Month: April 2019

Report: Increasing the Minimum Wage to $15 would Imperil 350,000 Wisconsin Jobs

Roughly 350,000 Wisconsin workers would be at risk of losing their jobs as a result of increasing the minimum wage to $15 an hour, according to a new policy brief published by the Badger Institute.

“The High Cost of Increasing the Minimum Wage in Wisconsin to $15,” authored by economists and Badger Institute Visiting Fellows Ike Brannon and Andrew Hanson, examines the economic impact in Wisconsin if lawmakers were to mandate a 107% increase in the minimum wage as Gov. Tony Evers and others have recommended.

The 350,000 workers who would lose their jobs represent nearly one-third of all workers currently earning a wage below the proposed new minimum. Half of the job loss would come from the bottom 10% of the income distribution, and 90% would come from the bottom quartile of the income distribution.

“Using a blunt instrument like the minimum wage to reduce poverty is both penny foolish and pound foolish,” said Brannon. “Greatly increasing the minimum wage could end up costing a couple hundred thousand workers their jobs, most of whom would be young and have relatively little experience in the workforce. If we want to help the working poor without reducing their employment, improving the Earned Income Tax Credit makes much more sense.”

“We estimate that up to half of all workers in food preparation and service currently earning below $15 an hour could potentially lose their jobs,” Hanson said. “But there are a wide variety of other occupations in the state that the data tell us would see a dramatic decline in employment, including maintenance, personal care and service, building and grounds maintenance, office and administrative support, sales, production, and transportation and material-moving industries.”

The authors conclude that a minimum wage increase to $15 an hour would also lead to cutbacks in hours, reduced benefits and more difficulty in securing employment for workers who are younger, possess lower skills or have blemishes on their records.

Speaker Vos Supports Increasing Gas Tax, but says that’s not the Entire Answer

While he believes it should be the only part of the solution, Assembly Speaker Robin Vos, R-Rochester, says he is in favor of increasing the gas tax to pay for road improvements.

“I will say, for our roads, I support raising the gas tax,” Vos said at a budget listening session in Union Grove on Thursday. “I think we need to raise revenue. I support tolling; I support any revenue option that says we’re going to pay cash instead of borrowing.”

You are not going to save your way out of it; you are not going to be able to borrow your way out,” Vos said. “The only way that we can (pay for roads) is to figure out how do we continue to find efficiencies, and the (Department of Transportation) has done an excellent job of finding efficiencies.”

“I think (the gas tax) has to be part of the equation, but I’m just not so sure it’s the entire answer,” Vos said. “But for the short term we’ve got to have some way to do it until we could do, perhaps, tolling, or determine some kind of a way to charge electric vehicles more, because they’re not paying anything for the roads.”

While the use of electric vehicles continues to increase, Vos said the state needs to consider fees for electric vehicles that don’t pay at the pump. Vos said some estimates claim as many as a third of cars on the road in 2030 will be electric.

“If one-third of the cars pay nothing toward for the maintenance of those roads, we’re going to have a huge crisis that we can’t pay for,” Vos said. “Because you can’t just pay a gas tax.”

U.S. Economy Grows by 3.2% in 1st Quarter, Topping Expectations

The U.S. economy grew at a faster pace than expected in the first quarter and posted its best growth to start a year in six years.

First-quarter GDP expanded by 3.2% in the first quarter, the Bureau of Economic Analysis said in its initial read of the economy for that period. Economists polled by Dow Jones expected the U.S. economy increased by 2.5% in the first quarter. It was the first time since 2013 that first-quarter GDP topped 3%.

Exports rose 3.7% in the first quarter, while imports decreased by 3.7%. Economic growth also got a lift from strong investments in intellectual property products. Those investments expanded by 8.6%.

Disposable personal income increased by 3%, while prices increased by 1.3% when excluding food and energy. Overall prices climbed by 0.8% in the first quarter.

Friday’s data was the first look at how the economy fared during the longest government shutdown in history. The federal government ceased operations for 35 days between late December and Jan. 25 amid a standoff between the Trump administration and congressional leaders over funding for a wall along the U.S.-Mexico border.

