Data Wonk

Why Conservatives Attack Minnesota

They condemn its business climate even as it out-performs Wisconsin.

By - Aug 3rd, 2015 01:01 pm
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Unemployment Rate: 2003-present

Unemployment Rate: 2003-present

My recent column comparing Wisconsin’s economy to Minnesota’s triggered a number of interesting comments. Several readers questioned whether it was fair to compare Wisconsin to Minnesota.

There is no question the Minnesota economy has been outperforming Wisconsin’s in recent years on a number of measures. Consider the employment rate. As shown on the chart to the right, the rate has been steadily declining since its peak in early 2010, in Wisconsin, Minnesota, and nationally.

For the past year, however, Minnesota’s rate has stopped dropping, hovering just below 4 percent. Is that bad news for Minnesota? Economists disagree about what rate is consistent with full employment, but agree that it is not zero. In a healthy economy some number of people will be between jobs.

Civilian Labor Force

Civilian Labor Force

To answer the question, the next chart shows the civilian work force (non-military and aged 16 or over) for Wisconsin and Minnesota over the same period. (Both the unemployment rate and the work force are estimated from a monthly survey of households and are subject to sampling errors.) At a time when Minnesota’s unemployment rate has plateaued, its labor force has jumped. This implies that Minnesota’s strong job market is pulling people into its labor force, either residents of other states or people who were not actively job hunting.

Now consider the same two charts for Wisconsin. Its labor force has been much flatter than Minnesota’s yet its unemployment rate has declined from early 2010. Here the interpretation is less clear, but a part of the explanation likely reflects discouraged workers and those leaving the state, which has caused unemployment to decline despite little gain in jobs.

Comparing states to evaluate government policies is at best a tricky business. States differ in many ways, a number of which have nothing to do with government policy. Perhaps the most blatant recent example of ignoring other factors to prove a political point is the recent claim that right-to-work laws lead to more jobs—often putting a specific number on the effect—while ignoring the fact that states with right-to-work laws clustered in the South.

The Minnesota-Wisconsin comparison is attractive because it eliminates many possible sources of uncertainty. In essence each state is compared to itself. Does the switch to a different party have a noticeable effect on its economic performance compared to its previous trajectory with the other party? If one state is performing better than the other, does the gap narrow, widen, or stay the same when the governing parties are switched?

But looking at the same state over two eras tells us very little. The eight years before 2011 saw a worldwide economic collapse, while the years since have seen economic recovery in the United States. Without taking these differences into account, whoever served as governor before 2011 would be judged a failure and any since a success.

An analogy may be useful. Let’s say we are interested in evaluating the comparative effect of two diet and training plans on the performance of runners. Ideally we would randomly assign a large group of runners to one or the other of the two plans and then compare their performance over a series of races. If there were a significant difference between runners on one plan with those on the other, it would be reasonable to conclude that the difference was due to the plan.

Such a model, incorporating pairing and random selection, is sometimes described as the “gold standard” in research. Unfortunately, it is seldom available when it comes to public policy issues.

Assume instead that only two runners are available, one of whom is suspected as being better than the other. In addition, there are only two races, of radically different difficulties. Also assume that the promoters of Plan A are loudly touting its ability to improve performance. Given these restrictions, is testing the claims a hopeless cause? Even with these restrictions, it would be possible to do a rough test of the promoter’s claims. It might work like this: train the more able runner using Plan A for the first race and then switch, by using Plan A for the less able runner. Is there any evidence that the switch between plans effected the results? If the promoter is to be believed, the less able runner should exceed expectations in the second race while the more able runner does less well than expected.

This analogy fits the Wisconsin-Minnesota comparison. Let’s say the better runner is Minnesota, the first race is the period from 2003 to 2011 and the second race the 2011 to the present, and Plan A is the economic policies pushed by Walker and a slew of organizations on the right, including Wisconsin Manufacturers and Commerce (WMC).

A recent Journal-Sentinel op-ed by the WMC’s Kurt Bauer argues that Minnesota is the better runner, referring to an article by University of Minnesota professor Roger Feldman. Bauer says, “Minnesota has been outperforming Wisconsin economically since at least the 1960s. Feidman (sic) cites many reasons for this, including Minnesota’s diverse economy and the vitality of the Twin Cities.”

