Scott Walker and Wisconsin’s Seccessionist Strategy
One year after Wisconsin Governor Scott Walker dropped what he called “the bomb” on public-sector unions with legislation effectively revoking long-held rights for union representation, Walker’s grip on power has grown far less secure.
Walker’s assaults on labor rights and public institutions, like Wisconsin schools, ignited a three-week siege inside and outside the State Capitol, drawing crowds of over 100,000. Once Walker’s draconian legislation passed, labor and its allies remained resolute, launching a massive petition drive to demand a recall election for Walker and key GOP allies. The signature drive gathered more than 1 million signatures, nearly as many votes as Walker won in his 2010 election.
Despite spending more than $10 million from sources like the hard-right Koch billionaires and other corporate forces gathered around the American Legislative Exchange Council, Walker recently polled behind several potential Democratic candidates who have spent nothing thus far on ads.
Further, Walker faces an ongoing “John Doe” investigation that resulted in the indictment of four close aides on charges ranging from campaigning while in public office to embezzlement from a fund for Iraq veterans and their surviving family members. The FBI has also raided the home of one Walker aide to confiscate a computer.
Since Walker took office in January 2011, the state’s GOP-dominated legislature has approved $1.6 billion in corporate tax breaks over the next 10 years, including:
- $874 million for manufacturing and agricultural companies
- $366 million specifically targeted to multi-state corporations
- $334 million for a new-hires write-off
Nonetheless, these “job-creation” programs have failed to blossom into even a fraction of the 250,000 new jobs promised by Walker during his campaign. In fact, Wisconsin has been the only state to experience 6 straight months of declining employment in contrast to 23 consecutive months of growth at the national level.
Democracy A Casualty Of Walker’s Agenda
Still, Walker’s backers have been delighted with the political inroads he made for the right wing, resulting in an erosion of labor rights, open and transparent government, and participatory democracy in the political sphere. Walker and the Republican majorities rammed through a voter ID bill that Common Cause director Jay Heck called “the most restrictive, blatantly partisan, and ill-conceived voter identification legislation in the nation.”
The new voter ID law, unless overturned as a result of several lawsuits, has the potential to disenfranchise overwhelmingly Democratic constituencies lacking such official documents as driver’s licenses and passports. The new law could result in excluding 23 percent of elderly Wisconsinites, 59 percent of Latina women, and 78 percent of African American men ages 18 to 24 who lack driver’s licenses, as well as a substantial number of senior citizens and the poor. “We saw labor protests of unprecedented size and intensity over limiting their voice as workers,” observed Frances Fox Piven, author of three books on America’s history of limiting voting rights. “And then [protesters] were greeted with a law to limit their power electorally, too.”
The Republicans also hatched a redistricting scheme that would exaggerate their voting strength and render it permanent for the next ten years. The redistricting plan was developed in secret with $400,000 in taxpayer dollars by a well-known Republican law firm, which has attempted unsuccessfully to use attorney-client privilege to hide the process of developing new voting maps. The Republicans’ attorneys have been repeatedly admonished by a special three-judge panel for intentionally causing delays, concealing information, and violating the state’s traditions of open government.
Other blatant infringements on democracy were rife at the height of the protests a year ago, such as violations of the state’s Open Meetings law, shutting off Democratic legislators’ microphones during debate, blocking Wi-Fi access to protesters in the Capitol, and efforts to close down the Capitol building.
Democracy was a consistent casualty of the Republicans’ drive to effectively revoke public-union representation allowed in Wisconsin since 1959, strip away public-interest functions of government (e.g., education, environment safeguards, healthcare), and to re-shape Wisconsin in the mold of a Southern-style state where corporations almost unilaterally set the state’s policy direction without any significant challenge from the union movement or other forces representing majoritarian interests.
