Foxconn’s Low Return on State Investment
Other state subsidies will have far greater jobs created per tax dollar spent.
As reports of other Wisconsin subsidies to recruit businesses come to light, the historically high Foxconn subsidies at $2.8 billion continue to look out of proportion.
Not counting additional local support for projects, the Wisconsin tax credits, which often will be in the form of pure cash payments to manufacturers and agri-businesses, vary widely deal by deal.
A recent accounting of the 49 other top economic development projects in the state in 2017 showed that those expansions would create about 5,000 jobs. That‘s a very positive track record, and Gov. Scott Walker rightly crowed about it.
Those new jobs, though, were a bargain compared to the Foxconn subsidies. The 49 companies, including 14 in the food and beverage industries, were awarded a total of $114 million in tax credits.
You can do the math. That divides out to about $23,000 per additional job.
Obviously, the Wisconsin Economic Development Corp. (WEDC) takes other factors into consideration when determining how much taxpayer money the state will throw into a deal. They look at investment levels in the expansions, pay levels and benefits, retention of existing jobs and the introduction of new technologies to the state’s repertoire.
Nonetheless, the main criteria will always the number of new jobs created. Gov. Walker promised that he would create 250,000 new jobs in his first term, and his promise paid off at the polls. Looking back, he batted about 50% on the jobs target.
Now he is trying to hit that number by the end of his second term. Foxconn may add several thousand by the time he runs for his third term in November 2018, but that’s a small piece of 250,000. The broad array of Wisconsin employers, most of which were once startups in the state, and entrepreneurs carry the ball for the most of the job creation.
In fairness, the unemployment rate in the state is running at a very low 3.2%, so the lack of qualified workers has become an inhibitor on growth. Companies have a lot of openings for skilled workers. Population growth is slow in Wisconsin, only slightly positive.
So every politician, Republican and Democrat, has taken up workforce development as a major strategy, rightfully so. We need every employable citizen trained up and matched to a job. Every employer needs to ramp up its training and education budget.
All that said, the wide range of subsidies is noteworthy. Here are a few individual awards per job created:
- Haribo, a candy maker in Pleasant Prairie, near Foxconn’s site, 385 jobs at $54,000 in tax credits per job.
- Master Gallery Foods, a cheese plant Oostbug, 150 jobs at $17,000 apiece.
- Johnsonville Sausage, Sheboygan Falls, plus 100 jobs at $100,000 apiece.
- Kwik Trip, La Crosse, plus 329 jobs at $64,000 piece.
- Generac Power Systems, Waukesha, plus 400 at $25,000.
I like the concept of “Return of Taxes” (ROT) for perspective on subsidies. A new job at $50,000 sends back about 10% per year to state coffers in sales and personal income taxes, or $5,000. So, the $54,000 per job credit at Haribo equates to about an 11-yer payback.
At $220,000 per job, Foxconn’s ROT is 44 years.
There are, of course, other positive effects down the supply chain.
The board of WEDC, a public-private collaboration, has the tough task of weighing the trade-offs as they set the level of credits. For instance, is the retention of a headquarters involved? That’s the case for Generac, Kwik Trip, Johnsonville, and U.S. Venture Inc. in downtown Appleton.
Other states compete hard to steal headquarters. Recruiters know that where the executives and their spouses hang their hats makes a big difference to a community and a state, such as taxes on executive salaries, selection of R&D partners, selection of vendors in the supply chain and leadership for civic and charitable causes.
Where, for instance, would Milwaukee be without the headquarters of NML, Rockwell, Briggs & Stratton and Manpower (all of which started here)?
The bestowal of subsidies is a tricky business, both in terms of paybacks and in terms of politics. Clearly, Gov. Walker is making a huge political bet in the recruitment of Foxconn at several multiples of other recent awards, even of those where a headquarters expansion is involved.
By the time he runs for his fourth term (assuming reelection in November and to tie Tommy’s four terms) in 2022, we will know if his high-risk bet, which I have supported, paid off.