Bauer ignores the parts of Feldman’s article that don’t square with the WMC agenda. Feldman attributes much of Minnesota’s success to its ability to diversify its economy: “When the milling industry departed in the 1960s and 1970s, Minnesota switched to making computers and later to medical technology.” Feldman also notes that Minnesota spends more on parks and bike trails, whereas Walker has cut all public funds for state parks.

The Minnesota-Wisconsin comparison offers no evidence that the switch to a Republican governor in 2011 has benefitted Wisconsin’s economy nor that the switch to a Democratic governance has hurt Minnesota’s. This conclusion is consistent with experience in other states, notably Kansas which promised prosperity through slashing taxes.

Despite this, Bauer predicts doom for Minnesota, citing four violations of WMC orthodoxy: increasing the minimum wage to $9 per hour for most workers, expanding Medicaid, a lack of a right-to-work law, and raising taxes. The obvious lesson—that these measures haven’t had the negative effect predicted—is ignored.

Bauer also brings up state rankings: “many leading rankings on both business climate and economic outlook have shown dramatic improvement for Wisconsin since 2011 when Walker took office. Minnesota hasn’t done nearly as well in many of those same rankings.”

But most such rankings tell far more about the politics of those doing the ranking than the effectiveness of state economic policies. As soon as Walker was elected, a survey of Bauer’s own membership rated Wisconsin’s business climate far more favorably.

A similar phenomenon appears in the rankings from CEO Magazine, based on a survey of its readership. Wisconsin moved from 41st to 12th in the latest survey. Yet Minnesota, whose economy had performed much better, has been stuck with a ranking around 30th for the whole period.

State Rankings from CEO Magazine
2010 Rank 2011 Rank 2012 Rank 2013 Rank 2014 Rank 2015 Rank
Minnesota 31 29 36 30 34 31
Wisconsin 41 24 20 17 14 12

But he who lives by the rankings, dies by the rankings. About the same time Bauer was writing his article, CNBC released its 2015 rankings of Best States for Business. Minnesota jumped to first place.

CNBC Rankings-Best states for Business
2011 2012 2013 2014 2015
Minnesota 7 11 15 6 1
Wisconsin 25 17 22 17 15

Where does this leave us? The model pushed by Walker, the WMC, and numerous organizations suggest that there is a trade-off: states wishing for prosperity have to sacrifice other things—including environmental protection, progressive taxation, public amenities such as parks and bike trails, a variety of transportation modes (rather than just auto-oriented transportation), and funding of education. But what if the sacrifice does not bring prosperity? Then the choice becomes easy.

If the benefits of the Walker-WMC policies are unproven, what about the costs? To the extent that success or failure of cities and states is influenced by lifestyle issues, by having strong public schools and universities and amenities like parks and recreation, the present policies may, in the long run, make Wisconsin less competitive.

24 thoughts on “Data Wonk: Why Conservatives Attack Minnesota”

  1. Adam says:

    Is this just another reason to compare WI and MN Bruce? This headline is completely inane. WI Democrats have been whining to a point of obsession about how amazing MN is since Walker and Dayton came into office. Is it not natural for WI conservatives to try defend themselves? And yes, MN does rank better in business and has for decades. Probably has to do with the conservative, pro-business, pro-corporate policies they have had in place for decades over there as well. A states’ economic fortunes change little in the span of the few years you measure here. Lets talk in 10 years and see where we are at. By the way, the only thing I dislike more than Scott Walker is journalists using false narratives to ‘prove’ their political biases.

  2. M says:

    Some of what sets MN and WI apart may be long-standing differences regarding issues like mass-transit infrastructure. They way outstrip us on that and our lag goes back a long time. Then Walker killed whatever forward motion had been building.

    MN also leads on alternative-energy development. Milwaukee and Madison are working to be strongly sustainable cities, but recent state policies discourage forward-thinking energy investment. We’re also creating fewer start-ups, for whatever reasons.

