Category Archives: Economy

Company Move from Illinois to Wisconsin

Excellent!

“Leaving Illinois was not an easy decision for us,” said James Merlo, Trifinity’s founder and CEO, adding that his family has been doing business in Illinois for 90 years since his grandfather immigrated from Sicily.

Merlo said it was a meeting with Kenosha Mayor John Antaramian that convinced him to move operations over the border, adding that Kenosha is a “business-friendly atmosphere” where “Trifinity can grow.”

Trolley in Memphis

I was in Memphis for a couple of days this week and noticed a couple of things. I stayed downtown near the convention center on main street. My hotel was about a mile from Beale Street and the entertainment district. I enjoy getting out of the hotel to explore, so I headed down the Beale Street a couple nights for dinner.

Memphis has a trolley that runs down a good length of Main Street from the transit center north of the convention center to a block north of Beale Street. It’s one of those trolleys on rails that is powered by overhead wires. The trolley is just a dollar to ride, but I chose to walk from my hotel to Beale Street twice because I enjoy walking. It also gave me the chance to observe the trolley in action and make a few observations.

  1. It was weeknights without much going on. Downtown was sparsely populated in the evenings, so I don’t think ridership was reflective of a busy time with a convention or something in town. Still, I only saw one family ride it. It was empty the rest of the time.
  2. Each trolley was driven by a driver. Plus, there was a guy who say in a Gator. Every time the trolley passed him, he got out and used a tool to shift the tracks. All told, they were paying at least 5 guys to run the system at any given time.
  3. The trolley did move faster than walking, but with the stops and waiting to board, it was still faster to walk.
  4. As it happens, the convention center was empty because it is currently undergoing a massive renovation (perhaps something to watch to see if it was worth it before Milwaukee spends money redoing theirs). This caused them to close a block of Main Street and block the tracks.

What that means is that to ride the rail trolley to the end of the route, you had to ride the rail trolley to the end of the block, get off, board a wheeled trolley, and then that trolley would take you around the detour to the other side.

In other words, while the railed trolley might be interesting, the infrastructure and personnel to run it are far more expensive than the wheeled version AND the wheeled version (A.K.A. decorated bus) is far more practical because it can adjust to circumstances on the road.

I wonder how much this system is costing the good taxpayers of Memphis per rider. Someone else can try to look that up.

Population Shifts

Interesting data from the BizTimes.

Most of Wisconsin’s population gain in the last year came from its natural increase with 63,712 births outpacing the state’s 50,393 deaths. Total net migration added another 1,903 people with a net gain of 3,341 internationally offsetting the net loss of 1,438 people domestically.

Since 2010, Wisconsin has seen a net loss of 12,755 people through migration with the loss of 72,006 residents domestically outpacing a gain of 59,251 from outside the U.S.

Every Midwestern state except North and South Dakota has seen a net loss off domestically. Illinois has lost 865,873 residents to other states while adding 242,945 from outside the U.S.

 

2020 is nigh

Here is my full column that ran in the Washington County Daily News yesterday. Of course, 2020 is no longer nigh. It is here. Happy New Year!

Whenever the end of something is upon us, whether it be a day, year, or a decade, it is a natural time to reflect. As a child, I could swear that someone promised me a flying car by 2020. We have not quite made it to that utopian transportation option, but we have come a long way since this decade began.

The state of Wisconsin was a completely different place in 2010. Democrats had controlled both houses of the Legislature for two years and the governor’s office for eight years. The state was facing yet another multibillion-dollar budget deficit. Taxes had been increasing for years. The state economy was stagnant. The crushing regulatory burden was driving businesses out of the state, public employee unions pulled the strings in Madison, and citizens were denied their Second Amendment rights. It was a dark time for the state.

The people of Wisconsin had had enough and swept Republicans into legislative majorities and elected Gov. Scott Walker. Republicans would remain in power for the next eight years and ushered in a bevy of conservative reforms. They cut taxes, reduced the spending increases (unfortunately, they did not cut spending), reduced regulations, empowered people over unions, and expanded the exercise of civil rights. The results speak for themselves. Compared to 2010, Wisconsin has lower unemployment, higher labor participation, higher wages, more businesses investing in the state (including a rejuvenated tech sector), lower taxes, more protections of civil rights, and has knocked off its “Rust Belt” national reputation. The teen years were very good to Wisconsin.

At the national level, the decade began with a political upheaval. After ramming through Obamacare in late 2009, the public responded by sweeping Republicans into control of the House of Representatives, thus mitigating the damage of President Obama’s administration. By the second half of the decade, the improbable election of President Donald Trump ushered in a new era of populist antiestablishment governance that has upended the old political order. As we closed the decade with the unjust impeachment of the president, we are beginning the new decade in as much upheaval as we began the previous decade.