More about the Foxconn Facility
- Resolution seeks to spare Milwaukee We Energies ratepayers from huge Foxconn bill - Ald. Bob Bauman - Jan 17th, 2018
- Governor Walker Announces Wisconsin Career Creator Plan to Support Long-Term Workforce Development Needs - Gov. Scott Walker - Jan 17th, 2018
- Wisconsin State Director of Strategic Economic Initiatives, Matthew Moroney to speak on the FOXCONN Development at AGC Corporate Dinner - Associated General Contractors of Greater Milwaukee - Jan 16th, 2018
- WisDOT soliciting bids for WIS 20 road work in Racine County - Wisconsin Department of Transportation - Jan 10th, 2018
- Op Ed: Foxconn’s Low Return on State Investment - John Torinus - Jan 8th, 2018
- Matt Flynn Attacks Green Light Given to Foxconn to Pollute Wetlands - Matt Flynn - Jan 4th, 2018
- Eyes on Milwaukee: City May Contest Foxconn Electricity Deal - Jeramey Jannene - Jan 4th, 2018
- Public Works Committee to discuss rate hike to fund work at Racine’s Foxconn facility - Ald. Bob Bauman - Jan 2nd, 2018
- Eyes on Milwaukee: Will Milwaukeeans Pay for Foxconn Power? - Jeramey Jannene - Dec 27th, 2017
- Eyes on Milwaukee: Should City Buy 500 Acres in Racine County? - Jeramey Jannene - Dec 23rd, 2017
- Murphy’s Law: Foxconn Subsidy Now Exceeds $4 Billion - Bruce Murphy - Dec 21st, 2017
- Gov. Walker’s Foxconn Scam Already Starting to Unravel as News Breaks of Additional $134 Million Cost to Taxpayers - State Rep. Dana Wachs - Dec 16th, 2017
- Eyes on Milwaukee: Could Milwaukee Build A Foxconn City? - Jeramey Jannene - Dec 13th, 2017
- State Senator Janis Ringhand statement on Foxconn earnings report - State Sen. Janis Ringhand - Nov 15th, 2017
- Foxconn Signing Is a Love Fest - Graham Kilmer - Nov 13th, 2017
- Andy Gronik Statement on Gov. Scott Walker’s Re-Election Foxconn Hail Mary - Andy Gronik - Nov 10th, 2017
- Governor Walker, Foxconn Chairman Gou Sign Historic Agreement to Bring $10 Billion World-Class Advanced Manufacturing Campus, 13,000 Jobs to Wisconsin - Gov. Scott Walker - Nov 10th, 2017
- One Wisconsin Now Statements on Gov. Walker Signing Contract to Implement Largest State Giveaway to A Foreign Corporation in U.S. History - One Wisconsin Now - Nov 10th, 2017
- Gov. Walker’s re-election Hail Mary falls short - State Sen. Jennifer Shilling - Nov 10th, 2017
- The Art of a Desperate Deal - Democratic Party of Wisconsin - Nov 10th, 2017
- Walker Accepts $3 Billion Liability, Rejects Accountability - State Sen. Lena Taylor - Nov 10th, 2017
- Murphy’s Law: Walker Retreats From Foxconn Deal - Bruce Murphy - Nov 9th, 2017
- Top Ten Reasons Wisconsin Got Conned - State Sen. Tim Carpenter - Nov 8th, 2017
- Matt Flynn Statement on the Foxconn Contract - Matt Flynn - Nov 8th, 2017
- Back in the News: WEDC Shifts on Foxconn Contract - Bruce Murphy - Nov 8th, 2017
- Democrats Continue to Lead the Fight to Protect Taxpayers on Foxconn - State Rep. Dianne Hesselbein - Nov 7th, 2017
- Rep. Sargent’s Statement on Second Request for Public Review of Foxconn Contract, WEDC Board’s Two-Day Review - State Rep. Melissa Sargent - Nov 7th, 2017
- WEDC — Seeing Contract Today, A Good First Step, Taxpayer Protection Still Top Priority - State Sen. Tim Carpenter - Nov 6th, 2017