Parallel Forms Of Dis-Investment
Walker’s disinvestment in the public sector parallels the disinvestment by major corporations in Wisconsin’s productive base over the past four decades, with huge firms shifting capital away from modernization of their factories to speculation on Wall Street and uprooting family-supporting jobs from Wisconsin communities to low-wage, high-repression nations like Mexico and China.
One iconic Milwaukee-born firm after another—Briggs & Stratton, Johnson Controls, AO Smith, Allen-Bradley, and Master Lock, to name just the best-known—has abandoned Milwaukee in favor of ultra-low wages in Mexico (about 10 percent of the U.S. average) and bargain-basement wages in China (about 3 percent of American wages). Johnson Control now has over 60 plants in China. Most recently, C&D Engineering, Thermo Fisher, and Mayville Machines have begun adding to the torrent of jobs rushing to Mexico to exploit low-paid workers.
This intensifying pattern of disinvestment and “offshoring” decisively shows how thoroughly corporations in Wisconsin and elsewhere have repudiated the “social contract” between labor and capital, under which unions achieved recognition and relatively high wages and benefits while management was assured labor discipline and an affluent base of domestic consumers. But the social contract began to crack in the early 1970s as Wisconsin firms first moved to “right-to-work” states in the South, where such laws were designed to permit management interference and thus break down the “workplace democracy” envisioned by backers of the 1935 Wagner Act that established legal protections for unions. However, the gains from lower wages in the South were a small fraction of the potential profits to be reaped in Mexico and other low-wage nations. Wisconsin firms increasingly leapfrogged over the South to harvest enormous savings on wages in repressive low-wage nations outside the U.S.
From 2000 to 2010, U.S.-based multinationals eliminated 2.9 million jobs in the U.S. while increasing overseas employment by 2.4 million. The offshoring of U.S. jobs, mainly industrial jobs (4.9 million since 1994 and the implementation of the North American Free Trade Agreement), but increasingly including professional jobs as well, has deepened the insecurity felt by working people. Despite its highly-skilled workforce that made the city renowned as “the machine tool capital of the world,” Milwaukee has lost 80 percent of its industrial jobs since 1977.
Milwaukee’s median household income, adjusted for inflation, has plummeted a stunning 21.9 percent since 1999, according to new U.S. Census data. That’s well over twice the national average of an 8.9 percent decline. Nine out of ten inner-city hospitals have closed and the city is plagued by an infant mortality rate that is at Third World levels.
Milwaukee’s African American population has suffered the most. With 53 percent of African American workers concentrated in manufacturing, the flight of major firms left a huge crater in employment opportunities for blacks. While factories have been emptied out, Wisconsin’s jails and prisons have been filled. Wisconsin now has the second highest rate of incarceration among black males in the nation and its overall prison population has climbed since 1970 from 2,973 to 23,112 at the end of 2009.
With the ever-present threat of relocation casting a huge shadow over contract negotiations in manufacturing (just 6.9 percent of private-sector workers are in unions, compared with 35 percent in the mid-1950s), starting wages in manufacturing have dropped a stunning 50 percent over the last 6 years, notes former Labor Secretary Robert Reich. As the anti-union, low-wage model has been spread from the old Confederacy to the rest of the nation, fully half of U.S. workers now earn under $26,634 a year.
Referring to the need for massive investments in education, healthcare, energy, and technology to insure continuing U.S. competitiveness, even globalization cheerleader Thomas Friedman of the NY Times openly frets that the U.S. corporate elite is not stepping forward to assert their customary “civic” leadership: “When I look around for the group that has both the power and interest in seeing America remain globally focused and competitive—America’s business leaders—they seem to be missing in action.”
For example, both General Motors and General Electric were non-players in the 2009-10 healthcare reform fight despite their huge health-insurance payments and GE’s role in producing sophisticated medical equipment, noted Chris Townsend, political director of the United Electrical, Radio, and Machine Workers union.