    It also seems MN, esp. the Twin Cities, has stronger community engagement, as opposed to most policies being made by a a few powers that be. For example, “Streets MN” is an all-volunteer organization of people who advocate (including through a large network of bloggers) for ways to improve transportation, streets, etc. They’ve become a force to be reckoned with. That passion surely exists here, but does not seem to have reached critical mass, at least in MKE.

    Business outcomes may not turn on a dime based on the governor’s party. But a state’s culture does evolve and it spurs specific outcomes. Public policy can definitely influence a state’s culture, for better or worse.

  3. TF says:

    @Adam: Minnesota has never been governed by “conservative […] policies” to the extent that Wisconsin has been under Walker. Pawlenty came close, but even he had to grapple with a Democratic legislature (much as Dayton has faced a Republican legislature for much of his term). Republican Minnesota governors like Arne Carlson and Al Quie are veritable moderates today; I think one of them was kicked out of the state Republican Party for some perceived ideological infraction.

  4. Bill Kurtz says:

    Adam, are you serious? I’d love you to find any Minnesota conservative who would say “conservative, pro-business, pro-corporate policies (were) in place for decades over there.” Bruce raises the real question. After four-plus years, “what if the sacrifice (the GOP demanded of everyone except ‘job creators’) does not bring prosperity?” What then? Maybe someone should ask WMC if they want still more- what are their members waiting for?

  5. Adam says:

    MN certainly looks pro-business, pro-corporate when compared to WI. I consider myself a progressive. Today that means see a problem in your neighborhood- start a business or non-profit to solve the problem. A large segment of WI Democrats strike me as very old-school, rusty, union-think people. If there is a chance an evil business or developer might make a profit by investing in their neighborhood they will do their best to chase that investment away.
    In a lot of ways its only natural because WI is so dependent on manufacturing. Working on the assembly line and being a member of a union is the antithesis of being creative and entrepernurial, IMHO and does nothing to nurture those qualities in people. At the end of the day macroeconomics, not politics, is the driving force behind WI lackluster performance. We are heavily reliant upon manufacturing and those jobs went overseas. They are starting to come back now, but at significantly lower wages. Manufacturing is a slow growth industry at best.
    Invest in ideas and inititiatives. I just read that 70% of the states’ growth is currently occurring in Dane County, where about 10% of the states population lives. A case study in smart, creative people in action.

  6. PMD says:

    So how exactly is Democrat-led Minnesota more pro-business and pro-corporate than Wisconsin? Are they better at fostering entrepreneurs? Do they support all businesses and not just those donating to the governor?

  7. Adam says:

    @PMD

    Organizations like WMC, whose members would rather pay off the governor to get tax subsidies instead of changing their business models to remain relevant certainly add to the stagnation. Plenty of rusty, resistant-to-change folks on the right and left here in Wisco.
    But there is reason for hope. Plenty of good things happening in Madison and Milwaukee. And this will be Walker’s last term if he even finishes it out. So this ugly period in state politics to will pass.

  8. PMD says:

    OK right but what exactly is Minnesota doing better than Wisconsin when it comes to developing new businesses and fostering entrepreneurs and aiding existing businesses? I don’t doubt that they are doing a much better job than we are. I just don’t know all the specifics, and you seem to know based on your comments.

  9. Marie says:

    Adam, I agree with many of your comments. Though Wis. WAS driven by manufacturing and now barely is. Madison, fueled in part by UW presence, has leapt ahead with entrepreneurial aplomb. But there are plenty of “old-school” progressives there, probably a draw for creative, entrepreneurial types.

    Quality-of-life issues cannot be dismissed when analyzing why people choose to stay or move anywhere. Not coincidentally, both the Twin Cities and Madison top the charts on “livability.” MPLS and St. Paul are #1 for parks (among 75 largest cities). Current Wis. Gazette catalogs all the lists Madison tops. Milwaukee does rank high for volunteerism, including by nonprofits and grass-roots efforts to improve the city, so can-do attitudes are clearly in play here.

