History, Corporate Tax Incentives, and the State Constitutional Gift Clause collide with Scott Walker's economic theories.

As it turns out, history had already determined that state handouts to attract and keep businesses was a horrible idea, so bad in fact many states amended their Constitutions to prevent those mistakes from ever happening again in the future.  

After reading the Cap Times article "Where to now with Foxconn? It won’t leave Wisconsin, but it won't build what it promised," where every paragraph revealed another strange twist or failure, I had to look up why Scott Walker and his band of plundering Republicans pirates liked the idea of state corporate handouts so much. Not surprisingly, their actions weren't based on anything I found in the real world, it was simply pure ideological theory. Look at how much money we're losing, and how few jobs they're creating...

That's what $590 million buy us? 

Let's do a little research our Republican majority didn't bother to do with Foxconn or the manufacturing tax credit:

Citylab: Timothy Bartik of the W.E. Upjohn Institute for Employment Research, who is perhaps the leading student of incentives and economic development, has a new report that provides the most detailed assessment of incentives across states and their effects on economic development. His database contributes a useful tool for state and local economic developers and others to take a hard look at incentives, what they cost, and whether they are worth it or not ... thanks to Bartik’s tool, you don’t have to take my word for it.

“Incentives do not have a large correlation with a state’s current or past unemployment or income levels or with future economic growth,” Bartik writes. Incentives are not the result of economic or fiscal conditions but reflect state politics and past practices. In other words, some states like to give away more money to business than others—for no obvious economic reasons.

That would be the manufacturers tax credit, resulting in no noticeable new job creation and a loss of much needed state tax revenue:

State Incentives Negative Impact: Research has been telling us this for years, it's only Republicans who believe in tax cut magic:

A 2002 study of some 350 companies that received incentives found a negative effect on their ability to create jobs. Companies that received incentives expanded more slowly than others, and the overall effect of incentives was a reduction of 10.5 jobs per establishment.
My own research published on this site found virtually no association between business incentives and any measure of economic performance, including wages, incomes, and unemployment. As I wrote here in 2012:

Companies typically select locations based on factors such as workforce, proximity to markets, and access to qualified suppliers, and then pit jurisdictions against one another to extract tax benefits and other incentives. 

A 2011 Lincoln Institute of Land Policy study found property tax incentives to be counterproductive, being all too frequently given to companies that would have chosen the same location anyway. So instead of creating new jobs or spurring employment, the main effect of incentives is simply to deplete a community's tax base. Since poorer states and communities are more likely to use incentives in the first place, the end result is to undermine the resources and revenues of the places that can least afford it.

Bartik's tool can also be used his to assess the savings that would come from eliminating or reforming incentives. For example, limiting incentives to just one year would reduce the overall cost of incentives by roughly two-thirds. Getting rid of refundability—the ability of businesses to receive incentives even if they have no state corporate income tax liability—would reduce the costs of incentives by a third.

There are other reform idea's:

New Republic: There are better ways to jump-start local economies. Aaron K. Chatterji of Duke’s Fuqua School of Business has proposed creating a Main Street Fund to support states that invest in choices that are smarter than incentives. Those could be seed money for startups, services to help businesses scale up, or a focus on attracting particular kinds of businesses, as Amy Liu of the Brookings Institution has suggested. But first, cities and states would have to cease offering big bucks to big business.

Walker's Foxconn Dream Extreme defied Historical Warnings embedded in our State Constitution: 

The Hill: State officials, who pledged big subsidies to Foxconn to land the project, are realizing they struck a bad bargain. The bitter irony is that the entire situation might have been avoided if Wisconsin policymakers had paid heed to sensible constraints embedded in the state constitution's "gift clause," which says that, with some exceptions, "the credit of the state shall never be given, or loaned, in aid of any individual, association or corporation." The state can "contract public debt and pledges to the payment" of its credit for "public purposes." Most states have similar gift clauses, passed to ... restrict the type of public-private partnerships that lead to the government risking money for the private benefit of a corporation.

History Repeats itself...or, living in the past (moving forward?):

Many states added gift clauses to their constitutions in the mid-to-late 19th century. The impetus for these clauses stemmed from the states' bad experiences in using their resources to promote private economic development. In the early 19th century, many state governments began borrowing funds, supplying working capital or issuing bonds in support of transportation corporations. This led to a rat race between state governments, as officials competed to make bigger and bigger promises to companies to lure business to their states.

