Two states, two approaches to unions; two vastly different results

Since 2010, pro-union Minnesota’s economy has outperformed RTW Wisconsin’s by every available measure

Since taking office in 2010, Minnesota Governor Mark Dayton and Wisconsin Governor Scott Walker have pursued vastly different state economic policy agendas. Dayton has worked to strengthen labor standards; Walker pushed through so-called “right-to-work” (RTW) and has done everything in his power to further weaken the state’s unions.

David Cooper, a senior analyst for the Economic Policy Institute, analyzed economic performance during Dayton’s and Walker’s tenures and found that, by virtually every measure, Minnesota’s economy has performed far better for working families than Wisconsin’s in the last seven years.

Minnesota and Wisconsin’s geographic proximity, similarities in population, demographics, culture and industry composition make for a compelling case study in economic performance and which agenda leads to better outcomes for working people.

“Throughout the course of their terms in office, Governors Walker and Dayton have pursued dramatically divergent agendas,” Cooper said.

“Policymakers in Wisconsin have pursued a highly conservative agenda centered on cutting taxes for the rich, shrinking government and weakening unions,” he said.

“In contrast, Minnesota has enacted a slate of progressive priorities like raising the minimum wage, strengthening labor standards, and boosting public investments in infrastructure and education, financed through progressive taxes.

“The results could not be more clear,” Cooper said. “Workers and families in Minnesota have done far better over the past seven years than their counterparts in Wisconsin.”

With Missourians poised to vote on Proposition A to determine whether the Show Me State should become a RTW state, the Minnesota and Wisconsin examples provide irrefutable proof that Prop. A (RTW) will drive down wages and fail to create jobs.

WISCONSIN

Walker’s policies have been typical of the most conservative state agendas:

• Large tax cuts for businesses and higher-income households.

• Deregulation.

• Imposing RTW and undermining workers’ ability to form unions, weakening labor standards, gutting public-sector unions, limiting their ability to negotiate new contracts or collect dues, and establishing onerous requirements for annual recertification.

• Huge cuts in funding for K−12, higher education, green energy programs and aid to the poor.

• Cutting safety net programs.

• Shifting public funding to the private sector.

• Rejecting federal dollars to invest in infrastructure or expand Medicaid.

MINNESOTA

In contrast, Dayton’s policies embraced:

• The role of government in regulating markets.

• Improving the welfare of workers and their families, and

• Boosting private-sector growth through public-sector investment.

Although divided government at the outset of his tenure prevented Dayton from implementing the entirety of his agenda, Minnesota was soon at the forefront of progressive state policymaking, Cooper says.

In the seven years since Dayton took office, Minnesota has:

• Raised its minimum wage and set it to be automatically adjusted for inflation each year.

• Raised taxes, largely on the wealthy, and used the additional funds to finance public investments in infrastructure, education, and aid to low-income families.

• Expanded preschool and access to full-day kindergarten.

• Authorized the unionization of new groups of state-funded workers.

• Expanded access to paid sick leave.

• Strengthened the state’s unemployment insurance program.

• Become an early adopter of the Medicaid expansion under the Affordable Care Act.

• Enacted a pay equity law to combat gender pay disparities.

• Legalized gay marriage.

• Made it easier to register to vote.

THE RESULTS

“The direct effects of the Minnesota reforms were unambiguously progressive — directing resources toward low- and moderate-income households and strengthening rules explicitly meant to boost these households’ economic leverage and bargaining power,” Cooper said.

“The direct effects of the Wisconsin reforms were unambiguously regressive,” he said. “Fiscal resources were transferred from low- and moderate-income residents to richer ones, and rules that buttressed the economic leverage of low- and moderate-wage workers were weakened.”

Union-busting didn’t lead to better private-sector job growth. And tax cuts for rich households didn’t trickle down to poorer households in the form of faster economic growth, job creation and wage growth.

Wisconsin’s Act 10 decimated the state’s public sector, leading to a loss of both public-sector jobs and the private-sector jobs that those public dollars supported, Cooper said.

The combination of Act 10 and the adoption of so-called RTW led to a dramatic decline in the share of Wisconsin workers in unions, and almost certainly dampened wage growth and contributed to the state’s weaker income growth and slow progress reducing poverty.

