Wisconsin: Economic Development

From Jason Stein, “State jobs agency adds 3rd finance chief in 2 years, then loses him in a day,” Milwaukee Sentinel Journal (April 24):

This week the state’s flagship jobs agency brought on its third chief financial officer in less than two years – only to see him resign within 24 hours to take a promotion at his former company.

WEDC has faced challenges since Gov. Scott Walker and lawmakers voted to create the quasi-public authority in July 2011 as a replacement for the former Department of Commerce.

Last year, the Journal Sentinel reported that the agency had discovered it had failed to track in one centralized database more than $12 million in past-due loans. As a result, the authority’s CFO resigned and Walker brought in Reed Hall, the retired executive director of the Marshfield Clinic, as WEDC’s new CEO to replace Paul Jadin, who left the agency in October to take a different economic development job.

Mike Klonsinski, the former chief financial officer of WEDC, resigned his $109,500-a-year job in October after the disclosure of the problems in tracking past-due loans. Klonsinski, who had earlier served as WEDC’s COO, had replaced former chief financial officer Eric Schroeder in July when a close aide to Walker arrived to take the agency’s number two job.

A summary measure of economic activity produced by the Philadelphia Fed (released on April 23) continues to show Wisconsin activity lagging Minnesota and the US (for more states in the regions, see this post).


Figure 1: Log coincident indices for WI (blue), MN (red) and US (black), rescaled to 2011M01=0. Source: Philadelphia Fed (April 23 release), and author’s calculations.

Wisconsin’s employment growth is shown here.


19 thoughts on “Wisconsin: Economic Development

  1. Jack

    Dr. Chinn,
    Would you be so kind as to offer any suggestions of policies that may lead to higher job growth in Wisconsin that are not currently being pursued?

  2. Menzie Chinn

    Jack: As my earlier posts on the maximally contractionary effects of cutting K-12 educational funding makes clear, rescinding those cuts would be a good idea. [0] [1]

    In addition, if policy uncertainty is an important deterrent to hiring and capital investment, it would make sense for the administration to cease implementing laws the courts have ruled void and invalid. But the principle of adherence to rule of law is, I know, sometimes selectively applied by some.

  3. Jack

    Dr. Chinn,
    If I understand your posts correctly, then I could assume that if Walker would spend $1 billion on education, jobs would skyrocket?

  4. Menzie Chinn

    Jack: No, not “skyrocket”. Have I ever used that word? If so, please cite specific instance (URL helpful). Using multipliers from this paper, I’d guess something on the order $2 billion increase in gross state product (GSP), and 28,600 jobs, relative to baseline. $2 billion is about equal to 1% of 2011 GSP.

  5. Jack

    Dr. Chinn,
    THanks for your reply. Now I will add some excluded information so national readers can better understand what you have left out in your comments.
    First, Walker’s ACT 10 has been stayed by 3 judges on 3 different occasions since it was passed.
    03/18/2011 Dane County Judge Sumi stayed the bill.
    03/30/2012 Federal court struck down parts of the bill, but Wisc Att Gen overturned this in the federal court of appeals
    9/14/2012 Dane County Judge Juan Colas struck down the bill.
    Dr. Chinn, as you well know, these challenges are not coming from across the state, they are all exclusively coming from the hard left of the lefties who live in lefty-ville, otherwise known as Madison. They (and you) know that just as soon as one challenge is struck down, the libs will petition yet another left-leaning judge from Dane county to order yet another stay to the bill. It would be one thing if these challenges were from across the state, but they arise out of Dane county, where the judges campaign on liberal platforms.
    Here is an example of a Dane County judge signing the Walker recall and then issuing a restraining order against a Walker bill. http://www.realclearpolitics.com/news/ap/politics/2012/Mar/18/newspaper__29_judges_sign_walker_recall_petition.html
    In fact, 29 judges signed the Walker recall petition, which brings up questions of judicial ethics.
    Of course, you will likely argue the in favor of how judges can sign a recall petition and rule against Walker, but outsiders looking in need to know the full story.