    These are complex issues. But making cities/towns livable for people of every means does promote prosperity. MN’s boosters proudly say they do that. Many in WI still hope trickle-down economics will magically lift all boats. Meanwhile, WECD corrupted econ development and some regressive policies have deepened Wisconsin’s ditch.

    Quality of life is not a partisan issue.

  10. Marie says:

    Milwaukee is doing well with re-purposing its old buildings, including those used for manufacturing…Nearly all of the MV has been reclaimed.

    http://www.jsonline.com/business/city-lights-a-new-craft-brewery-proposed-for-menomonee-valley-tower-b99550418z1-320629012.html

  11. DTY says:

    @Marie – “Quality of life is not a partisan issue.”

    Unfortunately, I think the interpretation is definitely a partisan issue. I think most would agree that conservatives, especially on the far right, tend to stress individual resources in opposition to (and often at the expense of) community resources. Many of the “quality of life” indicators that are stressed in national rankings and appear to be favored by the younger generation are community in nature.

    Parks are a great example. Conservatives seem to favor the individual having a large yard and their own playground equipment over having a smaller yard but spending public resources on a community park. Other examples – private individual or membership pools versus public pools or lakes that have water quality suitable for swimming. Private RV resort versus state park campground. Membership gyms versus public basketball courts. Private book collections versus public libraries. Personal auto and acres of parking versus transit-oriented development. Liberals will sometimes swing far in the opposite direction and attempt to prohibit certain individual assets – or at least impose draconian regulations to strongly discourage those assets or behaviors.

    The conservative / liberal divide on what constitutes quality of life is actually pretty vast, and this almost always translates into partisan decision-marking. To the ardent conservative, quality of life is derived from what one can accomplish and amass individually. To the dedicated liberal, it is only derived from the community. I’m not going to say which is right, although I would say that there needs to be a balance somewhere in between.

  12. PMD says:

    I hope this isn’t too far off topic, but I want to bring this up and I think it’s at least tangentially related to what’s being talked about here. I’m not sure if anyone else read it, but Duey Stroebel had an editorial in yesterday’s paper about the brain drain in Wisconsin (something that it seems most everyone agrees is real and a problem). He spends at least half the editorial discussing brain drain, and the rest is dedicated to his solution. What is it? A tax credit. Now that strikes me as absolutely ridiculous and not something that’s likely to appeal to Millennials. When I was 22 or 23, I don’t think I’d even heard of a tax credit. I sure couldn’t tell you what it was, and I was pretty well-read and informed then.

    He doesn’t mention public transportation or cultural amenities or the environment/healthy living or equality or any of the issues that Millennials say are most important to them (and what they look for when choosing where to work and live). I could be wrong, but a tax credit doesn’t seem like the best way to attract and retain that generation.

  13. John says:

    http://www.theatlantic.com/magazine/archive/2015/03/the-miracle-of-minneapolis/384975/

    Now contrast this with Milwaukee metro’s various cities. Could you ever imagine something like this happening here? Nope.

  14. David says:

    Wisconsin lacks an entrepreneurial spirit, is risk averse and stuck in its ways. We are self deprecating, divided and paranoid. This is our brand and its painfully obvious to people that visit or for those of us that are trying to change the dynamic. We are not a progressive state, we’re a click or two to the left of Ronald Reagan.

    What strikes me as ironic is that Milwaukee and Madison hold the keys to a bright future and these are the two places that the “new order” in this state is attacking. Their plan is to marginalize the two places that house the majority of Democrats / liberals within the state. Attack and limit the influence that these two bastions of liberalism have statewide. They want the whole state to be like Manitowoc. It is a massive PR campaign to turn us against each other. There are many exceptions, but I believe that people like Bob Donnal and others like him do immense damage.

    I went on vacation with some friends, most of whom are originally from the Milwaukee area but now live in places like Mpls, Mequon and Lake Country. I was the only one from Milwaukee and they didn’t hide their disgust and contempt for the city. Its my home and I love Milwaukee and try to make it a better place every day. The worst comments were made by people that live next door, like Mequon and Pewaukee. It was demoralizing and offensive. Most of the comments were sweeping generalizations and stereotypes. However, when I pressed them to be a bit more specific or provide coherent arguments, I was shocked at the amount of misinformation and ignorance they demonstrated. Milwaukee is not above criticism but the mean spirited, bombastic and ignorant language is pretty telling.