In the lives of everyday Americans, the decade was pretty good to most people. The Dow Industrial Average was hovering around 10,500 when the decade began, but will finish this decade at

around 28,500. Home values are up, inflation has been virtually nonexistent, wages are finally rising after years of stagnation, and jobs are plentiful. Technological advances have made life more convenient than ever. It is safe to say that as 2020 begins, Americans enjoy the most affluent, safest, comfortable, highest quality of life in the history of our species.

On a personal level, much has changed over the decade. I began the decade with four kids in the house, a busy bleacher schedule, and a full head of hair. I begin the next decade on the cusp of an empty nest, a grandchild, and the fading memory of owning a comb. It seems that nothing can resist the withering assault of time.

Looking back gives on the benefit of perspective. The further one looks into the past, the fewer things rise to the level of importance. One might consider several events in a previous decade to be important, but only one in a long-ago century. Some centuries seem to elude any level of importance altogether except that they are wedged as a bridge between more important centuries. Perhaps it is only when the lens is pulled back that the important things can come into focus.

I keep a quote by Goethe on my desktop that says, “life is the childhood of our immortality.” It is a reminder that this instant; this time; this life; is merely the foreword of a much longer, much more important story. We should laugh for no reason (or any reason), eat the candy, love without reserve, get dirty, play with the bubble wrap, make the stupid joke, and enjoy each moment. Yesterday does not hold dominion over us and tomorrow is not promised. Today is a gift to be opened with childlike joy.

Extreme Poverty Halved in Past Decade

Wow. Amazing.

Data shows that inequality has increased over the last decade with an increasing number of rich people in the global one per cent who have generated more wealth, while extreme poverty has halved.

Extreme poverty measured by the World Bank as those living on less than $1.90 per day has halved over the past decade

Extreme poverty measured by the World Bank as those living on less than $1.90 per day has halved over the past decade

Statistics from the World Bank and World Poverty Clock show that rates of extreme poverty have been halved over the past ten years, from 15.7% in 2010 to 7.7% now.

They also show extreme poverty in China has almost been entirely eradicated.

The number of people living on less than $1.90 per day, which is the World Bank’s threshold for ‘extreme poverty’, in areas including South Asia and Latin America have fallen dramatically, according to the data.

The trend does not hold true in sub-Saharan Africa, however, where overall poverty rates have risen to higher than a decade ago, partially due to a rapidly-growing population.

2020 is nigh

My column for the Washington County Daily News is online and in print. It is difficult to let a decade end (don’t start with me about the decade not actually ending until next year) without a bit of retrospective and reflection. Here’s a bit of navel gazing.

Looking back gives on the benefit of perspective. The further one looks into the past, the fewer things rise to the level of importance. One might consider several events in a previous decade to be important, but only one in a long-ago century. Some centuries seem to elude any level of importance altogether except that they are wedged as a bridge between more important centuries. Perhaps it is only when the lens is pulled back that the important things can come into focus.

I keep a quote by Goethe on my desktop that says, “life is the childhood of our immortality.” It is a reminder that this instant; this time; this life; is merely the foreword of a much longer, much more important story. We should laugh for no reason (or any reason), eat the candy, love without reserve, get dirty, play with the bubble wrap, make the stupid joke, and enjoy each moment. Yesterday does not hold dominion over us and tomorrow is not promised. Today is a gift to be opened with childlike joy.

Foxconn Pays the Tax Man

Good to see.

Mount Pleasant, Wis. – The Village of Mount Pleasant has received 2019 property tax payment from Foxconn Technology Group in the amount of $1,071,899.55, making Foxconn the largest taxpayer in the Village.

In addition, Foxconn also paid its first Special Assessment payment in the amount of $7,325,050. Foxconn is responsible to pay Special Assessments to cover the cost of all land acquisitions in the project area, in addition to the $60 million it paid the Village in 2017. To-date, 850 acres of land in Area I have been conveyed to Foxconn, and a total of $110 million in Special Assessments are in place on the approximately 2,600 acres of land in Areas I, II, and III.

“Ahead of schedule, Foxconn Technology Group has paid its 2019 property tax and special assessment payments to the Village of Mount Pleasant. These payments, totaling more than $8.4 million, establish the company as the largest taxpayer in the Village,” said David DeGroot, Mount Pleasant Village President. “We continue to see tremendous progress at Foxconn’s campus in the Village. These advance payments are one more example of Foxconn’s commitment to our area and to its obligations under the local development agreement.”

California’s New Gig Law Pushes Companies Out

At precisely the point in our technological development when it is becoming feasible for many jobs to be performed from anywhere in the world, California is making it harder and harder for people to actually work in their state.

Marisa Vallbona has transitioned a contractor who has worked for her in California into an employee, and is being more selective about the work she takes on in the state. Vallbona, who recently moved the headquarters of her public relations firm, CIM, to Houston from California, is now using only Texas-based contractors.

