Bloomberg News

Republican Whipping-Boy Illinois Beats Wisconsin on Jobs

April 20, 2012

Wisconsin Gov. Scott Walker after speaking to the Illinois Chamber of Commerceon April 17, 2012 in Springfield. Photographer: Seth Perlman/AP Photo

Wisconsin Gov. Scott Walker after speaking to the Illinois Chamber of Commerceon April 17, 2012 in Springfield. Photographer: Seth Perlman/AP Photo

Scott Walker, the Republican governor facing a recall vote in Wisconsin, traveled over the Illinois line to argue that the tax increase backed by his Democratic counterpart Pat Quinn is killing jobs even as the Midwest rebounds from recession.

“Is it any wonder because of choices that were made right here in the state’s capital?” Walker, 44, said in an April 17 speech in Springfield. “When you raise taxes on businesses, that wealth and opportunity and those jobs more often than not go somewhere else.”

A broader snapshot tells a different tale. Illinois ranked third while Wisconsin placed 42nd in the most recent Bloomberg Economic Evaluation of States index, which includes personal income, tax revenue and employment. Illinois gained 32,000 jobs in the 12 months ending in February, the U.S. Bureau of Labor Statistics found. Wisconsin, where Walker promised to create 250,000 jobs with the help of business-tax breaks, lost 16,900.

For Republicans, Illinois is the Nancy Pelosi of U.S. states -- like the former House speaker, a favorite target of ridicule when arguing Democrats stifle growth. The state has $8 billion in unpaid bills and $80 billion in unfunded pension liabilities.

Quinn was ready for the cross-border critique from Wisconsin, whose state’s employment fell more than any other. Quinn scheduled a news conference less than hour after Walker spoke to announce that LaFarge SA (LG), the Paris-based building materials maker, would move its North American headquarters to Illinois.

‘Worst Job Record’

“They have the worst job record in the whole country, dead last,” Quinn, 63, said of Wisconsin. “We certainly don’t want to follow his prescriptions when it comes to economic growth.”

Illinois, the home state of President Barack Obama, became a Republican talking point in January 2011 after the Democratic- controlled General Assembly approved and Quinn signed a 67 percent increase in the personal-income tax and a 46 percent boost in the corporate levy to help close a projected $13 billion budget deficit.

Governor Mitch Daniels of neighboring Indiana compared the situation with “living next door to ‘The Simpsons.’ You know, the dysfunctional family down the block.” New Jersey Governor Chris Christie said he’d try to lure jobs from Illinois. “If he wants to tank his economy, that’s just fine,” Christie said of Quinn.

The lingering feud between the Wisconsin and Illinois governors mirrors the broader election-year debate over the national economy and which party is best able to ensure a robust recovery from the longest downturn since the 1930s.

Stark Contrast

“You couldn’t ask for a starker contrast,” said Charles Franklin, a political scientist who runs the Marquette Law School Poll in Milwaukee. “Quinn is willing to raise taxes and Walker is not.”

Walker is facing a June 5 recall election following his successful push to curb collective bargaining for most public employees. The move provoked a campaign to make him only the third governor in U.S. history to be recalled.

Quinn has his own problems. His approval rating in Illinois was 30 percent and his disapproval 54 percent in a February 2-6 poll published by the Chicago Tribune.

The border war between Wisconsin and Illinois says more about politics than economics, said Edward Hill, an economist at Cleveland State University in Ohio.

“Illinois has a debt bomb ticking,” Hill said. “That’s the long-term anchor and you can’t simply cut your way out of that.”

Smaller Economy

Illinois’s economy is the fifth-largest in the U.S. while Wisconsin’s is 20th, according to U.S. government data. The smaller state has to fight more for jobs because “it does not have the economic engine of Chicago,” the third-largest U.S. city, Hill said. “What you’ve got is two states with a different competitive resource base and different ideologies.”

Walker boasts that his refusal to raise taxes was fiscally responsible and made his state stronger economically. Wisconsin’s 6.9 percent unemployment rate in February is tied with Massachusetts as the nation’s 14th lowest. The 9.1 percent rate in Illinois is tied with Georgia and South Carolina at 42nd. The jobless figure in Quinn’s state has been 9 percent or higher since March 2009.

Illinois ranked behind only North Dakota and Michigan in the Bloomberg economic index, which also measures home prices, mortgage delinquency rates and the equity performance of companies headquartered in each state. The index ranked Wisconsin 42nd among the states when comparing the fourth quarter of 2011 with the same period of 2010.

“Walker will look at the poor job performance and say it’s because the recalls caused a lot of economic uncertainty,” Franklin said. “It’s like Obama saying the economy would have been in a lot worse shape without his policies. It’s all in the eye of the beholder.”

To contact the reporter on this story: Tim Jones in Chicago at tjones58@bloomberg.net

To contact the editor responsible for this story: Flynn McRoberts at Fmcroberts1@bloomberg.net


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