Investors were closely watching out for the report as they looked for more confirmation that a recession may not be in the cards over the short term.

The report “helps offset fears of slowing global growth,” said Alec Young, managing director of global market research at FTSE Russell. “At a time of lingering U.S.-Chinese trade uncertainty and weak economic data everywhere from Germany to Korea to Japan, strong U.S. data acts as an insurance policy against further global economic weakness. And with inflation still subdued, it’s too early to start worrying about Fed rate hikes again.”

Elections Commission Certifies Hagedorn’s Supreme Court Victory

The state Elections Commission is certifying Brian Hagedorn’s victory over Lisa Neubauer in the race for an open state Supreme Court seat.

Unofficial returns from the April 2 election showed Hagedorn ahead of Neubauer by 5,962 votes. Neubauer had mulled a recount but ultimately decided against it and conceded defeat April 10.

The commission released a final tally Wednesday that shows Hagedorn beat her by 5,981 votes.

Hagedorn and Neubauer were vying to replace retiring liberal Justice Shirley Abrahamson, who is battling cancer.

Hagedorn will serve a 10-year term. His win means the court’s conservative majority will grow from 4-3 to 5-2 when he takes the seat in August.

Ballpark Estimate Pegs Wisconsin Bridge Repairs at $1.4 Billion

There are 14,275 bridges in Wisconsin – 1,054, or 7.4 percent, are classified as being structurally deficient, which means that one of their key elements is in poor or worse condition. That’s up from 1,043 in 2014, according to the American Road & Transportation Builders Association’s (ARTBA) 2019 Bridge Profile.

Wisconsin’s Department of Transportation has identified 1,955 bridges in need of repair at an estimated cost of $1.4 billion, according to ARTBA’s report. That’s down from 1,984 in 2014.

“Wisconsin has an ongoing, rigorous inspection and maintenance program designed to spot issues well before they turn into major public safety concerns. The net change of 11 bridges in this category means there are additional structures in the inventory that now receive closer attention – beyond the standard inspection schedule – to help prioritize any immediate needs and long-term solutions.

“Falling into this category does not mean unsafe or ‘undriveable.’ The department maintains current structural evaluations to ensure all bridges can safely accommodate the traveling public,” Kristin McHugh, director of public affairs for the Wisconsin Department of Transportation (DOT), said.

McHugh cautioned against inferring too much from the $1.4 billion estimate for bridge repairs, which Wisconsin DOT provides to the Federal Highway Administration as part of the National Bridge Inventory program. She explained that the estimate is a result of using “a prescribed replacement formula designed to give a ballpark idea of the financial impact of replacement.

“While the replacement calculations are accurate in that context, they would be considered hypothetical for planning and programming purposes,” McHugh said. “This is because the department would typically explore a host of much less costly rehabilitation and repair options, where viable, to extend the useful life of infrastructure and enhance the return on taxpayer investment.”


Social Security won’t be able to Fund Full Payouts by 2035

The Social Security retirement program will be unable to pay full benefits by 2035, according to a new report issued Monday by the Trump administration.

Without reforms, the report says, payments to beneficiaries would have to be cut by 25 percent starting in 2035 to keep the program solvent.

The report said the program’s roughly $3 trillion in reserves will be depleted by 2035.

The government will have to tap into those reserves beginning in 2020, when the costs of the program will begin exceeding the income it receives from taxes.

The trust fund for Medicare that pays for hospital care will run out of money by 2026, an unchanged prediction from last year’s report.

Medicare’s overall costs are expected to rise to 5.9 percent of the gross domestic product by 2038, up from 3.7 percent in 2018.

“Every day that passes, the problem gets bigger and the solutions become more difficult to implement,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a non-partisan advocacy group.

A 16-year runway, she noted, means that today’s 51-year-olds will not be able to collect their full benefits unless there is action.

She also had a message for Democrats who are calling to expand the program’s benefits.

“Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs,” she said.