Just as Walker’s contemptuous renunciation of public worker rights (a mere “expensive entitlement”) and public investment in shared institutions triggered the massive uprising led by labor in 2011, the abandonment of workers and communities by Wisconsin corporations has been igniting sporadic but fierce battles in the streets of Wisconsin’s factory towns over the past four decades. Starting in the 1970s when the corporate exodus began flaring up episodically as the offshoring of jobs accelerated, industrial unions and their allies have frequently challenged the sacrosanct “right” of private corporations to invest wherever they choose and asserted the radical claim of workers and communities on corporate resources.
The fight against plant closings and investor-rights “free trade agreements” like NAFTA by Wisconsin’s industrial unions—especially those concentrated in the southeast corner of Milwaukee, Racine, and Kenosha—contributed an important tributary of anti-corporate rebellion flowing into the mighty river that converged in Madison in February-March of 2011.
Business Climate: The Dominant Paradigm
For the corporate class, the exodus of jobs provided it with an opportunity to exercise greatly-enhanced leverage over public policy, asserting that Wisconsin’s attainment of a “good business climate” relative to other states would be good for all Wisconsin citizens.
In 1973, the Milwaukee Journal—then one of the nation’s leading liberal newspapers—published a relentless stream of front-page “news” articles by a University of Wisconsin business professor—financed by a corporate-funded think tank—arguing that Wisconsin needed to lower its corporate taxes to “remain competitive.”
The immediate result of pressure from Wisconsin Manufacturers and Commerce and the Journal was a property-tax exemption on machinery and equipment enacted under Democratic Governor Patrick Lucey and ardently supported by future governor Anthony Earl, then a legislative leader. (The Journal Co. itself benefited handsomely from the M&E exemption for which it had expended such efforts).
But since taxes are a relatively trivial consideration in business-location decisions, the “M&E” exemption failed to magnetically attract firms from other states or to even keep Wisconsin manufacturing firms from fully exploiting the M&E tax break and then relocating to the low-wage South, Mexico, or overseas. Briggs & Stratton, to cite one example, gained an estimated $50 million in savings as it downsized its Milwaukee manufacturing operations from about 9,000 to 2,000 workers, with the work relocated to low-wage Juarez, Mexico, China, and sites in the U.S. Sunbelt. Allied Industrial Workers Local 232 officer Joe Chambers noted that the workers had given substantial concessions to Briggs over the preceding decade (roughly 1983-93), “But you can never give enough.” Even after earning record profits in 1993, Briggs moved an additional 2,000 jobs out of Milwaukee in search of ever-greater record profits.
However, the lesson drawn by political and media elites from the continued flight of industry was not that tax breaks were a futile method of retaining jobs that allowed corporations to essentially “take the money and run.” Even considering such a conclusion would have opened public debate toward questions such as how to establish an effective public role—as is commonplace in Europe—in heretofore “private” decisions made by corporations which have a broad and devastating social impact. It would have also added support to the call for the adoption of an “industrial policy” in the U.S. that would have asserted a substantial role for the federal government in preventing plant closings, developing alternative uses for empty factories (e.g., producing mass transit equipment), ensuring balanced regional development, and in providing decent incomes and economic security to workers.
Instead, the dominant paradigm in Wisconsin became: no public good was more important than maintaining a “good business climate” to retain and attract industry. Each shift of jobs out of Wisconsin was interpreted by corporate leaders and Democratic and Republican elites as a warning signal that Wisconsin needed to make its “business climate” still more comfortable for business leaders. This conclusion was reinforced by news coverage and editorials throughout the state’s dominant media, without any reference to actual data that documented Wisconsin’s status as one of the nation’s lowest-taxed states for business.
The constant effort to perfect the “business climate” became the overriding goal of both Democratic and Republican administrations over the last four decades. As a result, even with its manufacturing base severely depleted, over 60 percent of Wisconsin firms with more than $100 million in revenue pay no corporate state income taxes. Ernst & Young, the respected accounting firm, calculated in April 2010 that Wisconsin offered the 4th lowest corporate taxes for a new corporation setting up anywhere in the nation.