- WisDOT applies for federal Infrastructure For Rebuilding America Grant - Wisconsin Department of Transportation - Oct 31st, 2017
- Gov. Scott Walker’s Foxconn Deal Widely Unpopular Amongst Wisconsinites - Andy Gronik - Oct 26th, 2017
- Murphy’s Law: The Secrets of Foxconn - Bruce Murphy - Oct 26th, 2017
- Matt Flynn Makes Statement on the Corrupt Handling of the Foxconn Contract by Walker’s WEDC - Matt Flynn - Oct 25th, 2017
- Walker jobs agency leaves taxpayers in the dark - State Sen. Jennifer Shilling - Oct 25th, 2017
- Op Ed: Can WEDC Oversee Foxconn Deal? - State Sen. Kathleen Vinehout - Oct 25th, 2017
- The WEDC: As Transparent as Trump with his Tax Return - State Rep. Jimmy Anderson - Oct 24th, 2017
- WEDC Audit Poses New Concerns on Foxconn Deal - State Sen. Lena Taylor - Oct 24th, 2017
- Audit of Walker jobs agency intensifies Foxconn concerns - State Sen. Jennifer Shilling - Oct 24th, 2017
- New poll shows Milwaukee area’s divided feelings on Foxconn, views on other topics as Marquette Law School launches expanded public policy program - Marquette University - Oct 24th, 2017
- Walker Administration Keeps Details of Foxconn Deal Secret as Agency Entrusted With Overseeing Deal Subject of Another Critical Review - One Wisconsin Now - Oct 24th, 2017
- Andy Gronik Urges WEDC To Release Foxconn Contract Details Before Vote, Collect Public Feedback - Andy Gronik - Oct 23rd, 2017
- Wisconsin Can’t Afford Another Foxconn “Nuclear Bomb” - Democratic Party of Wisconsin - Oct 20th, 2017
- What are Walker and Foxconn hiding? - Democratic Party of Wisconsin - Oct 17th, 2017
- Foxconn gamble shrouded in secrecy - State Sen. Jennifer Shilling - Oct 16th, 2017
- Court Watch: Foxconn Law Transforms State Courts - Margo Kirchner - Oct 12th, 2017
- Walker and Forty-Fifth President Sweeten Deal for Foxconn - State Sen. Lena Taylor - Sep 28th, 2017
- Walker picks Foxconn over Wisconsin schools and roads - State Sen. Jennifer Shilling - Sep 18th, 2017
- Governor Walker Signs Wisconn Valley Special Session Bill into Law - Gov. Scott Walker - Sep 18th, 2017
- The State of Politics: Mr. Gou – Your Turn - Steven Walters - Sep 18th, 2017
- Governor Walker Applauds Legislature for Approving Wisconn Valley Special Session Bill - Gov. Scott Walker - Sep 14th, 2017
- Governor Walker Releases Statement on Bipartisan Senate Passage of Wisconn Valley Special Session Legislation - Gov. Scott Walker - Sep 12th, 2017
- WEDC’s Poor Jobs Accountability Record Makes Foxconn Deal a Scandal Waiting to Happen - Citizen Action of Wisconsin - Sep 11th, 2017
- Op Ed: Foxconn Deal Suspends Judicial Rules - Wisconsin Democracy Campaign - Sep 11th, 2017
- GOP Puts $3 Billion Foxconn Thumb on Scales of Justice - One Wisconsin Now - Sep 5th, 2017
- Op Ed: Foxconn Multiplier Overstates New Jobs - William L. Holahan and Charles O. Kroncke - Sep 2nd, 2017
- Walker administration misleads on environmental rollbacks for Foxconn - State Rep. Katrina Shankland - Aug 31st, 2017
- Murphy’s Law: Newest Deal Shows Foxconn Flaws - Bruce Murphy - Aug 29th, 2017
- The State of Politics: Would Democratic Governor Kill Foxconn Deal? - Steven Walters - Aug 28th, 2017
- Op Ed: Illinois Loves Our Foxconn Deal - State Sen. Kathleen Vinehout - Aug 26th, 2017
