota did not demonize teachers or attack the university system.

Dayton and the Democratic legislature balanced the state budget by raising taxes on individuals making over $250,000, raised corporate taxes, closed tax loopholes, and increased tobacco taxes. They cut taxes for middle income earners, increased tax credits for renters, lowered property taxes, and capped local taxes. They raised the minimum wage to $9.50 per hour. They increased spending on public education by $485 million and college education by $250 million.

What is the results of these different policies and priorities? Many news stories have documented that by a number of measures, Wisconsin hasn’t fared as well as Minnesota. Wisconsin’s job growth has been tepid and among the worst in the region. Income growth is one of the worst in the country. Wisconsin has a higher unemployment rate than Minnesota. Despite the severe cuts to public services the Wisconsin state budget still has deficit problems.

Healthcare policy is illustrative of the contrast between philosophies and results. Walker opposed the Affordable Care Act, refused the federal Medicaid expansion funding, and cut Badger Care, throwing 85,000 people off the program. Dayton and the Democratic legislature embraced and promoted the Affordable Care Act and took the Medicaid expansion funding. In Minnesota the number of uninsured people fell 41% and private health insurance costs are significantly lower than Wisconsin. Wisconsin’s percentage of uninsured is twice Minnesota’s.

Other indicators of well-being tell the same story. Wisconsin’s job market remains tough and worker wages are stagnant. According to the Center on Wisconsin Strategy (COWS) the wage of Wisconsin’s median worker is 92¢ per hour more today than it was in 1979 (adjusted for inflation). This wage stagnation occurs with workers that are better educated and have higher productivity than in 1979.

COWS also says Wisconsin ranks 33rd in income inequality. In 2017 the top 1% made19 times the average annual income of $48,000. Over the last 40 years, Wisconsin’s richest residents have experienced dramatic increases in income, while the rest of the state’s residents have experienced little to no income growth.

The proportion of people living in poverty in Wisconsin increased to 13.3% in 2014, the last year of data availability. Poverty is a problem everywhere in America but Minnesota has a lower rate (11.5%) and this did not increase from 2013 to 2014. The difference in child poverty rates is even more striking. The proportion of Wisconsinites under age 18 living in poverty has risen from 15.8% to 18.5%. The increase in child poverty in Wisconsin is twice as large as the increase in Minnesota.

Ironically Walker’s “open for business” philosophy isn’t even working for the business community. The Milwaukee Journal Sentinel reports Wisconsin is 50th in the number of new business start-ups for the third year in a row! The same article points out that in 2016 Wisconsin received two-tenths of 1% of national venture capital. Minnesota, with an economy only 8% larger, received four times as much venture capital. Wisconsin is again lagging behind other states.

University of Minnesota political scientist Lawrence Jacobs sums up the comparison,

“The lesson from the upper Midwest is that rigid anti-tax dogma fails to deliver a convincing optimistic vision that widens economic opportunity and security. The excesses of liberalism may lurk, but Minnesota is building a modern progressivism that plows a hopeful path.”

The contrast between Minnesota and Wisconsin shows that the Republican ideologically driven, trickle-down economics doesn’t work for most citizens. In November Wisconsin needs to change direction. Wisconsin voters need to follow Minnesota’s lead and return to their people first, progressive roots.