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Wisconsin’s “Smoking Gun Of The Rigged Economy”

Wednesday, September 14th, 2016

dave.johnson “Outsourcing is the smoking gun of the rigged economy.”
— Robert Kraig, Executive Director of Citizen Action of Wisconsin.

Companies extort tax breaks and subsidies by threatening to withhold jobs. After their demands are met, they instead outsource the promised jobs. For the workers who remain, the threat of outsourcing causes their wages to fall. As Donald Trump said, if companies outsource jobs to places where workers make less, then “… you’ll come back … because those guys are going to want their jobs back even if it is less.”

But lately people have been figuring out ways to start doing something about these kinds of things. People are organizing to build power, making noise that the public and elected officials can hear and making clear demands that force politicians answer the question, “Whose side are you on?”

Wisconsin’s Privatized Economic Development Corporation (WEDC)

One group organizing people and forcing public officials to declare whose side they are on is Citizen Action of Wisconsin, a People’s Action affiliate. They are an “issue focused coalition of individuals and organizations committed to achieving social, economic, and environmental justice.” Citizen Action of Wisconsin is taking on the Republican Scott Walker administration over their privatization and use of the state’s “jobs agency” Wisconsin Economic Development Corporation (WEDC) to subsidize corporations even as they move jobs out of the state.

In 2014, Mary Bottari of the Center for Media and Democracy’s PRWatch laid out the background in Madison’s The Cap Times, in “Only 5,840 ‘actual’ jobs from Walker’s WEDC”:

… 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?

The answer, in 2014, was, “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.” Then 2015 audit found that the problems had only gotten worse.

Citizen Action of Wisconsin Takes On WEDC

In July of this year Citizen Action of Wisconsin announced what they found from an open records request of the privatized agency. In “WEDC Safeguards Against Outsourcing Completely Nonexistent”:

In response to a series of outsourcing scandals Governor Walker’s troubled jobs agency, the Wisconsin Economic Development Corporation (WEDC), adopted in 2014 a 30 day advanced notification policy. This policy is supposed to give state policymakers early warning if a corporation receiving state economic dollars plans to outsource jobs or downsize more jobs than they are paid to create.

An open records request by Citizen Action of Wisconsin found that despite a series of additional incidents of WEDC funded corporations outsourcing Wisconsin jobs, there are zero 30 day notifications in WEDC’s files.

They followed up in August, in, “At Least 11,331 Wisconsin Jobs Outsourced Overseas Over the Last Five Years,” which explains how “Governor Walker and Senator Johnson have aided and abetted multinational corporations in selling out Wisconsin workers for short-term profits.”

Data kept by the U.S. Department of Labor shows that at least 11,331 Wisconsin workers have had their jobs outsourced to other countries since Governor Walker’s scandal ridden jobs agency, the Wisconsin Economic Development Corporation (WEDC), was launched July 1, 2011. This is a very low-end estimate of the impact of outsourcing in Wisconsin because it only accounts for groups of workers who successfully applied for Trade Adjustment Assistance from the federal government by proving their jobs were eliminated because of global trade agreements. It does not account for outsourcing to other states, or downsizing where it is not possible to prove the jobs landed in a foreign country or were impacted by global trade deals.

Both Governor Scott Walker and U.S. Senator Ron Johnson have consistently supported a rigged economic system which allows multinational corporations to pit Wisconsin workers against low-wage foreign workers.

Also in August, a Wisconsin Public Radio report, “Citizen Action Of Wisconsin Claims WEDC Misrepresented Jobs Created In Sherman Park,” found that the agency was reporting success in creating 500 jobs in the very neighborhood where lack of opportunity contributed to two nights of disorder following the police shooting of Sylville K. Smith.

Citizen Action of Wisconsin reviewed a database on the Wisconsin Economic Development Corporation website and found the agency reported supporting and investing in the creation of 483 jobs in Sherman Park located on the city’s north side. When the nonprofit researched the companies adding those jobs, it found the companies to be located outside Milwaukee.

Summary: Republicans privatized the state economic development agency, awarded subsidies to companies that included campaign donors, stripped safeguards, and “lost track” of where millions of taxpayer dollars went. Meanwhile, companies receiving subsidies intended to create jobs in Wisconsin were actually shipping jobs out of the state and country, as part of an effort to pit state workers against low-wage workers and force down wages. WEDC aided that effort by misrepresenting the jobs numbers, and even reporting nonexistent job-creation.

Outsourced Wisconsin Tour

In response Citizen Action of Wisconsin has launched what they call the “Outsourced Wisconsin Tour” to “focus attention on corporate outsourcers who are taking public job creation dollars.”