- Biking: Foxconn, Biking and State Roads - Dave Cieslewicz - Aug 25th, 2017
- Op Ed: Foxconn Should Embrace Green Goals - John Torinus - Aug 24th, 2017
- Washington State Representative Offers Warning for Wisconsin on Foxconn - One Wisconsin Now - Aug 24th, 2017
- Murphy’s Law: Paper Peddles Bogus Foxconn Report - Bruce Murphy - Aug 23rd, 2017
- Representative Lisa Subeck Calls on Joint Finance Committee Co-Chairs to Focus on Budget, Prioritize People over Profits - State Rep. Lisa Subeck - Aug 22nd, 2017
- Governor Walker Highlights Opportunities Foxconn Brings for Wisconsin’s Healthcare Industry - Gov. Scott Walker - Aug 22nd, 2017
- The State of Politics: Foxconn Biggest Deal in State History - Steven Walters - Aug 21st, 2017
- Statewide Online Tool Assists Wisconsin Companies Seeking to Do Business with Foxconn - Gov. Scott Walker - Aug 21st, 2017
- The Senate Must be The Grownups in the Room… Again. - State Sen. Tim Carpenter - Aug 21st, 2017
- Op Ed: The Many Broken Promises of Foxconn - State Rep. David Bowen - Aug 20th, 2017
- Rep. Goyke Statement on Foxconn Special Session Bill - State Rep. Evan Goyke - Aug 18th, 2017
- Wisconsin Budget: Foxconn Could Take Till 2058 To Pay Off - Jon Peacock - Aug 18th, 2017
- Governor Walker Releases Statement on Bipartisan Assembly Passage of Wisconn Valley Special Session Legislation - Gov. Scott Walker - Aug 18th, 2017
- Republican Agenda Puts Corporate Welfare Package for Taiwanese Company Ahead of our Public Schools - State Rep. Dianne Hesselbein - Aug 17th, 2017
- Rep. Sinicki Votes No on Foxconn Package - State Rep. Christine Sinicki - Aug 17th, 2017
- Statement from Rep. Barca on the Assembly Passage of Foxconn Bill - State Rep. Peter Barca - Aug 17th, 2017
- Facts on Foxconn Trump Proponents’ Protestations Deal Would Benefit Wisconsin - One Wisconsin Now - Aug 17th, 2017
- Foxconn Debate Cheat Sheet - State Rep. Gordon Hintz - Aug 17th, 2017
- $3 Billion Foxconn Boondoggle Sells Out Wisconsin’s Future to Foreign Corporation - State Rep. Lisa Subeck - Aug 17th, 2017
- Op Ed: How to Get a Better Deal From Foxconn - John Torinus - Aug 17th, 2017
- Data Wonk: Will Foxconn Deal Fight Poverty? - Bruce Thompson - Aug 16th, 2017
- Governor Walker Moderates Foxconn Roundtable Discussion in Green Bay - Gov. Scott Walker - Aug 16th, 2017
- Op Ed: Where Will Foxconn Find Workers? - State Rep. Gordon Hintz - Aug 16th, 2017
- Vukmir: The time is now for Foxconn - Assistant Majority Leader Leah Vukmir - Aug 15th, 2017
- Foxconn tax break could exceed $1 million per job - State Sen. Jennifer Shilling - Aug 14th, 2017
- Paul Ryan Challenger Opposes $3 Billion Corporate Handout to Foxconn - Cathy Myers - Aug 14th, 2017
- The State of Politics: 10 Tough Questions About Foxconn Deal - Steven Walters - Aug 14th, 2017
- Dana Wachs Announces Opposition to Foxconn Package - State Rep. Dana Wachs - Aug 13th, 2017
- Campaign Cash: Did Foxconn Lobby Illegally? - Wisconsin Democracy Campaign - Aug 12th, 2017
- Statement from Rep. Barca Regarding Republican Amendment to Foxconn Bill - State Rep. Peter Barca - Aug 11th, 2017
- Statement: Amendment to Special Session Assembly Bill 1 - Wisconsin Assembly Speaker Robin Vos - Aug 11th, 2017