As Rutgers University professor G. Alan Tarr has described it: "Particularly influential in promoting the states' often-reckless promotional efforts were the hope of economic windfalls ... as other states courted prosperity with speculative ventures." Predictably, the bidding war, using public resources, led to ruin. In 1837, nine states defaulted on their debts, leading officials to question their methods of promoting economic development. As a result, many states adopted gift clauses to prevent the problems associated with promising state resources to private companies. One of those states was Wisconsin, which included its gift clause in the original 1848 constitution.

...but wait...

Unfortunately, since 1848, Wisconsin's gift clause has been weakened. It was amended to allow gifts or loans for "public purposes." Wisconsin courts have interpreted "public purpose" broadly, deferring to the legislature's determination of what is or is not a public purpose. The result is a clause that has no meaning and provides no limits on public spending.

Walker still waiting for Manufacturing Renaissance, which ain't happening!

I once wrote back in August of 2015: "Walker is stuck in the past, working on a manufacturing renaissance in Wisconsin. In fact, Walker is attacking, vilifying, and stopping emerging industries he feels aren't part of the Republican Party platform, like wind, solar and mass transit."

So Scott Walker decided to put out this braggadocious tweet thinking this would cinch his reelection:

Look, "#2" would be great if we were talking about a large number of jobs, with the promise of even more jobs to come in a growing industry:

In March of 2017, WPR reported that Wisconsin lost "4,000 Jobs in 12-Month Period Ending In September 2016. A total of 27 states lost manufacturing jobs over the same span, and so did the national economy:"

University Michigan Labor Economist Don Grimes: "No political leader if they had looked at the data and understand what's going on, should ever bet their future on manufacturing job growth. Because it's not going to happen."  

But wait, there's more: Walker also said this about the weak manufacturing jobs numbers, that incredibly, makes the manufacturing tax credit even more irrelevant:

Gov. Scott Walker said fewer manufacturing jobs might not be such a bad thing for Wisconsin, as long as wages are increasing.

"It's not just how many jobs — it's are those jobs paying at a significant level. If we see wages go up in manufacturing, to me, that's my ultimate goal. Overall, it’s just a different type of manufacturing – you’re going to see more and more automation. You can have successful manufacturing companies that don’t necessarily match all those (previous) numbers."

You gotta wonder who Walker is listening too:

Check out the 6 reasons by the manufacturing tax credit should be deep-sixed here, from the Wisconsin Budget Project. I'm not done piling on either...

Urban Milwaukee: The Manufacturing and Agriculture Tax Credit reflects the danger of letting nostalgia for the past drive economic policy, of succumbing to the hope that we can return to when manufacturing drove the Wisconsin economy. While it is important not to write off manufacturing, it is also a mistake to expect a return to the days of well-paid, but low-skilled and highly repetitious mass manufacturing jobs. Those jobs are either being automated away or migrating to nations with much lower labor costs.

In its fixation on manufacturing jobs, Wisconsin runs the danger of neglecting the investments needed to build a new economy. It blocks serious planning for what comes next. Ending the manufacturing tax credit would free up roughly $300 million that could be directed to more productive uses.

Even Trump's former National Economic Council director Gary Cohen knows the basics, it's all about the service economy now. That's why we need a minimum wage hike now. Besides tariffs, people are leaving manufacturing:

Cohen: "We create jobs through services...the big increase is we saw more need for workers in business services...not manufacturing. In fact, we saw more voluntary leavers from the manufacturing industry, because as the job market tightens, people will volentarily leave the manufacturing industry and go into the service industry." 

Today service employment has grown to around 130 million, while goods producers have been stuck at 20 million for the past 80 years.

Finally, this from Michael J. Hicks, professor of economics and the director of the Center for Business and Economic Research at Ball State University:

MSN: Over the past 50 years, American jobs have steadily moved away from factories, mimicking the shift from farm to factory in the 50 years before that. The cause of each phenomenon was largely the same: technology, automation and the associated productivity growth meant we needed fewer workers to produce even more goods.

The causal factor in the decline of many Midwest places was simply dogged, stubborn, almost prideful ignorance about century-long changes to the world economy ... it has mistakenly convinced millions of Midwesterners that factory jobs may once again be plentiful. They won’t; even as manufacturing production will continue to expand, employment will not.

Peak manufacturing employment in the Midwest is nearly five decades behind us, when Chinese and Mexican exports were trivial. Yet far too many communities continued to pursue “jobs attraction” policies that failed them since the 1960s.

