Hey Wisconsin, what happened?

Last Friday, I dug into some economic comparisons between Minnesota and Wisconsin. Data showed Minnesota performed better than Wisconsin during the Great Recession and has greater strength in the recovery.

One reader, though, suggested that the recession and post-recession years were too small a data sample to declare Minnesota the economic winner. So I went back looking for some long term comparisons on the economies of both.

Well, from 1980 to 2000, the two states were neck-and-neck in key economic indicators. But then something happened in 2000. Wisconsin tailed off compared to Minnesota and the rest of the U.S. and has continued to lose ground.

Here’s a look at the the coincident index for Minnesota, Wisconsin and the U.S. from 1980 through 2012 (click on the chart for a larger view).

coincident.jpg

The index, produced by the Federal Reserve Bank of Philadelphia, is a good apples-to-apples comparison, combing four indicators (nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and inflated-adjusted wages) into a single statistic.

For 20 years, both states saw nearly identical growth in the index — no matter which political party was in charge.

In those years, Wisconsin was led by two Republican governors (Lee Dreyfus and Tommy Thompson) with a Democrat (Anthony Earl) sandwiched in between. Minnesota was led by two Republicans (Al Quie, Arne Carlson), a DFLer (Rudy Perpich) and Jesse Ventura, Independence Party.

Wisconsin, though, started slow in 2000 and the index shows a downturn in the 2001 recession that had little effect in Minnesota. Wisconsin stumbled in the first few years of that decade while Minnesota took off again.

Here’s a chart with the economic index for Minnesota and Wisconsin since 2000:

2coincident.jpg

In that period, Wisconsin had three GOP governors (Thompson, Scott McCallum and Scott Walker) and one Democrat (Jim Doyle). Minnesota had Ventura, the independent, one Republican (Tim Pawlenty) and one Democrat, current governor Mark Dayton.

As I said in the last post, the data don’t end the discussion about taxes and spending or the effects of fiscal policy on business decisions.

But looking at the data, I’m wondering: How much does fiscal policy really matter to a state’s economy? And what’s happened to Wisconsin?

4coin.jpg

  • Rich Fallis

    The Be Bold report initiated by former Wisconsin, Gov. Jim Doyle showed there is a $6 thousand a year per capita wage gap with Minnesota.

    While Republican dogma, also increasingly adopted by Democrats says so-called high-taxes are to blame (taxes are at their lowest point as a percentage of GDP in 60 years) the real difference is technology.

    Minnesota has a strong high tech base, more Phd’s and Master’s per capita, and way more patents filed that America’s Dairyland. The Be Bold 2 report notes highly educated people are leaving the Walker kingdom in droves.

    Technology companies are not focused on taxes. Instead they focus on centers of educational excellence, the workforce mix, and ease of air transport along with access to angel funding.

    Wisconsin, is hopeless in all of the above.

    Wisconsin, Gov. Scott Walker (R) insists the future rests with low-wage agriculture, rustry manufacturing, and tourism. Mr. Walker, a college drop-out, doesn’t know what he doesn’t know.

    As a result, he recently borrowed $558 million to keep his administration afloat over the next two years, calling his indebtedness a ‘surplus’ which he is using to give a $200 income tax cut to Wisconsin residents. His stimulus will have limited effects, we will remain in debt, and also remain dumbed down due to his rape of the state’s education system.

    As a result, with our high-tech base continuing to atrophe, our job creation, now 42nd in the nation behind even stupid Alabama, will continue to decline as Minnesota continues to prosper.

    Any jobs that do come along in Wisconsin will likely by of the ‘Would you like fries with that?’ variety.