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What’s the Matter with Wisconsin?

Middle-income workers in Wisconsin are facing rising prices and reduced bargaining power.

It may sometimes feel like everything is always getting more expensive, whether it’s housing, health care or groceries.

 

“You hear that all the time in the news,” says Dan Sanderson, 64, a software developer living in New Richmond, Wisconsin, across the Minnesota border from Minneapolis. “I identify with that,” he tells me. “Although I’m paid well, I certainly have not kept up with [the] pace of the expenses for me.”

 
Median income growth has slowed across the country but particularly in Wisconsin, where a host of Republican policies were rolled out within the last decade under former Governor Scott Walker.

 
Sanderson’s experience underscores the reality that while low-income workers struggle to make enough money, middle-class workers face the uncertainty of rising prices as well.

 
For instance, Sanderson says that as he’s gotten older “medical expenses and so forth seem to be outpacing what I make. And I don’t see how that’s going to turn around anytime soon.” His instincts are right: Health care costs have ballooned in the last few decades and are expected to keep rising. In the past decade, health care spending by families with large employer medical plans has increased at twice the rate of wages.

 
Sanderson, who turns 65 soon, is looking forward to becoming eligible for Medicare in three months.

 
In Wisconsin, real median income growth slowed to 2.2 percent during the first two years of the Trump administration, compared to a healthier 6.4 percent growth rate for the typical household in the previous two years, according to an analysis of U.S. Census data by the Economic Policy Institute and Capital & Main. The so-called soaring economy President Trump boasts about isn’t necessarily translating to stability for a typical household. Even though incomes have been growing, prices have been growing faster, so families still find it difficult to pay their bills.

 

In Wisconsin, real median income growth slowed to 2.2 percent during the first two years of the Trump administration

This doesn’t necessarily make intuitive sense—unemployment is low and worker productivity is rising. In theory, wages and income should be keeping pace with prices. This is true in nearly all states nationwide, but the slowing of median income growth in Wisconsin is distinctive.


A year after Scott Walker left the governor’s mansion in Madison, his legacy may help point to what’s the matter with Wisconsin.


“There’s a set of policies that I would point to as pushing against equity and median income growth,” says Laura Dresser, associate director at the Center on Wisconsin Strategy at the University of Wisconsin–Madison. “You can see this across the budgets, the policy choices that the legislature and the governor were making from 2011 to 2018.”


Those policy choices include Walker and the right-wing state legislature decimating public-sector unions in 2011, and then establishing a right-to-work law in 2015 to hurt private ones. Since then unionization has heavily declined in the state. Weakened bargaining power — which historically affects both union and nonunion workers — means that workers have less ability to negotiate for better wages. And so wages and incomes don’t necessarily rise alongside prices.


In addition, before the Trump administration’s massive federal tax reform, Walker restructured the tax system to funnel tax cuts toward those at the top, widening inequality in the state.


And health care, that necessity with its ever-increasing prices, was not a priority. This may not exactly be reflected in the median income trends, but Republicans’ refusal to expand Medicaid not only put a strain on low-income families but cost the state in health care jobs and investments. Walker opted out of a state-run marketplace; Sanderson lost his state plan — a high-risk pool for people with pre-existing conditions — as he was expected to turn to pricier federal marketplace plans. “There were hardly any competitors,” in his area of western Wisconsin, he says, which drove up costs.

 

He was forced to find private insurance, and “the deductibles were just outrageous.” He and his wife are still paying off bills from back then. “We’ve always had insurance,” says Sanderson. “It just doesn’t cover everything.”

 

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According to Dresser, “Public policy tends to be a slow [process] — the tie between economic policy and income outcomes is not direct and sudden.” If Wisconsin is doing worse, she says, “I think we laid the groundwork” for declining median income growth with the slew of inequitable Walker policies.

 

And then came the Trump administration.

 

National trade policies (not all due to Trump) have hobbled manufacturing in Wisconsin and its iconic dairy industry. Large agribusiness is dominating over small family farms and milk surplus is driving prices down.

Dan Sanderson, 64: “Medical expenses seem to be outpacing what I make. And I don’t see how that’s going to turn around anytime soon.”

Sanderson has a side business developing dairy herd management software, but his income from that project has sharply declined in the past couple years. He reminds me of the statistic that on average two dairy farms close each day in the state.

 

But there are other trends pushed by the Trump administration that threaten worker bargaining power. Trump’s long list of anti-worker policies — e.g., diluting the power of unions and rewriting an Obama-era overtime rule — create an atmosphere that has tangible effects. “It slows down wage growth when workers feel disempowered. This is both the functional and symbolic elevation of employer power,” Dresser explains.


What ultimately happens in Wisconsin, an election battleground state, will depend on how workers perceive these policy changes and how they’ve affected their lives.


For Sanderson’s part, “It seems the current [federal] administration is trying to help business and the wealthy with their tax cuts. Supposedly we all got a tax cut out of the deal,” he says.


“But I didn’t see much.”

Copyright Capital & Main

 

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