In addition, Cooper said, the Walker administration’s decision to reject federal health exchange funding, reject the Affordable Care Act’s Medicaid expansion, reject federal transportation dollars and reject expanded federal unemployment insurance funding has likely contributed to slower job growth in the health care, transportation, and construction industries, leading to higher numbers of uninsured residents, higher rates of long-term unemployment, and more people dropping out of the labor force.

“In contrast, Minnesota lawmakers’ large public investments in infrastructure, health care, and education fueled the state’s impressive job growth in construction, health care, education, and other industries,” Cooper said.

“The state’s decision to raise its minimum wage spurred strong wage growth for low-wage workers,” he said. And “expansions to state safety net programs and low-income tax credits likely helped to bolster incomes and bring down Minnesota’s poverty rate.”

Conditions for Minnesota workers and families are not perfect, Cooper said. “But the progress achieved in Minnesota over the past seven years is undeniable.”

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Pro-union Minnesota and RTW-Wisconsin have seen strikingly different results

Looking at job creation, wage growth, household income, men’s and women’s wages, health coverage, poverty and population and union growth in pro-union Minnesota and RTW-Wisconsin, the differences are striking.

WAGES

From 2010 to 2017, wages grew faster in Minnesota than in Wisconsin at every level.

Low-wage workers experienced much stronger growth in Minnesota than Wisconsin, with inflation-adjusted wages at the 10th and 20th percentile rising in Minnesota by 8.6 percent and 9.7 percent, compared to 6.3 percent and 6.4 percent in Wisconsin.

MEN’S AND WOMEN’S WAGES

The inflation-adjusted median wage for women rose by 5.4 percent in Minnesota from 2010 to 2017, compared to only 0.8 percent in Wisconsin.

Men’s median wage rose by 1.6 percent in Minnesota, while the median wage for men in Wisconsin actually fell by 0.9 percent.

HEALTH COVERAGE

Minnesota accepted a $1.2 billion grant from the federal government to set up a health care exchange and expand Medicaid under the Affordable Care Act (ACA). Wisconsin chose not to accept federal funding to set up a health exchange or to expand Medicaid under the ACA.

As a result, Minnesota residents are more likely to have health insurance than their counterparts in Wisconsin, with stronger insurance take-up of both government and private health insurance since 2010.

JOB GROWTH

Job growth since December 2010 has been markedly stronger in Minnesota — 11.0 percent growth in total nonfarm employment, compared with only 7.9 percent growth in Wisconsin.

Minnesota’s job growth was better than Wisconsin’s in the overall private sector (12.5 percent vs. 9.7 percent) and in higher-wage industries, such as construction (38.6 percent vs. 26.0 percent) and education and health care (17.3 percent vs. 11.0 percent).

HOUSEHOLD INCOME

Median household income in Minnesota grew by 7.2 percent from 2010 to 2016. In Wisconsin, it grew by 5.1 percent over the same period.

Median family income exhibited a similar pattern, growing 8.5 percent in Minnesota compared with 6.4 percent in Wisconsin.

POVERTY

Minnesota made greater progress than Wisconsin in reducing overall poverty, child poverty, and poverty as measured under the Census Bureau’s Supplemental Poverty Measure.
As of 2016, the overall poverty rate in Wisconsin as measured in the American Community Survey (11.8 percent) was still roughly as high as the poverty rate in Minnesota at its peak in the wake of the Great Recession.

UNION MEMBERSHIP

From 2010 to 2017, the share of Wisconsin workers in unions fell by 5.9 percentage points from 14.2 percent to 8.3 percent — the largest decline in union membership of any state in that period. The drop can be directly traced to the 2011 passage of Act 10, which stripped collective bargaining rights from public sector workers, and the subsequent passage of a so-called “right-to-work” law.

POPULATION TRENDS

From 2010 to 2016, both states had more residents migrate to another state than move into Minnesota or Wisconsin However, the domestic migration trend has recently shifted in Minnesota. In 2016-2017, net domestic migration was positive, with nearly 8,000 more U.S. residents moving to Minnesota than departing. In Wisconsin, net migration was still negative, with over 2,000 more people leaving the Badger State than entering from elsewhere in the United States.

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