Nationally, manufacturing employment growth has slowed since April, and here in Indiana, it dipped into negative territory for two consecutive months. The manufacturing portions of the Fed’s Midwest economic index have been negative for four months. To be clear, the worst is yet to come as both tariffs and their lagging effects will plague us well into 2019.

And, in an underappreciated farewell speech, President Obama made it quite plain “. . . the next wave of economic dislocation won’t come from overseas. It will come from the relentless pace of automation that makes many good, middle-class jobs obsolete.” Like him or not, that statement is as true and obvious as the rising sun. 

Ignoring almost the whole of those truths, today we pursue a trade war. It is ironic that the very places that ignored the economic changes of the past half-century will be the first to feel the spreading pain of this bad medicine. 

Scott Walker's Bumbling Economy and Slow Job Growth, and he had the nerve to criticize Obama?

I once wrote: "Scott Walker is stuck in the past, working on a manufacturing renaissance in Wisconsin. In fact, Walker is attacking, vilifying and stopping emerging industries he feels aren't part of the Republican Party platform, like wind, solar and mass transit." 

Well, now we're feeling it, which is just in time to give Walker four more years? Seriously? Walker was so sure about his vision of a manufacturing-mecca-in-the-Midwest, that he put all of his eggs in one tax cut basket:

The Manufacturers and Agricultural Production Tax Credit will reduce corporate tax liability for manufacturers to 0.4 percent from 7.9 percent by 2017.

Failed!!! So what did the manufacturers tax cut give back to Wisconsin?

Wisconsin added just 11,590 private sector jobs in 2016, good for a growth rate of 0.5 percent. Those numbers mark the slowest job growth of any year since Gov. Scott Walker took office. 

Contributing to the slower growth in 2016 was a decline in manufacturing jobs. Wisconsin suffered a loss of 3,776 jobs in the state's second-largest industry.

Tim Smeeding, an economist at UW-Madison who noted 2016's flat job growth in the Wisconsin Poverty Report released earlier this week, said, "Manufacturing employment has been dropping in this country for 40 years. Other jobs in other industries - there aren't enough startups - there's not enough going on."

Walker's laser like focus on manufacturing, encouraged by the lobbyist at Wisconsin Manufacturing and Commerce, owns this collapsing job market. In the report below by WKOW's Greg Neumann, Walker offered up this distraction:

"Our biggest challenge isn't creating jobs, it's finding people to fill them," wrote Tom Evenson in a statement. "Wisconsin’s unemployment rate is 3.2%, the best it’s been since 2000 ... We’ve seen a strong ramp up in private sector job growth so far in 2017."

As anyone knows, since time began, there has always be a lot of jobs that go unfilled. So to focus on the impossible task of filling those jobs, instead of creating new jobs in emerging industries, you get the lowest job growth numbers in Walker's six years, .05!!!



And this didn't help either; out migration of labor:

Walker has ignored the biggest engine of job creation, small and medium businesses under 500 employees. And in today's economy, that means venture capital for startups, many of which are in the tech industry. WKOW's Greg Nuemann explained:



Here's an even more in-depth look (4:30 min.) at the need for venture capital in Wisconsin:



Gig Economy...does Scott Walker even know what it is? He should as governor. Yahoo Finance talked about it in the video clip below, and Techtarget defined it below that:

A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.

A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors ... this digital age, the workforce is increasingly mobile and work can increasingly be done from anywhere, so that job and location are decoupled. That means that freelancers can select among temporary jobs and projects around the world, while employers can select the best individuals for specific projects from a larger pool than that available in any given area ... financial pressures on businesses leading to further staff reductions and the entrance of the Milennial generation into the workforce ... businesses save resources in terms of benefits, office space and training. They also have the ability to contract with experts for specific projects who might be too high-priced to maintain on staff.

Republican Opposition to rebuilding U.S. Infrastructure is Destroying Manufacturing: Ironically, Republican policies are making Walker look like an even bigger fool. 

As the Economic Policy Institute's Robert Scott advises:

Taken together, steps to eliminate trade deficits (by ending currency manipulation and unfair trade) and rebuild U.S. infrastructure could easily generate sufficient demand for manufactured products to return most or all of the 5 million manufacturing jobs lost between 2000 and 2014. Growing trade deficits and the shortfall in demand caused by the Great Recession, and not productivity growth, are the major causes of manufacturing job loss in this period.

