Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
This July marks the three-year anniversary of the Wisconsin Economic Development Corp., Gov. Scott Walker's flagship economic development agency. WEDC has been mired in allegations of incompetence and skirting the law since 2012, but how has it performed when it comes to its top priority of creating jobs for the people of Wisconsin?
Two official state data sets indicate that for every verifiable job Walker's WEDC managed to create, the state lost more than two to plant closings and layoffs.
In November 2010, Walker was elected governor by a wide margin. He promised to "focus like a laser" on the economy to create 250,000 jobs.
On Jan. 3, 2011, Walker was sworn into office and immediately called a special session of the Legislature to get to work on his jobs agenda. One of the first bills Walker introduced privatized the Department of Commerce's economic development functions.
In July 2011, WEDC was launched "with the mission of elevating Wisconsin's economy to be the best in the world." The quasi-public agency is run by a 15-person board chaired by the governor.
The agency was soon caught up in controversy. In July 2012, allegations of bid-rigging forced it to cancel a planned award to an information systems company. In October the Milwaukee Journal Sentinel reported WEDC had lost track of some $8 million in funds. In May, WEDC was slammed by the federal Department of Housing and Urban Development for misappropriating $10 million in federal funds.
In May 2013, the Wisconsin Legislative Audit Bureau found that WEDC had awarded a portion of these grants, loans and tax credits to ineligible recipients, for ineligible projects and for amounts that exceeded specified limits.
WEDC controls an extraordinary amount of taxpayer funds. In fiscal year 2011-12 alone, Walker's WEDC administered "30 economic development programs through which it authorized local governments to issue $346.4 million in bonds, awarded $41.3 million in grants and $20.5 million in loans, and provided $110.8 million in tax credits to businesses and individuals," says the audit bureau.
With all that taxpayer money, how many actual jobs have been created?
'Impacted' Vs. 'Actual' Jobs
In October 2011 the WEDC governing board chaired by Walker approved an operations plan that set the agency a goal of creating or retaining 50,000 jobs in Fiscal Year 2012. The number was bold, but at 50,000 a year, WEDC would be on track to creating a robust number of jobs as Walker stood for re-election in 2014.
WEDC's board is required to set performance goals for each of its many economic development programs and to report to the Legislature "expected" vs. "actual" results. At the end of 2012, when WEDC was required to issue its first report documenting how many of the 50,000 jobs it had created, WEDC reported 23,759 jobs "impacted" in FY 2012. This new term combines "expected" jobs and "retained" jobs. It allows WEDC to avoid reporting "actual" jobs.
The Center for Media and Democracy spoke to subsidy expert Greg LeRoy at the national nonprofit research group Good Jobs First about the term "impacted." "I am not aware of any other state that uses the term impacted in this way. It is a vague and not very meaningful measure," said LeRoy.
Nowhere in its 2012 annual report does WEDC say how many jobs were actually created that year, but its official database documents only 1,044 "actual" jobs reported by companies that year. (Note: For 2012 and 2013, CMD excluded jobs that were reported to be created before financial aid was received from WEDC.)
At the end of 2013, WEDC told the Legislature and the public it had "impacted" 37,313 jobs. No actuals were included in the report to the Legislature, but its official database includes documentation for 4,796 "actual" jobs.
To create those jobs over a two-year period, some $203 million in taxpayer money went out the door in grants, loans and bonding authority.
So there you have it. The number of new jobs WEDC can credibly document is not 250,000; it is not 50,000; it is not 37,000. Walker's official jobs database can document only 5,840 "actual" jobs reported to be created by firms for FY 2012 and FY 2013. Note that these are jobs created through the efforts of WEDC, and the numbers are separate from the state's job numbers reported monthly and quarterly by the federal government.
While WEDC was busy handing out grants, many Wisconsin companies were cutting back or going under. In order to prepare workers and communities for mass layoffs, Wisconsin law requires that businesses with over 50 employees give 60-day advance warning of mass layoffs or closures. In the same two-year period in which the WEDC database indicates 5,840 jobs were created, the state's WARN data set indicates that 13,616 jobs were lost in the state due to layoffs or closures. (Note: CMD excluded notices that had been rescinded or reported earlier.)
Two state databases, two distinct numbers — more than two jobs lost in the state for every job gained through WEDC's efforts.
5,840 — a Stark Contrast to Walker's Goal
The two data sets are not the only measures of job performance and most Wisconsin companies have not needed the state's help to create jobs. Wisconsin has slowly gained some 100,000 jobs since Walker took office, well behind the national average and ninth out of 10 Midwestern states. But how many jobs can Walker personally take credit for?
Certainly those created by his flagship agency.
But by any measure, Walker's WEDC has failed in its mission to elevate "Wisconsin's economy to be the best in the world."
Originally published in the Capital Times.