Why is it that none of the right wing economic fantasies every actually produce good economic results and often wind up torpedoing the economy (see Kansas as another example)
http://www.salon.com/2015/02/24/scott_walkers_economic_mess_how_worker_wages_were_gutted_in_wisconsin/Scott Walker’s economic mess: How worker wages were gutted in WisconsinIn many respects, the point of Walker’s anti-union crusade was to destroy the electoral muscle of the main opposition to his conservative agenda. But the most important impact of the creeping death of public unions in Wisconsin may be on take-home pay.
The Washington Post didn’t take note of this, but according to the Census Bureau’s American Community Survey,
median household income in Wisconsin is $51,467 a year, nearly $800 below the national average. And it has fallen consistently since the passage of the anti-union law in 2011, despite a small bounce-back nationally in 2013. The Bureau of Economic Analysis puts Wisconsin in the middle of the pack on earnings growth, despite a fairly tight labor market with a headline unemployment rate of 5.2 percent.
This actually undercounts the problem a bit, because it doesn’t cover total compensation. For example, in the wake of the anti-union law, public employees lost the equivalent of 8-10 percent in take-home pay because of increased contributions to healthcare and pension benefits.
Moreover, the meager earnings growth that has come to Wisconsin has mostly gone to the top 1 percent of earners. Another Wisconsin Budget Project report shows that the state hit a record share of income going to the very top in 2012, a year after passage of the anti-union law. That doesn’t include the $2 billion in tax cuts Walker initiated in his first term, which went disproportionately to the highest wage earners. (This is precisely the agenda Walker is likely to run on in his presidential campaign.)The trends mirror those in the country at large, where labor has similarly stumbled. Real hourly wages fell for almost everyone nationwide in 2014, according to the Economic Policy Institute, except for the low-wage sector, bolstered by minimum wage increases at the state and local level. Wisconsin has not joined that movement, with its minimum wage still consistent with the federal floor, at $7.25 an hour.
You can argue that squashing unions in Wisconsin had no bearing on income stagnation in the state. But you would have to ignore how the labor market works. If public employees cannot bargain for wages and benefits, they stay depressed. And employers who compete for well-educated workers, like those who take jobs in teaching and government administration, similarly don’t have to increase wages to attract their services. Blunting worker power in one sector has ripple effects everywhere else; as Larry Mishel wrote in the New York Times yesterday, “the erosion of collective bargaining is the single largest factor suppressing wage growth for middle-wage workers over the last few decades.” And Wisconsin provides a salient example of that.Collective worker action was behind the biggest wage announcement in the past several years: Wal-Mart’s move to increase entry-level pay to $9 an hour this year, and $10 an hour by 2016. This will act like Wisconsin’s wage depression in reverse: retailers will be forced to compete with Wal-Mart’s slightly higher wages, and the entire wage floor will push upward. And while an improving economy, tighter labor markets and the need to retain personnel may have factored into Wal-Mart’s decision, you cannot deny the role of the United Food and Commercial Workers’ campaign to organize Wal-Mart workers. “This is not an act of corporate benevolence,” said Marc Perrone, president of UFCW, in a statement on the Wal-Mart announcement. “Walmart is responding directly to calls from workers and their allies to pay a living wage.”
In fact, the last time Wal-Mart faced significant labor unrest in 2006, it raised wages as a direct result, according to Federal Reserve minutes. It, like most businesses, makes changes that benefit workers only when its reputation is threatened and poor publicity ensues. That means that worker voices play a powerful role in wage growth.
Scott Walker has taken that voice away from public unions, and effectively the entire Wisconsin labor movement, which finds itself crippled. That has real consequences for middle-class wages. Since Walker wants to bring this policy menu to the rest of the country in 2016, people on Main Streets outside of Wisconsin should take note.