- Op Ed: Renegotiate the Foxconn Deal - Matt Flynn - Aug 11th, 2017
- Murphy’s Law: Walker’s Desperate Deal With Foxconn - Bruce Murphy - Aug 10th, 2017
- Foxconn Deal Flounders in State Legislature - One Wisconsin Now - Aug 10th, 2017
- If ‘Ifs’ and ‘Buts’ Are Candies and Nuts We’ll Have Foxconn Deal Paid Off in 2043 - One Wisconsin Now - Aug 9th, 2017
- Rep. Shankland: Statement on Foxconn Analysis - State Rep. Katrina Shankland - Aug 8th, 2017
- Foxconn Fiscal Analysis Deeply Troubling for Wisconsin Taxpayers - State Rep. David Crowley - Aug 8th, 2017
- Statement from Rep. Barca on New Fiscal Analysis of Proposed Foxconn Deal - State Rep. Peter Barca - Aug 8th, 2017
- Rep. Hintz Statement on Foxconn Cost to Taxpayers - State Rep. Gordon Hintz - Aug 8th, 2017
- Campaign Cash: Bill Has $10 Million Giveaway to Fiserv - Wisconsin Democracy Campaign - Aug 8th, 2017
- Wisconsin Veterans Chamber of Commerce Calls For Foxconn Project to Include Disabled Veteran Owned Businesses - Wisconsin Veterans Chamber of Commerce - Aug 7th, 2017
- Wisconsin Budget: The High Cost of Foxconn - Jon Peacock - Aug 4th, 2017
- What Does the Foxconn CEO Say About His Employees? - One Wisconsin Now - Aug 4th, 2017
- Foxconn Hearing: Big Promises, Little Details, Lacks Transportation Plan - State Rep. David Crowley - Aug 3rd, 2017
- One Wisconsin Now Testimony on Foxconn Subsidy Legislation - One Wisconsin Now - Aug 3rd, 2017
- No Guarantees to Prevent Wisconsin Tax Dollars From Subsidizing Illinois Jobs in Foxconn Deal - One Wisconsin Now - Aug 2nd, 2017
- Unnecessary to Sacrifice Natural Resources for Foxconn - Wisconsin League of Conservation Voters - Jul 31st, 2017
- Statement from Rep. Barca on Foxconn Developments - State Rep. Peter Barca - Jul 28th, 2017
- The Contrarian: Walker’s Reelection Now A Certainty - George Mitchell - Jul 28th, 2017
- Eyes on Milwaukee: Foxconn Loves Wisconsin, Walker - Jeramey Jannene - Jul 27th, 2017
- Governor Walker, Foxconn Founder and CEO Terry Gou Sign Memorandum of Understanding in Milwaukee - Gov. Scott Walker - Jul 27th, 2017
- REALTORS® Welcome Foxconn - Greater Milwaukee Association of REALTORS® - Jul 27th, 2017
- MATC Statement on Foxconn - Milwaukee Area Technical College - Jul 26th, 2017
- Statement from Rep. Barca on Foxconn Economic Development Announcement - State Rep. Peter Barca - Jul 26th, 2017
- Milwaukee County Executive Chris Abele Statement on Foxconn Announcement - County Executive Chris Abele - Jul 26th, 2017
- Global High-Tech Manufacturer Foxconn Announces $10 Billion Investment, Will Create 13,000 Jobs in New Wisconsin Campus - Gov. Scott Walker - Jul 26th, 2017
- Foxconn Frenzy: Proceed with Caution - State Sen. Chris Larson - Jul 26th, 2017
- Shilling cautious on Foxconn announcement - State Sen. Jennifer Shilling - Jul 26th, 2017
- Op Ed: Loss of Talgo Train Hurts Foxconn Deal - James Rowen - Jul 20th, 2017
- Mayor Barrett Supports Siting Foxconn Facility in Southeastern Wisconsin - Mayor Tom Barrett - Jul 17th, 2017
- On the Air: How Likely Is It Foxconn Will Create 10,000 Jobs? - Urban Milwaukee - Jul 13th, 2017
- Murphy’s Law: Walker Building Yesterday’s Economy - Bruce Murphy - Jul 13th, 2017
- Eyes on Milwaukee: Foxconn Lands in Milwaukee - Jeramey Jannene - Jul 10th, 2017