Manufacturing and Coal Renaissance??? It almost seems like Walker is longing for the days of big manufacturing plants pumping out billowing clouds of pollution from their towering smoke stacks. Take Walker lap dog AG Brad Schimel's editorial defending the dying coal industry as a way to save manufacturing...well, it pretty much says it all:

As one of the top manufacturing states in the country, Wisconsin has much to lose if the Obama administration succeeds in its plan to destroy the viability of clean-coal electric generation. Manufacturing jobs in our state depends on affordable and reliable electric power.

 If coal is so cheap...? 

Electricity rates paid by businesses and residents of Wisconsin now rank highest among eight Midwest states.

CEO dupe Scott Walker can't stop the job losses.

Over and over again, job layoff announcements have been announced and no one seems to be around to add them up or point them out. Is it another Scott Walker failure? His big selling point was making the state a great place to do business. But nothing has change, and the bloodletting continues.

I tried to do search of all the recent stories, but time has already swept most of those stories into a forgotten archive somewhere.

 So here's the latest:

Old National Bancorp has notified state officials it plans to eliminate 140 full-time jobs, almost all of them in Madison ... Most of the positions will terminate in September.

Caterpillar Inc. said it is moving engineering and technology jobs from its mining equipment division in South Milwaukee to Tucson, Ariz. … South Milwaukee Mayor Erik Brooks said the company told him 10 to 15 jobs from his city will be moved to Arizona this year and approximately 200 jobs could be moved over the next five to seven years … the bulk of the transfers will take place in 2018.
 Caterpillar has laid off hundreds of employees in the Milwaukee area and now employs about 240 at its manufacturing plant in South Milwaukee, down from 800 a few years ago.

As always, Arizona Republicans found a way to help the supposed free market work its magic…

Some have speculated that Arizona offered Caterpillar more than $50 million in incentives in exchange for the jobs. Caterpillar didn't reach out to Wisconsin or Milwaukee officials for assistance in keeping the jobs here.

Yes, CEO's are saying the business climate great, but they're not lifting a finger to help. Even after Scott Walker’s gift of lax environmental regulations for mining, Caterpillar is still leaving.

Walker's corporate welfare to biggest donors ignores the real job creators, sole proprietors and small businesses.

The Republicans have big problem; owing their political careers to big monied interests.

Besides consumer demand, the real job creators can't afford Scott Walker's or the GOP's attention, like sole proprietors or very small business with only a few employees.

And that's why Scott Walker and his band of plundering Republican pirates are last in business startups and a disaster at job creation. It's all about politics and ideology:

Economist Joe Stiglitz points out "a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity."

He says the only cure is an increase in aggregate demand, far-reaching redistribution of income and deep reform of our financial system. The obstacles to this cure, he writes, "are not rooted in economics, but in politics and ideology."

Despite Democratic efforts to focus on small business startups, no one ever took them seriously.

But a new study backs up their efforts, and highlights how everything the GOP and Walker's WEDC have done in the last 5 years is wrong. Cap Times:

UW study: Startups driving job growth, but policies favor big business: A couple of University of Wisconsin-Extension economics researchers have a message for the state: It’s the startups, stupid.

Tessa Conroy and Steven Deller recently completed a study showing that Wisconsin job growth is fueled by newer, smaller businesses. But the report says state policies tend to boost larger, more established businesses. “Given the importance of new startups to job creation, the relatively low ranking for Wisconsin helps us better understand why Wisconsin’s recovery from the Great Recession has been one of the slowest in the U.S.,” the authors write.

That might help explain why job growth in Wisconsin lags ... 7.6 percent for the state versus 11.2 percent for the U.S. over the past five years.

In Wisconsin, policymakers often blame dismal job numbers on slowdowns in the manufacturing sector or the decline of the paper industry. Their findings showed that newer, smaller businesses rule. And without new startups, according to the study, Wisconsin would be “experiencing a significant job loss” ... nearly 50 percent of job creation in Wisconsin is done by businesses between 0 and 5 years old, about half of them from businesses less than a year old, and which have few employees.

To the chagrin of Republicans, these small businesses can't afford to stuff their campaign coffers.

And the performance by Wisconsin startups is fairly lackluster compared to the rest of the country. For jobs created from newly birthed startups in 2012 — the most recent year for which data was available — Wisconsin ranked 47th among the lower 48 states.

“In Wisconsin, and across the nation, new business startups are key to job creation ... Equally important is the survival rate of those new startups. The question is: Can Wisconsin craft policies that encourage new business startups and support them in the key first three to five years of operation?”

