Wisconsin Governor Scott Walker got a boost last week from the American Legislative Exchange Council (ALEC) in its annual Rich States, Poor States report. Despite Bureau of Labor Statistics data putting Wisconsin in 44th place for private-sector job creation, ALEC placed the state as 15th in the country in its ranking of economic outlook, giving Walker -- a former ALEC member -- a boost as he lays the groundwork for a re-election campaign and a possible Presidential bid.
The ALEC report ranks the states by "economic outlook," based on factors including the existence of "right to work" anti-union laws, and the rates at which personal and corporate taxes are levied by the state. Wisconsin gains points in the ALEC assessment for having no inheritance tax, the lowest possible minimum wage, and for having a lower than average number of public employees. But ALEC also docks points because, despite Walkers' infamous attack on the right of public-sector workers to organize in Wisconsin, the state has not passed a private-sector "right to work" law.
The report effectively grades states in line with the very policy positions that ALEC promotes through its "model" legislation, including the privatization of public services, the elimination of regulations, and attacks on workers rights.
Even the U.S. Chamber of Commerce Knows WI Has a Jobs Problem
Since Walker took office in 2010, job growth in Wisconsin has taken a nosedive. Wisconsin has consistently lagged behind neighboring states and the nation as a whole in terms of new job creation, a trend that was predicted by Federal Reserve economists shortly after reviewing Walker's 2011-2012 austerity budget. Walker's steep and controversial budget cuts abruptly moved Wisconsin from positive territory into negative territory as the graph below illustrates.
Even the U.S. Chamber of Commerce is cognizant of Wisconsin's dismal jobs record. A recent Chamber of Commerce report placed Wisconsin 44th in the country for overall economic performance, and for short-term job growth between September 2010 and November 2012 it ranked Wisconsin 50th out of 50. The Chamber report didn't place long-term job growth much better either, ranking Wisconsin at 45th out of 50. The report ranked Wisconsin 39th for its "business climate."
Walker was in Iowa this week, raising his profile for a likely Presidential bid in 2016, but before then he has to contend with a gubernatorial re-election battle next year. The ALEC report and Wisconsin's surprising ranking is therefore a timely boost.
Governor Walker was an ALEC member when he was a legislator, beginning in the nineties. Since becoming Governor in 2010, he has signed into law nineteen ALEC-related bills and budget provisions. These include economic measures such as the elimination of the capital gains tax, which is similar in effect to the ALEC "model" "Capital Gains Tax Elimination Act," and Walker included a provision in his first budget to reopen the corporate tax avoidance, or so called "Las Vegas Loophole," which is related to the ALEC "Resolution in Opposition to Mandatory Unitary Combined Reporting."
Criticism of Rich States, Poor States
Good Jobs First and the Iowa Policy Project published a review of the methodology of previous ALEC Rich States, Poor States publications in their November 2012 report, titled Selling Snake Oil to the States: The American Legislative Exchange Council's Flawed Prescriptions for Prosperity. According to the authors, "Rich States, Poor States provides a recipe for economic inequality, wage suppression, and stagnant incomes, and for depriving state and local governments of the revenue needed to maintain the public infrastructure and education systems that are the true foundations of long term economic growth and shared prosperity."
The report argues that ALEC has its states upside down:
"A hard look at the actual data finds that the ALEC-Laffer recommendations not only fail to predict positive results for state economies -- the policies they endorse actually forecast worse state out-comes for job creation and paychecks. That is, states that were rated higher on ALEC's Economic Outlook Ranking in 2007, based on 15 'fiscal and regulatory policy variables,' have actually been doing worse economically in the years since, while the less a state conformed with ALEC policies the better off it was."
Rather than an accurate predictor of economic success, the ALEC rankings can reasonably be seen as a measure of how closely a state is following the ALEC agenda, how the state is performing in driving down taxes, wages and benefits, and in promoting laws that benefit the 1% and place an increasing burden on average working and middle class families.
Walker may not be creating many jobs, but he is doing a fine good job in promoting ALEC's agenda.