  6. Jack

    Dr. Chinn,
    I’m glad that you clarified your position on government spending stimulating the economy. Now, you have the unique opportunity to help both your state AND your employer, as it appears that the UW system has been quietly amassing a $1 BILLION DOLLAR slush fund on the sly.
    Oops. DId I say slush fund? I meant ‘accounting mistake’. Maybe you could take your economics degree and help the university’s accounting department learn to do math correctly. After all, I’m sure it was just an accident.
    Think about it for a minute. You are advocating for increased government spending. Yet, your university has collected and hid $1 BILLION DOLLARS that was NOT spent in the state as a way of boosting aggregate demand, as Keynes would request. In fact, just last year the university asked for another 5.5% tuition hike when they were already sitting on $1 BILLION DOLLARS. http://www.jsonline.com/news/education/uwmadison-tuition-would-top-10000-if-increase-okd-kj5lae6-156998885.html Can you defend this practice of your university and still look your students in the face? Especially when half of college grads can’t find full time work to pay off their student loans?
    Your university system is pulling in money out of general circulation through higher taxes on Wisc residents AND through ever-higher-tuition fees, and is then SITTING ON THE MONEY, keeping it out of circulation.
    Dr. Chinn, I suspect that you will through around some greek showing how the university system hoarding $1 BILLION DOLLARS is somehow not nearly as bad as Walker’s reforms designed to let people keep more of their money to spend of invest as they see fit, instead of shipping it off to the UW Madison slush fund to be hoarded. But, the rest of the readers of Econbrowser have the right to know the facts on the ground in Wisconsin that somehow seem to get left out of your thinley covered missives against Gov Walker.

  7. Anonymous

    Jack–GREAT posts. Better yet, Menzie could help all those middle class folks that he claims to care so much about by increasing his teaching load. How much could UW reduces tuition if EVERY tenured and tenure-track faculty there taught, say, 4 undergraduate courses a year……..instead of the usual 1 or 2.
    It’s the height of hypocrisy to say ‘I care about the middle class’ as you sit idly by (in the faculty lounge) while you employer enriches itself ripping off the the middle class with outrageous/excessive tuition. When Menzie talks about greed, he should look in the mirror……because the greed of Wall Street pales in comparison to the greed of colleges and universities.
    We don’t need a Occupy Wall Street, we need a Occupy the University……

  8. Menzie Chinn

    Jack (9:04PM): So I take it we should restrict first amendment rights for judges. Maybe it should apply to Supreme Court judges as well.

    “hard left of the lefties who live in lefty-ville”. I am tempted to ask if you think the John Birch Society was a moderate right organization.

    Jack (9:26PM): “I suspect that you will through around some greek”??? If you received your degree from the UW system, then I agree the institution has much to account for. Well, I will not throw around any Greek letters, merely note this article. I bring to your attention the University of Texas system statistics.

    By the way, I do not see your citation of where I used the word “skyrocket”. I await your answer.

    Anonyomous (7:21AM): I am going to let your statement “the greed of Wall Street pales in comparison to the greed of colleges and universities…” speak for itself.

  9. 2slugbaits

    Anonymous How much could UW reduces tuition if EVERY tenured and tenure-track faculty there taught, say, 4 undergraduate courses a year……..instead of the usual 1 or 2.
    So in your world university professors at public institutions usually only teach 1 or 2 undergrad courses per year. Or in other words, at most one undergrad course per semester. Really? Have you ever been to college? It doesn’t sound like it. One of my brothers is an English professor and department chair, and while there are many things about his career that he loves, I don’t think spending hours napping in the faculty lounge is one of them. That’s not reality.
    There are plenty of very serious problems with higher education. The gap between tenured professors and adjunct professors is staggering, and colleges are depending more and more on overworked and underpaid adjuncts. There are plenty of other problems as well. For example, the explosion in “for profit” institutions that grant worthless degrees and suck up billions in education resources. Another problem is that cutting back on state funding has forced universities to rely more on less academically qualified out-of-state students from rich families who are also able to afford out-of-state tuition. And to attract those students universities have to offer all kinds of non-academic amenities. And if you look around any large university town you’ll see that a construction crane is a permanent part of the skyline. Politicians (typically Republicans) in state legislatures push for endless and dubious construction projects on college campuses in order to support their political friends.
    As I said, there are plenty of problems with higher education. But complicated problems call for subtle minds, and I don’t think anyone ever accused Gov Walker of having a subtle mind.

