WMC was contacted by multiple media outlets in early October to get our reaction to a Bloomberg report that said Wisconsin lost 5,200 manufacturing jobs between August 2018 and August 2019.
In addition to fielding calls from Wisconsin media, like the Wisconsin State Journal and Milwaukee Business Journal, WMC also heard from the Los Angeles Times and Washington Post. Those national papers know that Wisconsin is expected to be a critical battleground in next year’s presidential race. They also know that how our economy is performing will greatly influence whether or not President Donald Trump carries the state for a second time, which many pundits believe is an imperative for him to win a second term on Nov. 3, 2020.
The national media narrative seems to be that the U.S. economy is slowing down, if not contracting. Trump’s trade and tariff policies are most often cited as the cause, and I wrote a column in January expressing my concerns that tariffs would harm Wisconsin manufacturers and farmers.
In fact, WMC’s last economic survey showed that 47 percent of respondents were being harmed by the tariffs, specifically the ones being imposed on China. But interesting enough, 67 percent of the same respondents said they either “strongly” or “somewhat” support the tariffs on China because of that nation’s unfair trade practices, including forced technology transfers in exchange for market access, currency manipulation and the systemic theft of intellectual property.
The global marketplace where businesses operate is inherently uncertain, fickle and sometimes unstable. Government shouldn’t make matters worse with policies that create even more uncertainty and confusion. Without question, the tariffs have created an additional layer of uncertainty and complexity, even if many believe taking a stand against China is necessary and overdue.
Another trade related issue that is causing uncertainty is Congressional inaction on the United States Mexico Canada Agreement (USMCA). USMCA is designed to be the successor to the North American Free Trade Agreement (NAFTA), which was negotiated by the Clinton Administration. A lot has changed since the 1990s and USMCA is clearly an improvement, especially as it relates to intellectual property protections, digital rules and overall trade agreement enforcement.
Forty-seven percent of Wisconsin’s exports go to either Canada or Mexico, and our state enjoys a positive balance of trade with both nations. Given the dire challenges faced by dairy farmers, Wisconsin needs USMCA to be enacted as soon as possible. Mexico, in particular, is a major buyer of Wisconsin cheese.
If you haven’t done so, please contact your member of the U.S. House of Representatives and both of Wisconsin’s U.S. Senators, especially U.S. Sen. Tammy Baldwin. Tell them to support enactment of USMCA.
Of course, state policy proposals can impact jobs as well, even if they haven’t gone into effect. I am referring to Gov. Tony Evers’ push to repeal the manufacturing part of the Manufacturers and Agricultural Production Tax Credit. Gov. Evers included the repeal (again just for manufacturers) in his first state budget introduced in February.
Gov. Evers’ action may have chilled some plans to expand in Wisconsin, although it is hard to say. Certainly, businesspeople were paying attention to what the governor put in his budget. Last December, after Gov. Evers won the election but still hadn’t taken office, 68 percent of CEOs responding to our semi-annual economic survey said the state was headed in the right direction. In June of this year, 59 percent said Wisconsin was headed in the wrong direction.
Global economic factors also play a role in Wisconsin jobs, manufacturing or otherwise. I have often referred to Wisconsin as a windsock economy. The reason is that we account for just about two percent of U.S. GDP, which means our economy is inevitably “blown” in the same direction as the U.S. and global economies.
While the U.S. economy seems stable, other nations are experiencing weakening, including Germany and China. The looming so-called Hard Brexit (the United Kingdom leaving the European Union without a deal) is also a compounding factor.
It wouldn’t be a Kurt Bauer column if I didn’t bring up workforce at least once. I believe demographics are playing a role in the reported loss of Wisconsin manufacturing jobs. Eightyone percent of WMC members say they are having trouble finding workers because there are simply fewer people of working age in Wisconsin. So, as Baby Boomers retire, there are not enough Generation Xers or Millennials to replace them, and some positions are going unfilled. As a result, I would argue that demographics may be impacting job numbers just as much as economic factors.
All of what you just read was part of a speech I recently gave in Waukesha. After I delivered it, an economist friend of mine approached me. He said that the Bloomberg report may be inaccurate and that when the federal Bureau of Labor Statistics revises its numbers, the loss of Wisconsin manufacturing jobs may be smaller than 5,200. His take is that the initial estimates, based on monthly rather than quarterly figures, overestimate losses. He said we will know by February.
Kurt Bauer is president and CEO of Wisconsin Manufacturers & Commerce (WMC). His commentaries are published regularly in the Wisconsin Business Voice, a WMC publication.