The announcement, “Outsourced Wisconsin Tour Launched” explains:

Following last week’s revelation that over 11,000 Wisconsin jobs have been outsourced in the past five years, advocates for good jobs launched a statewide tour on Thursday of corporations who are outsourcing while taking public job creation dollars.

The first company on the tour is the Rexnord Corporation in Milwaukee:

At a news event today community leaders detailed how Rexnord outsourced Wisconsin jobs at the same time it took millions in public job creation dollars from Governor Walker’s scandal plagued Wisconsin Economic Development Corporation (WEDC).

[. . .] According to data from the U.S. Department of Labor and WEDC, Rexnord has actually outsourced more jobs than it has been paid with public dollars to create. The company has received $2.75 million in WEDC funds, but has so far outsourced 130 more jobs than it is has created.

“The Smoking Gun Of The Rigged Economy”

Robert Kraig, Executive Director of Citizen Action of Wisconsin explained the reason for the tour.

“Outsourcing is the smoking gun of the rigged economy. It would stun most Wisconsin workers to learn that state leaders are aiding and abetting economic treason by giving public dollars to corporations who are outsourcing more jobs than they create. It’s long overdue for federal and state government to side with workers by using it leverage to build an economy where everyone who wants a good job can get one.”

You can join their effort to end outsourcing, and say, “Enough!”

Click here: 11,331 WI jobs Gone Overseas in Last 5 Years – Tell Madison: Enough!

“With so many Wisconsin workers struggling to find family supporting jobs, our state and federal governments ought to be focused on creating an economy where everyone who wants a good job can get one. Shamefully, elected leaders who are supposed to work for us often aid and abet corporate outsourcers, helping them rig the economy against average people. They vote for trade deals which make it easier for multinational corporations to ship more of our good jobs overseas. In Wisconsin Scott Walker gives huge subsidies and tax giveaways to unpatriotic CEOs engaged in outsourcing our jobs.”

This post originally appeared on ourfuture.org on September 12, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

Outsourcing Jobs...that Can't be Outsourced

Tuesday, October 26th, 2010

Martin FordPeople who work in knowledge-based fields like information technology, accounting, graphic design or legal research are probably well aware that their jobs are susceptible to being outsourced to a low wage country. In fact, I suspect that economists underestimate the impact that this practice will have on the job market as improving technology makes offshoring cheaper and more accessible to smaller businesses. That may be especially true if weak consumer demand continues to push businesses to focus on cost-cutting rather than revenue growth.

But what about people who have jobs that involve physically interacting with their environment? Those jobs can’t be offshored, right? Well…

There’s an article in the San Jose Mercury News today on the emerging remote-controlled robot industry:

Remote-controlled robots are entering the workforce

The declining prices for telepresence robots will encourage experimentation among companies and entrepreneurs, who will find new uses for them, analysts say.”These robots will have a network effect,” said Hyoun Park, an analyst at the Aberdeen Group, a technology research firm. “The more robots there are, the easier it will be to work remotely in ways we haven’t thought about before.”

As as these technologies become more prevalent, I think one of the new ideas that will emerge will be offshoring the control function. So you’ll have a worker in India or Bangladesh who can do a job that requires physical proximity in a developed country. Some jobs that “can’t be outsourced” … might just get outsourced.

I have a section on this in my book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (get the free PDF), which focuses on how technology and globalization are likely to result in increasing structural unemployment:

Those jobs that require significant hand-eye coordination in a varied environment are currently very difficult to fully automate. But what about offshoring? Can these jobs be offshored?In fact they can, and we are likely to see this increasingly in the near future. As an example, consider a manufacturing assembly line. Suppose that the highly repetitive jobs have already been automated, but there remain jobs for skilled operators at certain key points in the production process. How could management get rid of these skilled workers?

They could simply build a remote controlled robot to perform the task, and then offshore the control function. As we have pointed out, it is the ability to recognize a complex visual image and then manipulate a robot arm based on that image that is a primary challenge preventing full robotic automation. Transmitting a real-time visual image overseas, where a low paid worker can then manipulate the machinery, is certainly already feasible. Remote controlled robots are currently used in military and police applications that would be dangerous for humans. We very likely will see such robots in factories and workplaces in the near future.

As I’ve written previously, I don’t think economists understand the extent to which technology is playing a role in the current unemployment crisis–and more importantly how things are likely to progress in the future. Technology and globalization are not going to stand still while we wait for the job market to recover. They will continue to progress and even accelerate. That will make it very difficult to drive the unemployment rate back down without some very effective policies in place.

This article was originally posted on The Huffington Post.

About The Author: Martin Ford is the founder of a Silicon Valley-based software development firm.  He holds a computer engineering degree from the University of Michigan, Ann Arbor and a graduate business degree from the University of California, Los Angeles. He is the author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (available from Amazon or as a FREE PDF eBook) and has a blog at econfuture.wordpress.com.

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