“I don’t work with freelancers in California anymore because of the gig economy problems,” she says.

Other companies inside and out of California are likely to follow suit. The increase in remote working over the past two decades has made it easier for companies to find workers anywhere.

It’s a shame, really. Homelessness and underemployment are real problems in that state.

Governor Seeks to Welch on Foxconn Deal

He seems determined to kill this economic engine.

MADISON, Wis. (AP) — Gov. Tony Evers’ top aide warned Foxconn Technology Group last month that a scaled-down factory in Wisconsin won’t qualify for tax credits unless the Taiwanese electronics giant renegotiates with the state, letters Evers’ administration released Friday show.

The letters underscore a deepening schism between Evers and the world’s largest electronics provider. Foxconn counts Apple, Google and Amazon among its customers.

Foxconn originally proposed building a massive flat-screen plant in Mount Pleasant that would eventually employ 13,000 people. Enamored with the thought of a monumental economic boost going into the 2018 elections, then-Gov. Scott Walker and Republican legislators approved an unprecedented $3 billion state incentives package in 2017 for the factory. Democrats complained at the time that Walker and the GOP were giving away too much for a project that might never materialize.

House Finally Moves Forward on USMCA

Excellent. But let’s be honest here… Pelosi dragged her feet on this for months for domestic political and personal benefit at the same time she is planning to impeach the president for allegedly leveraging public policy for domestic political and personal benefit.

House Democrats and the Trump administration have reached an agreement to move forward with the White House’s replacement for the North American Free Trade Agreement, top Democrats said Tuesday.

The two sides had worked for more than a year to resolve Democratic concerns about enforcement tools for labor and environmental standards under the new deal, known as the United States-Mexico-Canada Agreement. House Democrats, President Donald Trump, top Senate Republicans and labor leaders all cited progress toward a deal this week.

The Trump administration needs to submit ratifying legislation to Congress for the House to move forward with approving the agreement. Once the White House submits text — it could do so in the coming days — a 90-day window to approve USMCA starts.

The three countries’ representatives — U.S. Trade Representative Robert Lighthizer, Canadian Deputy Prime Minister Chrystia Freeland and Mexican Deputy Foreign Minister Jesus Seade — signed the revised deal on Tuesday afternoon in Mexico City.

Wisconsin Gets High Marks for Transparency for Economic Development

Good news!

Wisconsin has received the second-highest marks in the nation for economic development-related transparency and online access to information, according to a new report — a major boost for a state whose job-creation agency faced numerous problems in its early years.

The latest ranking from Wisconsin Public Interest Research Group Foundation and Frontier Group, both liberal advocacy organizations, underscores efforts at the Wisconsin Economic Development Corp. to increase transparency when taxpayer dollars are used to fund economic development subsidies.

While the state was criticized for a severe lack of spending transparency in a 2012 WISPIRG report, this year’s analysis found Wisconsin is second only to Ohio for providing online access to the state’s use of taxpayer dollars to subsidize business projects or economic development.

Jobs Surge

Wow. I didn’t expect this.

The jobs market turned in a stellar performance in November, with nonfarm payrolls surging by 266,000 and the unemployment rate falling to 3.5%, according to Labor Department numbers released Friday.

Those totals easily beat the Wall Street consensus. Economists surveyed by Dow Jones had been looking for solid job growth of 187,000 and saw the unemployment rate holding steady from October’s 3.6%.

The jobs growth was the best since January. While hopes already were up, much of that was based on the return of GM workers following a lengthy strike. That dynamic indeed boosted employment in motor vehicles and parts by 41,300, part of an overall 54,000 gain in manufacturing.

With unemployment already being so low, it is really challenging to have this much job growth. There just aren’t enough people in the workforce to fill the jobs. This means that more people are coming off the bench to fill jobs.

This is also encouraging:

Average hourly earnings rose by 3.1% from a year ago, while the average work week held steady at 34.4 hours.

Jobs up. Earnings up. Good stuff.

Wisconsin Is Adding Higher-Paying Jobs

Excellent news from the Wisconsin Policy Forum.

Generally speaking, jobs have grown more in Wisconsin in higher-paying occupations than in lower-paying ones since 2008. In fact, employment in the 11 highest-paying occupational groups—which each pay median wages of at least $42,000 annually—has grown by a combined 114,870 statewide during that time. Meanwhile, employment in the 11 lowest-paying occupational groups paying median wages of less than $42,000 has declined by a combined 42,990.

Four of the five occupational groups that have added the most jobs pay median annual wages of at least $60,000 per year: business and financial operations, computer and mathematical, healthcare practitioners and technical, and management. (See Figure 1 and our interactive charts.) These occupations also typically require higher levels of education and training than many of the occupations in decline.