There are jobs, and there are potential jobs. The latter often come in the form of the state’s non-employer businesses, which have increased in number by 25 percent since 2000, accounting for 71 percent of total businesses in 2013. These businesses, the smallest businesses in the state, are concentrated in non-farm agriculture, fishing, hunting, real estate, the arts and entertainment. They don't have employees, but they generate economic activity, and if they grow can lead to hiring employees. But again, according to the report, Wisconsin lags both the U.S. and neighboring states in the creation of non-employer businesses.

And from all indication, Madison is strong on startups:

In the Madison area ... jobs created from new startups increased from 10 percent of the state total to 12 percent from 1977 to 2013. “This growing importance of ‘entrepreneurship’ is something that economists have known about for years, but policies still tend to favor larger established (older) businesses.”

He points to Wisconsin Economic Development Corp. policies that favor larger manufacturing firms over smaller startups ... a WEDC webpage touting the agency's successes ... heavy on large corporations or multinationals like papermaker Pratt Industries, global manufacturer Gardner Denver and Ireland-based Kerry Ingredients. WEDC also focuses on luring existing businesses to the state, which in reality rarely happens. “Very few companies really move around that much,” he said. “The vast majority of startups are located in the community that the owner lives in.”

So why doesn’t the state put its money where the jobs are? Deller, who’s not been shy about criticizing state economic policies in the past, has a theory. “In today’s increasing pressure to raise money, politicians are drawn toward those larger, established firms because they have the resources to make significant contributions. Smaller startup firms are not in a position to be proactive in terms of significant donations.”

Add to that the fact that startups don’t lobby. “Politicians are looking to be associated for business activity that draws media attention.”

So what can be done? Well, you can bet Scott Walker won't learn from any of this:

To counter these factors, Conroy and Deller recommend a multi-pronged approach to encouraging new business ventures, including educational opportunities from the state universities and technical colleges to local efforts by chambers of commerce and business associations to match entrepreneurs with workshops and mentors. They also suggest boosting financial support on the state level through loan guarantees and other programs.

“Support for new business owners, even those that do not yet have employees, could lead to higher gross and net job creation.

By Design, Walker's talk of a Manufacturing Revival Blown out of Proportion.

Since Scott Walker wants us all to bank heavily on the return of manufacturing in the state, I thought this quick examination was a nice but unwelcome reality check:

Steve Rattner shares charts on U.S. manufacturing, showing why the country won’t return to manufacturing levels seen in the 1950s and ’60s.

Walker's push to revive Manufacturing in Wisconsin hurts Jobs effort now and in the Future.

Don't get me wrong, manufacturing is still an important element to our nations economy, but it isn't the powerhouse it once was or will every be again. The emerging new economies for energy creation can help fuel a rise in manufacturing again, but lets face it, the return of high wage unskilled labor is not about to make a comeback.

Proving my point is the chart below. Scott Walker is focused on Wisconsin's manufacturing resurgence. But if the trend continues, as demonstrated  below, we're in real trouble ten to twenty years from now. Elections do have consequences, and Walker's unfortunate time at the helm may be felt many years from now. The Great Recession changed the way the U.S. did business, and yet Republican policy makers are fighting against that shift.

Manufacturing Employment in June Fell by 6,000 Jobs, the fourth straight month. How will that affect Wisconsin?

I would like nothing more than to have our great blue collar manufacturing jobs back again, employing high school grads with no skills and training them on the job. I did that for years before I went into radio.

But that’s not looking too good right now.

For Scott Walker and the Republican legislature, who are spending and borrowing money based on a rosy economic forecast, reality may crash their party.

WonkBlog: You know that great jobs report today? There’s an ugly little trend hidden in it: America looks like its back to laying off factory workers.

The economy has gained jobs at a lukewarm-but-steady pace over the last year, a pace that heated up a bit with Friday’s news that 207,000 net private-sector jobs were created in June. But manufacturing employment fell by 6,000 jobs in June — the fourth straight month of job losses in the sector. For the calendar year, factory employment is basically flat, even as overall employment is up.

Wisconsin 20th in Manufacturing job creation.

Manufacturing isn't likely to make a total comeback in Wisconsin, but it's still holding, and could have been better had Scott Walker embraced alternative energy and high speed train production.

From CNBC:

Ball State Grades state Manufacturing “A.” If only Wisconsin’s “Human Capital” didn't have such high “Worker Benefit Costs.”

