Lassa: Lag in Consumer Spending Slows Wisconsin’s Economy
By State Senator Julie Lassa
A new report delivers more troubling evidence that Wisconsin’s economy has lagged behind the national average — and even behind other states in our region. On August 7, the U.S. Department of Commerce released figures that show slow growth in consumer spending, another indicator that the economic recovery experienced by the rest of the nation is leaving Wisconsin behind.
The report shows that Wisconsin consumers spent $34,721 per person in 2012, a 2.5 percent increase from the year before. Nationally, consumer spending grew 3.3 percent during the same period. Wisconsin lagged even farther behind its neighbors in the Great Lakes region, where consumer spending rose 3.5 percent.
When people don’t have money to spend, they buy fewer goods and services: slower sales mean fewer orders, and fewer orders result in fewer jobs. There’s a link, then, between our poor consumer spending performance and the fact that Wisconsin ranks 37th among the states in job creation.
There’s also a link between the amount of money people have and the amount they can spend, and here too, Wisconsin lags behind. Wisconsin residents’ personal income grew 3.9 percent from 2011 to 2012, while it increased by 4.2 percent nationally and 4.6 percent in Minnesota. Clearly, the divisive policies of Wisconsin’s current governor have not improved the economic security of Wisconsin families.
One way we could help get Wisconsin back on track is to make sure that our workers receive an honest day’s pay for an honest day’s work. I support the effort launched by my colleagues in the State Legislature to raise Wisconsin’s minimum wage for the first time since 2009. Wisconsin’s Fair Minimum Wage Act would gradually increase our wage floor to $10.10 per hour.
Restoring a living wage in Wisconsin is the right thing to do. To begin with, anyone who works hard at a full time job deserves to be able to take care of their families.
Economists at the Center on Wisconsin Strategy estimated that 587,000 Wisconsin workers would benefit from this wage increase – almost a quarter of the workforce. And raising the minimum wage impacts everyone who works for a living, because it provides incentives to pay competitive wages at all levels of the workforce.
Just as we all benefit from more competitive pay and greater economic growth with a living wage, we all pay the price when wages are kept artificially low. Too many Wisconsin citizens work hard at two or three jobs, only to have their families struggle in poverty and be forced to depend on government programs for food, childcare, health care, and other assistance. In this way, taxpayers are subsidizing the profits of corporations that are allowed to pay their employees poorly. When corporations pay less, taxpayers pay more.
Opponents of a living wage paint gloomy portraits of economic disaster and job losses, but the facts demonstrate otherwise. According to The Review of Economics and Statistics, a comparison of 17 states that have minimum wages above Wisconsin’s current level shows virtually no difference in the employment rate. In fact, the Economic Policy Institute estimates that raising the minimum wage would inject $645 million into Wisconsin’s economy and actually create 2,700 jobs.
And contrary to the assertion that the minimum wage is just for teenagers, 82 percent of Wisconsin workers who earn that wage today are 20 years old or older; 41 percent are 30 or older. One only has to reflect on the seniors who return to work in retail and restaurant jobs to supplement their retirement income to realize that a living wage will help more than just kids.
When you look at the data, it seems clear that our current policies aren’t working, and that Wisconsin is falling behind. Increasing the minimum wage would be one way to help the hard-working people of Wisconsin achieve the economic security they deserve. -Julie Lassa, State Senator, District 24