Study: Wisconsin’s Migration Patterns Threaten Workforce

Wisconsin has seen a steep decline in net migration of families with children and this could be problematic for efforts to replace the state’s aging workforce, according to a new report.

The Wisconsin Counties Association’s nonpartisan research arm, Forward Analytics, recently released a study that raises concerns about the state’s migration patterns. The report claims that Wisconsin doesn’t have enough young people to take over jobs from baby boomers set to retire in the coming 10 to 15 years, Wisconsin Public Radio reported.

“We’ve got to figure out how to turn that around and we’ve got to do it fairly quickly because baby boomers are nearing retirement,” said Dale Knapp, Forward Analytics’ research director.

The state’s migration of children dropped below 10,000 from 2010 to 2015. Before 2010, Wisconsin added 40,000 children from outside the state over a five-year period.

Wisconsin’s birthrate has also declined to its lowest in four decades.

Wisconsin was successfully able to lure people in their 30s to 50s around 1990 to make up for the exodus of younger residents, many of whom were college graduates leaving the state, he said.

Knapp said the issue is that states across the country are facing an aging population and declining birthrate.

“So we have to figure out what makes us different, what makes us more attractive than Iowa, Illinois, Indiana or Minnesota. So we can attract those workers,” Knapp said. “Our long-term economy really depends on it.”

Wisconsin’s Tax Freedom Day Is April 19th

The Badger State’s Tax Freedom Day is April 19th this year, according to the Tax Foundation. 

Tax Freedom Day is the day in each year when taxpayers will have earned enough money to pay off their tax bills. Wisconsin’s Tax Freedom Day is three days after the national Tax Freedom Day, which occurred on April 16th this year.

Both the national and Wisconsin measures stayed on the same day compared to last year after jumping significantly earlier in the prior year, thanks in large part to the sweeping Tax Cuts and Jobs Act. 

The Tax Foundation calculates the annual measure to remind the public just how much we spend on various government services every year. In 2019, Americans will spend more money on taxes than on housing, food, and clothing combined. 

In the race between states, Wisconsin is behind the pack. The Badger State’s Tax Freedom Day is ranked 35th among the states. Alaska’s tax burden is the smallest, with taxpayers there earning their average tax bill by March 25. New York and Washington, DC are tied for last place at May 3. 

As the largest share of the average tax burden, income taxes take the longest to pay off, on average. Wisconsin has among the highest individual income tax burdens in the country. 


Governors wants to change Foxconn Contract to Reflect Scaled Back Project

Gov. Tony Evers is looking to renegotiate portions of Wisconsin’s contract with Foxconn Technology Group, saying the company has scaled back its plans and is unlikely to hire 13,000 people in the near future.

“Clearly the deal that was struck is no longer in play and we will be working with individuals at Foxconn and of course with WEDC to figure out how a new set of parameters should be negotiated,” Evers said at a Capitol meeting with reporters. The governor’s office provided BizTimes a transcript of the remarks.

Evers did not say how many jobs he expects Foxconn to create, but he did say 13,000 is “an unreal expectation” and discussed the project in terms of 1,300 to 2,000 jobs.

Foxconn did not immediately respond to requests for comment on the governor’s remarks.

Evers said it was too early to say what elements of the contract could be renegotiated.

“That’s premature to say that but all we know is that the present contract deals with a situation that no longer exists so it’s our goal to make sure that taxpayers are protected and environmental standards are protected and we believe that we need to take a look at that contract and see if it needs to be downsized as a result,” Evers said.

100 Days into His Tenure, Governor Evers Draws Line on Budget

One hundred days into his tenure, Democratic Gov. Tony Evers has drawn a line in the sand with Republican lawmakers on what the next state budget must include.

“We have to make sure we have affordable and accessible health care, we have to make sure we have increases in resources for our education system, and fix the damn roads,” Evers said in an interview with the Wisconsin State Journal. “I would not be accepting of a budget that didn’t make significant progress on all three of those.”

Still, Evers said he thinks the likelihood is small that he will veto an entire budget passed by lawmakers.