If you ever wanted to know what business thought of those lowly humanoid cogs in the for-profit making machinery, the latest rating from Ball State University should clear things up:

Business Journal: A new report from Ball State University gives Wisconsin an "A" for manufacturing but says that sector is constrained by high worker benefit costs and taxes.

I’m sorry, that alone was just breathtaking. It continued…

Michael Hicks, a Ball State economics professor and director of the CBER, said “For Wisconsin, the constraint to manufacturing expansion remains the same story of very high taxes and high worker benefit costs,” Hicks said. “Once these are effectively remedied, the other very strong scores in human capital and in expected fiscal liability gap will provide the incentives for expansion of manufacturing."

I’m sorry, but did he say once high worker benefit costs are “remedied…REMEDIED?”

Scott Walker and his band of Republican pirates act like Wisconsin is a warm weather state located on transportation's main thoroughfares, with none of the four season maintenance costs paid for by our higher taxes.

If they don’t like it here, as much as I did once before they took power, they should live somewhere in the south.

Here’s our letter grades from the report: 

Manufacturing: A
Logistics: B-
Human Capital: B
Worker Benefit Costs: D-
Tax Climate: D+
Expected Liability Gap: A
Global Reach: C
Sector Diversification: C+
Productivity and Innovation: C

UPDATE: Rocknetroots has been on this story for some time and came up with this 2 year old video between Scott Walker and "the notorious economic development group, Rock County 5.0." The theme is the same, which means we should get familiar with their terminology, and quick, before it's too late. By the way, doesn't it look like the people in this clip lack souls?:

U.S. becoming "Third World India 40 years ago" with low wage jobs. We don' Build Thinks Anymore....

Former Assistant Treasury Secretary Paul Craig Roberts identified the jobs Republicans like to call “going in the right direction,” with the 179,000 jobs created in May. Thanks to America United for the story tip:

TruthDig: Retail, 27,700; wholesale trade, 7,900; ambulatory health care services, 15,300; servers and bartenders, 38,100; local government, 13,000; amusement, gambling and recreation, 12,500; temporary help, 25,600; business support services, 4,300; services to buildings and residences, 6,400; accounting and bookkeeping, 3,100; architecture and engineering, 4,900; computer systems and related, 6,000; management and technical consulting, 3,200.

“For a decade this has been the jobs profile of ‘the world’s most powerful economy.’ It is the profile of third world India 40 years ago. The jobs that made the U.S. the dominant economy have been moved off shore by corporations threatened by Wall Street with takeovers if they did not increase their profits. The U.S. has twice as many people employed in government than in manufacturing,” and virtually no new jobs for the “vast number” of recent college graduates.

Caterpillar to lay off 300 workers, all the while asking for H-1B work visas.

Even though Caterpillar is planning on laying off 300 workers, it's also trying to import cheaper workers on H-1B visas. 

jsonline: The chief executive at Caterpillar Inc. says he wants more visas for foreign engineers and a path to legal status for undocumented immigrants, even as the company plans temporary layoffs of up to 300 employees in South Milwaukee.

"Today, we (employers) have gaps in our workforce. We have trouble filling highly skilled positions like engineers and scientists. We also have trouble filling many lower-skilled positions," Doug Oberhelman, chairman and CEO of Peoria, Ill.-based Caterpilla.

CEO "Job Creators" refuse to offer decent pay and job training.

 NY Times article, "The Skills don't pay the Bills," does away with the idea there's a shortage of skilled workers. But we've been warned before about this manufactured myth.

Under my Video History tab, I posted the following CNN News clip from Lou Dobbs back in 2004-
2005. Check it out before reading an excerpt of the Times story:

Running out of skilled workers? The truth is, companies don't want to train employees and pay them more for their skills.

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.”
At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.

The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs.

“It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages. 

This is like an instant replay of the video above.

“Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.” The study’s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less. As a result, the United States may soon have a hard time competing in the global economy. The average age of a highly skilled factory worker in the U.S. is now 56.

One result, Sirkin suggests, is that the fake skills gap is threatening to create a real skills gap.

While Isbister says he thinks that his industry suffers from a reputation problem, he also admitted that his answer to a nervous parent’s question is not reassuring. The industry is inevitably going to move some of these jobs to China, or it’s going to replace them with machines. If it doesn’t, it can’t compete on a global level.

Howard Wial, an economist at the Brookings Institution with the confluence of computers, says increased trade and weakened unions, the social contract has collapsed, and worker-employer matches have become harder to make. Now workers and manufacturers “need to recreate a system,” a new social contract, in which their incentives are aligned.