Michael Hiltzik

Wisconsin shows how job incentives are handed out -- in Bizarro world

Wisconsin awards a job-development grant to a company cutting jobs

Via the Wisconsin State Journal of Madison, we learn of the zany way that political officials in that state are handing out job-creation funds. Long story short, they've voted to hand over $6 million in taxpayer cash to a company that's planning to cut its Wisconsin work force in half.

The company is Ashley Furniture, which has had its snout in the taxpayer trough before. But the new grant is more than all those others combined, the Journal says. The $6-million grant, which has been voted by the state Economic Development Corp. but not yet finalized, won't require Ashley to create any new jobs. Instead, it will allow the manufacturer to "lay off half of its current 3,848 Wisconsin-based workers," the newspaper says.  

The chairman of the incentive-awarding body is Republican Gov. Scott Walker. A few weeks after the WEDC approved the grant to Ashley, its owners donated $20,000 to Walker's re-election campaign.

Walker also is a candidate for the 2016 GOP nomination for president, so his job creation skills will be under a spotlight. The Ashley deal may be front and center. Walker told the Journal on Friday that "I, just as previous administrations, want to make sure they (Ashley) are here in Wisconsin and they’re growing." My guess is a year from now, you’ll see Ashley in the state with a much higher volume of jobs than they have today."

That's not what the terms of the deal reportedly say. According to a WEDC memo reviewed by the Journal, the company agrees to retain 70% percent of its work force this year, 60% next year, and 50% percent in 2016-18. The memo also observes that Ashley doesn't provide a lot of high-grade jobs--56% of the workers make less than $10.88 per hour.

As Jerry Seinfeld might put it, this is how job-creation programs work in the Bizarro world. They're supposed to increase jobs, not condone cutting them.

Ashley evidently threatened to pull out of Wisconsin entirely if it didn't get the grant. But forking over an incentive that allows a company to cut its work force in half is drifting pretty far from the purposes and goals of a legitimate incentive program. It begins to look more like a handout to an influential recipient. The promptness of the contribution to Walker's campaign doesn't make the deal smell any sweeter. 

This is the governor, after all, whose staff allegedly emailed each other with such messages as: "Take Koch’s money....Corporations. Go heavy after them to give." That's according to documents released to a special prosecutor looking into the financing of Walker's fight against a recall in 2012. They raise a familiar question: Exactly whom does Scott Walker work for?

Keep up to date with The Economy Hub by following @hiltzikm.

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