In a desperate attempt to leave the impression that he actually did something worthwhile for Wisconsin before the gubernatorial election, Scott Walker pushed for and approved a $3 billion subsidy in incentives for the Foxconn, a Taiwanese electronics manufacturer, to build a new plant in the state. Masked under the dubious claim that the plant will bring jobs to Wisconsin, the deal is extremely risky and the potential return for taxpayers could be minimum.
There is no guarantee how many jobs the company will provide. The Republican-controlled legislature and the Governor agreed to the deal though they knew the facility is simply expected to create between 3,000 and 13,000 new jobs. That is a huge disparity that the lawmakers seem to have blindly agreed to.
The annual payout to Foxconn will be between $200 million and $250 million, according to the Wisconsin Economic Development Corporation, which means the state will pay between $15,000 and $19,000 dollars per job per year, assuming 13,000 positions are actually created. But that’s the best case scenario, as we could be paying up to $83,000 each year per job if the company provides the minimum 3,000 jobs.
The subsidy would be the largest ever from a U.S. state to a foreign company and 10 times bigger than anything Wisconsin has extended to a private business. This is completely absurd, considering the typical deal would be closer to $2,400 per job per year, according to Timothy Bartik, an economist at the W.E. Upjohn Institute for Employment Research.
Walker has gone too far. This deal will cost taxpayers $3 billion dollars, which will go straight into the pocket of a large foreign cooperation, in return for the feeble promise that it will create only a fair amount of jobs.
Not to mention, the potential jobs Walker purchased for Wisconsinites may end up going to Illinois workers as well, because Foxconn is planning to build the plant right near the Illinois border and the company never explicitly said they would only hire Wisconsin workers. Democrats in the State Legislature pushed for changes to the deal to prioritize Wisconsin workers and businesses, protect taxpayers from overpayments to Foxconn and increase environmental oversight. However, these precautionary measures were shot down and rejected by Republicans and there remain no protections for Wisconsin workers.
Job creation shouldn’t have a price tag, you say? Well even if that is the case, Foxconn has been known to be a corporate monster elsewhere in the world. According to the New York Times before Foxconn pledged to create jobs in Wisconsin, the company made a similar promise in Brazil. Foxconn pledged to invest billions of dollars and build one of the world’s biggest manufacturing hubs in the state of São Paulo, and essentially create 100,000 jobs. However, the lofty promises fell short leaving São Paulo still waiting for jobs six years later. Now the area where Foxconn said it would build a plant is totally abandoned.
In an eerily similar situation, Foxconn took advantage of a government looking to create jobs for its citizens and left them with unfulfilled promises and discontented people.
If Scott Walker truly wanted to improve the state and spawn more economic growth, he should have invested the money into education. However Walker is sadly under the impression that Wisconsin schools are simply a liability, as he dramatically slashed $250 million from UW funds and K-12 schools just two years ago. For a man that wants the state’s economy to flourish, he clearly needs to do some research to see where he can actually get the best bang for his buck.
A study at Brown University found that government spending on elementary and secondary education creates the most jobs out of all the different areas studied. Education provides direct jobs for teachers, principals and office staff and indirect jobs in industries such as textbook publication, furniture manufacturing, electric utilities, etc. Not to mention, having a more educated population has a multitude of economic benefits on top of job growth.
Stanford University published a study that concluded that an educated population is powerfully related to long-run economic growth. The study found that education increases labor productivity and increases the innovative capacity of the economy. No matter what area of education — elementary, secondary, the UW system — it will always have a high, if not the highest, return on investment.
The bottom line is education is always the answer. Unfortunately, Wisconsin has vowed to throw away $3 billion dollars of valuable taxpayer money to a foreign company with the meek prospect that jobs will materialize. While Wisconsin waits 25 years to see a return on the investment, the money could have pumped life into our schools and the entire state could have benefitted from the immediate economic boost. But alas, 3,000-13,000 people can look forward to the possibility of a job in Southwestern Wisconsin.
$3 billion dollars could have done so much for Wisconsin, yet here we are, settling for a business deal that is mediocre at best.
Claudia Koechell ([email protected]) is a sophomore majoring in history and political science. She is the press secretary for UW College Democrats.