The unquestioned supremacy of the “business climate” paradigm kept Republicans on the aggressive, allowing them to brand every tax or regulating corporations as a barrier to “jobs,” as if full employment rather than greater profits for their corporate campaign contributors were their primary aim. Democrats swallowed the fundamental GOP assumptions that public policy might affect corporate decision making about the location of new plants and that state policy must first be scrutinized by corporate leaders before adoption.
The terms of Democratic governors since Patrick Lucey have been constricted by concern about the business climate and relations with business leaders, with Governor Anthony Earl (1983-86) cutting unemployment compensation benefits and lowering taxes on the wealthy. In a context where acceptable policy was so narrowly defined by corporate approval, even the most progressive members of the legislature—as with the major public-employee unions—failed to launch educational campaigns to stress that lower corporate taxes produce more jobs in Wisconsin and that Wisconsin actually imposes a relatively light tax burden on corporations.
Over the last several decades, the basic outcome of this uncritical worship of the business climate has been a steady decline in the share of taxes borne by Wisconsin businesses and a commensurate rise in property taxes and fees borne by ordinary citizens, like the University of Wisconsin’s soaring tuition levels.
Globalization: Get Used To It
Beginning in the late 1980s and early 1990s, the primacy of the “business climate” was augmented with arguments for keeping up with “global competition” that required the acceptance of wage concessions by workers and corporate tax cuts and regulatory changes at both the state and federal levels. Unions were encouraged to recognize the unalterable “reality” of globalization and passively “get used to it,” to quote the most important lesson from a Milwaukee Journal series on adapting to the world economy. Plant closings and relocations of “low-value” jobs should be accepted in exchange for the certainty of finding higher-skilled, higher-paying jobs that would surely follow the passage of measures like NAFTA.
Yet even with all the efforts to appease corporate decision makers, the outflow of industrial jobs to low-wage nations has accelerated. Despite the enshrinement of the business climate as Wisconsin’s driving purpose, the state has experienced a hollowing out of unionized jobs that provided working class people with a “middle class” standard of living. Corporate America generated close to zero job growth in the 1990-2009 decade in contrast to job growth of 20 percent to 38 percent in every decade since 1940.
With Wisconsin’s manufacturing unions grievously weakened, corporate vultures swooped in to drive down wages, reduce benefits, and weaken workers’ rights to effective representation. Mercury Marine, located in Fond du Lac, insisted on the acceptance of a lengthy list of painful concessions—most notably, the imposition of a permanent two-tier wage structure that will lower base pay over time. Mercury Marine used the threat of shifting all the 1,500 jobs to Oklahoma if members of the International Association of Machinists refused the concessions.
Harley-Davidson motorcycle workers in Milwaukee, members of the United Steelworkers and Machinists, were the next victims. Workers there were also threatened with relocation of their jobs unless they accepted a multi-tier pay structure that would push down wages and permanently reduce the workforce. Adding insult to injury, Harley officials accompanying President Obama to the Far East announced a few months later that they were opening a new low-wage motorcycle factory in India.
With the precedents of Mercury Marine and Harley much discussed in the media, United Auto Workers Local 833 prepared for similar demands from the Kohler Corporation located near Sheboygan. A militant local that successfully fought the longest strike in U.S. history—9 years—the UAW started their negotiations with an impressive rally of 3,000 members and community supporters against concessions. But once negotiations got rolling, the UAW soon found itself with a gun pointed at its head: swallow massive concessions—including a multi-tier wage structure that will degrade pay and benefits and vastly-increased healthcare payments for retirees—or watch as their jobs got sent overseas where Kohler already employs more than half its workers.