    What does this have to do with the article? Let me count the ways. If we were to illustrate the difference between WI and MN, or between the Milwaukee region and Twin Cities, it is that the backwards ideology / attitude results in policies that limit quality of life, investment and growth and ultimately drives away the young and educated.

    The Mpls / St. Paul region operates as a cohesive unit. The Milwaukee region is divided racially, economically and politically. The Twin Cities believes in regional transit and mobility. Wisconsin has made it illegal to operate a regional authority in SE WI and trashed plans to better connect us to a world city, Chicago, by high speed rail. Mpls / St. Paul believes in complete streets, bike lanes and other pedestrian amenities. WI wants to add $50 to the cost of a bike to pay for bike lanes and eliminate the complete streets policies that make us safer and our cities livelier. The Twin Cities fully funds its cultural amenities while we operate on a scarcity model slowly watching our valued institutions rot. Mpls / St. Paul heavily invests in the arts while we cut cut cut. The Twin Cities invests in their parks while we let ours deteriorate. MN invests in education while we wage war against teachers and cut the only thing driving our economy, the UW System. Finally, the Twin Cities sees value in its urban centers and implemented a metropolitan style of government and revenue sharing within the region. Wisconsin has adopted divide and conquer.

    All this is apparent to anyone looking to stay, relocate or invest in our state and cities.

  15. Doug says:

    In light of the recent “brain drain” articles it would be interesting to see what the differences in migration of young college educated people are for MN and WI. Specifically what’s the number of WI grads going northwest? As for the policies, it’s just further confirmation that trickle down doesn’t work. It really is simple logic. Let more income reside with lower or middle class folks and they will spend every nickel, let it reside with government and they will spend every nickel and then some, give it up the ladder to the folks at the top and they will squirrel it away and spend very little. That’s why raising taxes and bolstering the middle class causes economic expansion. Reagan RAISED taxes and spent a boatload of money we didn’t have and the economy took off (yes interest rates helped), and Bill Clinton raised taxes (after George HW Bush did too) and economy again flourished. Oh and we were actually running surpluses.

  16. Will says:

    @David,

    Best comment Ive read on this site. Thanks for posting

  17. DTY says:

    PMD, David & Doug –

    Your points all related, all correct and all part of what is a clear divide between conservative and liberal philosophies. The conservative that lives in Oconomowoc on two-acres with a private pool and has frequent flier miles to spare has no need for a public park, sidewalks or a high-speed train to Minneapolis. Further, they believe (quite genuinely) that everyone else wants the same existence and giving you tax credits will help you achieve it.

    These quality of life discussions – like Duey Stroebel’s brain drain proposal – are all about the inability to appreciate someone else’s point of view. My father-in-law probably to this day can’t comprehend why I chose a career in the public sector rather than getting an MBA and probably making 2-3 times in salary. On the flip side, liberals just won’t ever acknowledge that most people simply prefer driving alone when they travel to work.

    Hence, I think the biggest difference between Wisconsin and Minnesota that contributes to the economic difference is the strength of the political divide. I don’t know where it happened, but sometime between Tommy Thompson and Scott Walker there was an immense chasm that opened between conservative and liberals, such that counties and communities are either one or the other. That chasm doesn’t appear to exist as much in Minnesota. In the 2012 presidential election, only one county in MN had more than 64% for a candidate (Ramsey Co for Obama). Compare that to WI, where 9 counties had more than 64% for a candidate (6 for Obama, 3 for Romney).

  18. Wisconsin Conservative Digest says:

    I grew up in Minnesota and spent lots of time there. Went to school in Wisconsin. States are almost identical except for Madison and Milwaukee two poorly run Leftist pits that chase business out to Waukesha county and others. Those places are more like Illinois. Walker saved us from being Illinois, another term from Doyle and co. and we would be there. Barrett is one of the worst Mayors in country with bad roads, high crime, worst schools, heroin epidemic, worst poverty, 57% youth unemployment, human trafficking, corruption. That is what is hurting thsi state.

