The lack of specificity in the points and counter-points during and after Gov. Walker’s state of the state speech this week demonstrates that political leaders at all levels of government have few rock solid ideas about how to create jobs in the short run.
The same might apply to journalists and academics who are great at pointing out the scope and problems of joblessness, but are short on pragmatic solutions.
If we have learned nothing about else about job creation – or destruction – we know it is a long term proposition. There is no magic wand; there is not a faucet to turn from off to on; ideology from the left or right is not very helpful.
Let’s take the governor’s speech, what was said and not said, and the ensuing criticisms, and evaluate them from a short and long-term perspective:
• Mining, the centerpiece of governor’s report: At best, most the purported 2800 jobs up and down the supply chain from the Mellen ferrous mine are five years out. The jobs represent about one-half of one percent of the half million people in the state who are unemployed or under-employed.
• An income tax cut: Presumably, the governor means a personal income tax cut from the 7.75% rate put through by former Gov. Jim Doyle. Any cut in the personal rate will help the bulk of Wisconsin corporations that are pass-through entities for tax purposes, meaning taxes are paid at the personal level not the company level. But a cut of, say, a half percent, would not jump start business activity. The benefits would be long term, past even a second term should Walker win one.
• Recruiting from other states: Walker has moved off that strategy, a good thing because (a) it has never worked for Wisconsin for any large numbers, and (b) when it does, it’s a zero sum game between the states and for the nation. As he says, let’s just beat da Bears.
• Entrepreneurship. There is almost complete consensus across the land that innovative startups are one good way to go. Entrepreneurs are the wealth and job creators, the re-inventers of a Midwestern economy badly in need of reinvention. Steve Jobs was more important for the economy than any president. Wisconsin got a head start with the Act 255 tax credits for early stage investors, but it needs to take more bold steps to encourage the positive trends in the state. This, however, is decidedly a long-term commitment. The job tallies from tens and hopefully hundreds of high growth start-ups will accumulate geometrically over time, but it will take a decade or two more to produce big time results. (The 47 startups in the Milwaukee metro area over the last four years now employ more than 500 people.) Walker hinted he will do more on this front, but most of the action is in the hands of entrepreneurs and their investors, with support from universities. The state’s foundations and pension funds could do a lot more. A few have stepped forward in Milwaukee.
• Health costs: The unmentioned elephant in the GOP caucus (pun intended) is soaring health care costs and their dampening effects on the economy. Gov. Walker could do what former Gov. Mitch Daniels of Indiana (he would be president if he had run) did when he installed consumer-driven health care in the public sector in that state. The private sector is making health cost containment through better health a strategic priority. Walker just cost-shifted to public employees; that’s budget reform, but not health care reform. The savings are immediate. The impact is short and long term. Wisconsin could have a competitive advantage over states that don’t figure out this economic stranglehold.
• Workforce training: This is a short-term solution to lower the state’s jobless rate of 6.6%. If all of the state’s 30,000 openings were filled, the rate would drop about a point. There will always be some openings. Filling the gaps in skills clusters in key exporting sectors that drive the economy will turn loose the wealth-creating companies that want to expand.
• Investment in education. The low economy and soaring health costs have cramped and crowded out such investment in Wisconsin for about a decade. New money flowing into the state coffers should be released only as education institutions show a commitment to helping with job creation strategies. The new flexible degree at the UW System that gives credit to experience is an example. The quick-response certificate in the technical college system is another. Walker talks of performance based funding, and no one disagrees with that broad concept. A Be Bold 3 analysis of the whole education fabric of the state is in order. There has been no such blue ribbon, high level, external examination for decades.
• Deregulation. The impact of putting common sense to the myriads of state regulations will be large over the long term. Then initiative sends a short term message, but no one disentanglement from a silly rule makes a huge impact.
The long and short of job creation is that it is mostly a long-term proposition. But adults should be able to deal in both dimensions. Big headlines about month-to-month changes in the job counts are over-wrought.
Walker didn’t back away from his commitment to creating 250,000 in his first four years, despite missing the milestones in his first two years. Nor should he. It’s a worthy goal, even if he misses in his first term.
He is not in this alone; we all play a part in job creation. It may take two terms to get positive momentum. But that’s reality; this is a long-term proposition.
With the right long term policies, job creation could become a reliable process going forward several governors, more of a steady process than a massive turn-around effort.
It took a decade or more for the geniuses on Wall Street and in the nation’s capital to screw things up as badly as they did. It’s going to take at least that long to get the economy fixed.