Walker Seeks Concessions
Governor Walker seemingly viewed the painful concessions extorted at Mercury, Harley, and Kohler as a lever for escalating his persistent attacks on public-sector unions during his campaign for governor (although his campaign speeches never mentioned the revocation of union rights). Arguing that private-sector workers were sacrificing pay—at the threat of losing their jobs and without any obvious economic justification—Walker insisted that public workers, too, should be called on to sacrifice. Walker labeled the public-sector workers—who actually receive less compensation than comparably-educated private sector workers, according to the Economic Policy Institute and other researchers, as Wisconsin’s “haves” taking advantage of the state’s “have-nots”—the taxpayers.
Ultimately, Walker sought to use the diminishing organizational strength of private-sector industrial unions to isolate and crush labor’s key remaining bastion of power in the public sector. State Senate President Scott Fitzgerald openly admitted on Fox-TV the Republicans’ political motives in seeking to weaken labor unions: “If we win this battle, and the money is not there under the auspices of the unions, certainly what you’re going to find is President Obama is going to have a much more difficult time getting elected and winning the state of Wisconsin.” At the national level, strategists on the Right saw the de-unionization as carrying both immense political rewards while also serving to reinforce lower wages in the private sector, based on the mythical belief that wages are higher among public workers of comparable skills.
But Walker failed in his attempt to isolate public employees as over-privileged and under-worked, judging both from polling data and the response of unionists and supporters at the State Capitol and around the state. In particular, parents with children in public schools were particularly resistant to Walker’s claims. Moreover, subsequent events suggest that Walker badly misread public sentiment about the concessions extorted from private-sector workers. Walker essentially portrayed these pay cuts and other givebacks as the contributions of willing workers trying to insure their employers’ survival at a time of great need, while the Wisconsin public may have increasingly interpreted them as purely opportunistic acts of greed by major corporations. On the one hand, Walker and the Republicans scored a stunning “trifecta” on November 4 by winning the governor’s office and both houses of the Legislature, a feat unmatched anywhere else in the nation.
Walker and the Republicans managed to convince those voting—a much more wealthy, whiter, and older electorate than in 2008—that the state’s economic troubles were due to excessive government and regulation interfering with private-sector job growth, a unified theme sung by the entire Republican chorus and the considerable media machine of the Right. But in the intervening weeks between Walker’s election and the war over his February 11 announcement of his attack on public-sector union rights, a very compelling narrative challenging Walker’s became evident, explaining Wisconsin’s troubled economy as the product of enormously profitable corporations and wealthy CEOs’ increasing “secession” from the rest of society.
The winter and spring witnessed a constant stream of media stories about the records set with Corporate America’s fourth quarter profits, its cash on hand of nearly $1.9 trillion, CEO salaries, and Wall Street bonuses. Adding to a growing populist turn in public sentiment was the disclosure that General Electric—whose CEO Jeffrey Immelt (headed Obama’s Commission on Jobs and Competitiveness—had avoided paying any corporate income taxes on $14.2 billion in profits in 2010. To top it off, GE actually accumulated $3.2 billion in tax credits despite its continuing pattern of shutting U.S. plants and offshoring jobs.
The efforts by labor and community allies to save family-supporting jobs and contest capital’s unilateral “right” to abandon workers and communities often ended in failure despite occasional successes. But the battles waged by industrial unions and their allies—overcoming internal opposition (often from the top) and uniform hostility or disinterest from corporate, political, and media elites—have helped countless Wisconsinites to fully understand the uncompromising nature of the global investor class to drive down wages, avoid their tax responsibilities, destroy valued public institutions, and usurp democracy .
As a result, the fights waged by Wisconsin’s industrial unions contributed immensely to illuminate where Scott Walker intends to drag Wisconsin in the global “race to the bottom.” At the crucial juncture when Scott Walker has sought to mobilize public support among private-sector workers for his assault on the rights and income of Wisconsin’s public employees, the dominant response among working Wisconsinites was solidarity.
This article is adapted from Roger Bybee’s chapter in It Started in Wisconsin, a new book from Verso edited by Mary Jo and Paul Buhle. Roger Bybee is a freelance writer and university lecturer based in Milwaukee, Wisconsin.