Amidst ‘distractions,’ what happened to job creation?

Governor Scott Walker

Governor Scott Walker

Job creation was the central debate topic in the just-concluded campaign for governor of Wisconsin, so the question has to be asked: how did that issue fade so fast from the radar screen of the state’s political leaders?

Remember the hoo-ha about not hitting the 250,000 jobs goal in Gov. Scott Walker’s first term?

Yet, the headlines in the aftermath of Gov. Walker’s third decisive win in four years are all about the state budget, accountability in education, reform of the Government Accountability Board, road building, the John Doe process, workforce skill development and right-to-work.

I recently spent a day each at two economic summits, one for the Northeastern Region and one for the state as a whole. The oxygen was pretty thin up there. As for sherpas, there were way more support players in attendance than business people (the job creators) or political leaders, except for Gov. Walker, a speaker at both.

The post-election summits were timed to miss the election fray, but were still timely. Wisconsin has suffered from an endemic, four-decade decline in prosperity relative to other states. It still ranks in the middle of the pack, at best, for economic growth. Its wage rates are 35th — right below Alabama.

The most curious part of the rarefied dialogues was a shift in the strategic agenda from job creation to job filling.

Said Gov. Walker: “The state that gets in front of workforce development will be ahead of the economic development game.” His answer to jobs, jobs, jobs is workforce, workforce, workforce.

There is no question that workforce development ranks right up there next to job creation as a strategic priority for the state, but it has to be a secondary strategy. You can’t fill jobs that aren’t there.

How quickly we forget. It was only five years ago when more than 400,000 Wisconsinites were unemployed or under-employed. It’s still well over 300,000, or more than 10% of the workforce. There are openings, but nowhere near that number. Further, many of the modest gains have been low-pay positions.

That compels a strategic priority on high-pay jobs to restore the viability of the eroded middle class.

It is also important to note that the unemployment rate in Milwaukee is still 7.7% vs. the 5.7% rate in the rest of the state. A realist could say that many of the unemployed are unemployable, hence the need for more workforce development and education accountability. There’s truth there.

A better theory is that if job creation and labor demand were so strong that lots of jobs paid $20 an hour, two things would happen: employers would ramp up training programs to employ the alleged unemployable, and the so-called unemployable would get themselves employable, because the rewards would be there if they did.

Actually, it’s already happening. As job creation numbers get better, people who dropped out of the workforce are re-entering, and employers who whined about not being able to find welders are stepping up to partner with the tech colleges to create new ways of developing welders. Fast track welding boot camps are one example. It’s the marketplace for labor at work.

Oh, and did you notice? As job creation improves, wages are increasing. It’s looking like a 4.5% upward pace of late, up from negative five years ago, 2% two years ago, and 3% a year ago.

Point is: We need to create as many high-wage jobs as possible. New high-pay jobs lift all boats. So why take our foot off that accelerator? It would be like a business that stops selling when its backlog picks up a bit. No smart business person would ever do that, ever. Business people know that the pendulum swings.

Now, where do those jobs come from? From real estate development? Well, no. From poaching from other states? Well no, not on Wisconsin any way. We don’t win recruiting battles – frozen tundra, high taxes, tough union environment – who knows why it doesn’t work here, but it hasn’t worked here for 50 years.

All of our great employers were started here by entrepreneurs. Repeat ALL.

Why can’t we learn that? Why wasn’t that the buzz of the two summits instead of training programs? Wisconsin loses 10,000 college graduates every year, not because of inadequate training programs, but because its job base isn’t robust enough. People move for careers.

What we do know is that all jobs, including high-end jobs, come from young businesses – from entrepreneurs.

And we do know that the market leading companies at the top of various supply chains, the exporters, are all important. We also know that many big companies don’t live forever, so we need new high-growth companies to take their place.

Re the other recent headlines: where does a right-to-work law fit into all this? First, Americans should have the right to join or not join any organization. We are a nation built on individual rights being superior to the rights of the collective.

Second, in regard to economic development, right-to-work for Wisconsin would be more symbolic than impactful. Only 8% of the workers in the private sector are unionized. For most private companies, it’s a non-issue.

Third, in terms of recruiting companies to our shores, it’s also a lesser issue, even though it would makes us competitive with 24 other states. As stated before, we don’t win in that game any way.

Job creation is a long-term proposition, so any improvement in the business climate would be welcomed by business people, even if they won’t do cartwheels over its passage. One way or another, most corporations have moved past the adversarial labor vs. management model. It’s an anachronism in a global world where collaboration is necessary for survival.

In that perspective, Gov. Walker is not inaccurate when he calls right-to-work “a distraction.”

I would add that it is a distraction from a needed strategy of high-growth, high-pay job creation by the best sherpas, the entrepreneurs.

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