  19. Marie says:

    David, please consider expanding your insightful remarks in an op-ed.

    DTY, re: “On the flip side, liberals just won’t ever acknowledge that most people simply prefer driving alone when they travel to work.” Many people indeed enjoy solo drive time, but others enjoy reliable, convenient mass transit that allows them to read or do other things on their commute. (Know any research on this?)

    I agree that progressives and conservatives often interpret quality-of-life differently and support or reject funding accordingly. But states like MN that approach issues regionally and collaboratively serve those with varying preferences and incomes. Many suburbanites enjoy what MKE has to offer & would not want to live in a small town far from big-city options. Dissing/defunding MKE (or Madison) is self-defeating.

    Someone noted that without MKE, WI is simply Iowa. But not funding community assets in MKE & elsewhere is putting WI in QOL jeopardy.

  20. DTY says:

    @Marie –

    Ummm … the point I was making is that people in Wisconsin always want to defend their point of view on quality of life issues. Your questioning my statement about commuting actually proves that point. I never said that many people don’t want transit; I said that most – based on commuting patterns almost everywhere in this country, even in areas with high levels of mass transit – still choose solo auto.

    And I don’t get your statement “But …” Again, that was my point. A state like Wisconsin has so much of a difference between liberals and conservatives that rarely does anyone think regionally. Why ever consider someone else’s needs or attempt to collaborate when you can live in a homogeneous community that simply doesn’t have any other point of view? Even suburbanites that enjoy big city options typically do so in small doses and in very specific locations – and big city residents do likewise for suburban and rural options such as state parks or cultural sites like Old World Wisconsin.

    Somehow, Minnesota has less of an idealogical divide, although Wisconsin’s wasn’t that bad until about 8-10 years ago. I’m guessing it had something to do with everyone in the state searching for scapegoats on either side during the 2008 recession (even though that was clearly a national phenomenon caused by a variety of financial issues).

  21. Marie says:

    @DTY:
    I concur with your assessments. Thanks for clarifying the commuter data.

    There will be no easy ways to fix any of this, but it may help to at least acknowledge what’s happening and its impacts.

    EPA head Gina McCarthy told Charlie Rose last night that when people see no way to fix a problem (like climate change) they will deny it exists–as a coping device. (She noted that there are now clear ways to address carbon emissions affordably, which is why most states will be on board with new EPA rules.)

    People outside cities will need to see that embracing regional solutions can benefit them before they will accept that the status quo is a real problem.

  22. DTY says:

    @MARIE:
    Thanks – I think we were agreeing more than disagreeing.

    And to build on your last statement (and to try to see all points of view), people inside cities will need to embrace regional solutions that can also support the amenities and qualities of life that suburban and rural residents value. In other words, if the suburbanite agrees (or is taxed) to help fund an urban park, don’t prohibit him/her from having his/her own 2-acre lawn.

  23. Adam says:

    @ Wisconsin Conservative Digest
    “States are almost identical except for Madison and Milwaukee two poorly run Leftist pits that chase business out to Waukesha county and others.
    Nice you bring up Madison and Dane County. Since 70% of the states economic growth is currently occurring in this county that holds less than 10% of the states population. , 56% of the states private sector job gains, and had the second largest private sector wage increase in the nation in 2014. Think how dismal this states economic numbers would be without this ‘leftist pit.’
    Demographics and behaviors are changing quickly. Madison is currently driving the states economy and as MKE’s renaissance really takes hold in the coming years it will be driving this state. Better get comfortable with these ‘leftist pits’ exerting more and more influence in the years ahead, WCD!

  24. Marie says:

    @DTY
    I’ve never been into prohibiting suburban 2-acre lots. My sister & her husband raised her family on a several-acre lot in Delafield–a perfect spot for large family gatherings, gardening, etc. They let a farmer plant at least half of it–feed crops or sunflowers some years.

    But their three 30-somethings are all part of the WI brain drain–now living in Austin, LA, and San Francisco. The parents may soon sell the big house and move to MKE or head west. Suburbs are facing their own accelerating problems as they age. Collaboration will be key.

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