Go Big, Or Go Home
Just as Governor Snyder signed the SB 242 – 244 ‘Good Jobs’ subsidy package yesterday, Foxconn announced that they accepted Wisconsin’s insane subsidies. The new Foxconn industrial campus will be built in the Badger State, not Michigan. The Foxconn competition, however, was the bait used to stampede the Michigan Legislature into passing the ‘Good Jobs’ package much sought by Michigan’s government and business establishments.
Wisconsin is going to lavish $ 3 billion in subsidies on Foxconn for somewhere between 3,000 and 13,000 new jobs. That works out to somewhere between $ 1 million and $ 230,769 in subsidies per job. Amortized over a 10 year period, the state of Wisconsin will be paying somewhere between $ 48.00 and $ 11.09 per labor-hour of every Foxconn worker’s wages using taxes extracted from other less fortunate Wisconsin workers. Subtract these per labor-hour subsidies from the headline wages touted for the future Foxconn workers and their ‘Good Jobs’ don’t look quite so good. Gussied up minimum wage jobs at best, wage theft at worst.
The little pig gets to feed at the trough, the hog gets taken to market and slaughtered.
Wisconsin’s population is only about 57% of Michigan’s, so $ 3 billion is a staggering burden. Badgers are used to extravagant taxation – their state government’s per capita spend is 43% more than Michigan’s. Unequivocal evidence of a higher threshold of pain throughout the Badger state, but this deal should sorely test that tolerance at a time when Wisconsin’s state government budget is in an ongoing fiscal crisis. Badger State private workers just got slaughtered financially. Governor Walker and the Wisconsin establishment just sold them down the river.
It is pretty clear that the Michigan SB 242 – 244 ‘Good Jobs’ subsidy package won’t go to waste. Anyone else would be embarrassed by the Foxconn betrayal on its subsidy signing day, but Governor Snyder has enjoyed 7 years of masochism shilling for Michigan’s crony capitalists, government bureaucrats, and unionized government employees. The ‘Good Jobs’ package will be used to quietly reward Michigan’s crony capitalist class for any and all future employment within our state. They just won’t get to feed at a Wisconsin sized trough.
Crony capitalists across the world lust after state subsidies for their businesses, but it is less obvious why those subsidies are also very important to government bureaucrats and unionized workers of all stripes. Those subsidies create bogus headline wage numbers which bureaucrats and unions use as comparables when they negotiate their own wage packages. Those bogus headline wages even drive state minimum wages higher. A sly fraud upon the supply and demand curve in the labor market which then drives the labor participation rate ever lower. Why McDonalds is installing computerized ordering kiosks at the expense of their cashier line workers. Labor is only just so valuable. Then its price crashes into reality.
“Wait. Foxconn didn’t pick Michigan even after we were told we had to pass Good Jobs to get them? This is not my shocked face.”
Rep. Steve Johnson (R – Wayland Township) an opponent to the “Good Jobs” tax incentive package the Governor signed into law today. [MIRS, 26 July 2017]
Sadly, a majority of Michigan’s legislators are not so bright.