  10. Anonymous

    2Slugs know it all: Then how about Menzie posting his undergraduate teaching load for the past 6 or 8 semester. Who knows, maybe I’m wrong and he and your brother) actually teach a whopping 3 undergraduate courses a year! Oh the humanity…..working 3 hours a week one semester and six hours a week the next……all so that they can (so the argument goes) churn out ever-increasing quantities of mediocre research.
    Maybe your brother…because he teaches so little (you never tell how ‘much/little’ he actually teaches)..will publish the 1 millionth article on Shakespeare. Cool. I’m sure the world will be better off by his drivel…….the drivel colleges use to justify outrageous tuition increases that is burying the middle class……..
    As stated earlier: the greed of Wall Street pales in comparison to the greed of colleges and universities (and their liberal, lazy faculty).

  11. Menzie Chinn

    Anonymous (4:16PM): As I might have mentioned before, there is no faculty lounge at LaFollette. But let not facts interfere with your argument.

    I do not understand why graduate courses don’t count. For me, a Master’s level course on recent policy innovations in monetary policy and financial regulation is much more difficult than intermediate macro (a course I believe you would do well to take, given your previous comments regarding macroeconomic policy), as it requires catching up on the latest literature.

    I look forward to seeing how many hours it takes for you (per Master’s course) to write up lecture notes/presentations, write up problem sets, grade problem sets, write up midterms, grade midterms, write up final exams/grade final exams, and/or read term papers, and to respond to student emails (on top of office hours).

    But in the interest of transparency, webpages for my courses have been posted online for all the years I’ve been at UW Madison [1] (and before at UC Santa Cruz). I’ve nothing to hide (unlike somebody who cannot leave comments as anything but “Anonymous”).

  12. Anonymous

    Well Menzie if you have nothing to hide…..tell us how many undergraduate courses you have taught in each of the past five academic years.

  13. Menzie Chinn

    Anonymous: If you can add (no subtraction or division necessary), you can figure it out from the [1] I provided before. Although I still don’t understand the focus on undergraduate courses. Are Master’s students chopped liver?

  14. Anonymous

    Menzie–same ole tired excuse–MA courses are harder to teach. What bull. I’ve talked to plenty of folks like you–folks who don’t want to be bothered teaching undergraduate courses–and they all say teaching a graduate MA course is harder and involves more work than teaching an undergraduate course. And yet, when you push them, they eventually admit this isn’t true IF you teach a quality undergraduate course, a course where you work diligently with students, challenge them to think critically (via essay exams that you actually grade instead of pawning off on a grad student), hold extensive office hours.
    Bottom line, if teaching a MA course were harder than teaching a quality undergraduate course, folks like you would be clammering to teach undergraduate courses.

  15. Menzie Chinn

    Anonymous: OK, maybe that’s true for these people you talk to (do they really exist? Since you talk about these fantastical faculty lounges, I doubt it). Anyway, take a look at the links I provided for AY 2012-13. Compare the workload for the undergraduate and master’s level courses. I don’t have a TA for either. Tell me what you think (and I would be amused to know if you can solve Problem Set 1 for either!!). By the way, if you haven’t figured it out yet (and I bet you haven’t given your failure to give me the tabulation), my teaching load is 2 and 2 in AY 2012-13.

  16. Anonymous

    Wow Menzie, I’m impressed. So, Tuesday you teach from 8 to 9:15 and then again from 9:30 to 10:45. Heavy, really heavy lifting there …… oh wait, I forgot…you have to do it again on Thursday.
    As someone who works 40 to 50 hours a week, and paid over $100,000 a year to send my 2 kids to college, I don’t have to look at your links to tell you what I think. You are overpaid and under worked….period.

  17. Menzie Chinn

    Anonymous: Well, if that’s your model (gee, I did have to prepare all the lectures, problem sets, midterms, finals — the papers are yet to come — you didn’t add those in), then I hope you never have to use Warfarin. It wouldn’t have existed in your model of what professors should do. When I tabulate how many hours I work, I far exceed the number you log. In academia, we often call weekends “research time”!

  18. Flutter

    Jack obviously doesn’t understand what you do, Dr. Chinn. He is one of the few who still feel Gov. Walker walks on water. Even Walker’s cronies are realizing how shallow and deceitful he is. I’ve noticed how many of them, over the years, he’s thrown under the bus to save his own skin. The latest are Jadin and Huebsch, and prior to that all his staffers and appointees who took the rap for him and are now felons. I wonder how much they’ll have in their offshore accounts after it’s all over.

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