One notable exception to this trend was personal care and service occupations, which have shown the most growth overall and which pay relatively low wages. Personal care and service occupations include personal care aides, barbers/hairstylists, and child care workers. Employment in that group grew by both the largest number (42,240) and percentage (56.2%) statewide during the 10-year period. At $23,870, personal care and service occupations paid the second-lowest median wage of the 22 groups in 2018 behind only food preparation and serving jobs.

Wisconsin’s Grade Inflation

It’s not just for kids anymore. This from Dr. Will Flanders at WILL, writing for RightWisconsin.

A Lake Wobegon Effect? Wisconsin is a state, according to the latest report cards, where (almost) everyone is above average.Despite proficiency rates in that hover around 40% in both math and reading, 87% of schools in the state meet or exceed expectations.

A part of the explanation for this is that growth and proficiency make up different shares of a school’s overall achievement score depending on the number of low income kids in the school. Because low income kids start from behind in many cases, growth makes up a bigger share of the score when a school has more low income kids.

It is laudable to account for student growth, but we should recognize that it makes comparisons between schools more difficult. When a school like Kluge Elementary in Milwaukee “Meets Expectations” with proficiency rates of 4.1% in math and reading, something is unbalanced.

If proficiency rates are 40% and 87% of schools are considered to meet or exceed expectations, then our expectations are woefully low. The soft bigotry of low expectations isn’t very soft anymore.

Taxes Up. Ranking Falls.

Progress?

Wisconsin’s state and local tax ranking has fallen over the prior year but remains a little higher than the year before that, the latest data from the U.S. Census Bureau show.

Taxes took up 10.3% of Wisconsinites’ income in 2017, a slight increase from 10.2% in 2016. Despite that uptick, the state took a modest step forward compared to its peers around the country, with Wisconsin’s ranking dropping to 19th highest in 2017 from 16th highest in 2016.

The public should be cautious, however, about reading too much into the 2017 data alone since not much has changed since 2015. That year, the state’s taxes took up 10.4% of personal income and ranked 22nd highest.

 

Time to let college athletes be compensated

Here is my full column that ran yesterday in the Washington County Daily News.

I had occasion last week to visit my alma mater, Texas A&M University, to celebrate the 125th anniversary of the Fightin’ Texas Aggie Band, in which I marched. The days were filled with old friends, old stories, and meeting with legions of Aggies past, present, and future.

As part of the activities, we were offered a tour of the newest addition to Kyle Field, now the largest stadium in the state of Texas. Opulent does not begin to describe it. The Hall of Champions, luxury suites, amenities, training facilities, locker rooms, etc., are truly superb. A look to the west at the baseball field, track facilities, soccer field, basketball arena, etc., will find equally magnificent facilities. Many of these facilities, including the newest addition to Kyle Field, were built mostly with private money, but they really show how much money flows through college athletics.

While I could use any university as an example, the numbers from Texas A&M are a good example. Last year, Texas A&M Athletics took in $212.4 million in revenue against $165.8 million in expenses, resulting in a 22% profit of $46.6 million. Many private companies would be delighted to see such positive financial performance. On any given home football game day, 60,000-plus people flood into town. They stay at hotels, eat at restaurants, buy merchandise, rent cars, and have a staggering economic impact on the little city. Jimbo Fisher, the football head coach, is being paid $75 million over 10 years. The media companies make millions broadcasting the games on television and radio. Companies like Nike, Adidas, and Under Armor make millions selling athletic gear with college logos on them.

Everybody is making money — big money — in college athletics except the athletes playing the games. That needs to change.

For years, it has been forbidden for college athletes to earn or accept money. The rationale is that the purpose of college athletics is to be an extracurricular activity that attracts kids to college and provides some of those kids with access to higher education through scholarships. If college athletes can earn money for playing a sport, then they blur into professional athletes competing for a school instead of an amateur college kid just playing while he or she is earning a degree. Such notions seem almost quaint when college sports has become a multibillion-dollar industry.

While much of the attention is focused on the tiny number of high-profile athletes who are destined for national fame in professional leagues, the vast majority of college athletes do not fit that mold. In all of Division I athletics, only 69% of athletes receive some kind of scholarship, and a smaller percentage receives a full scholarship. Even then, the scholarship does not cover expenses outside of school. For athletes from financially disadvantaged backgrounds, the prohibition from being able to earn money if they play a sport might keep them from playing the sport at all.

Furthermore, only a handful of college athletes will ever go on to compete at a professional level, and only some sports even have a professional league where athletes can earn good money. Most college football, baseball, basketball, and hockey players never make it to the pros, and the average track, volleyball, or lacrosse player will never be able to earn a living competing in their sport.

College athletes are adults. It is fundamentally unjust for thousands of people to make money off of their talent while they are prohibited from doing so. This is especially true considering that the athlete is assuming all of the risk. How many times, for example, has a star college athlete destined for the pros suffered a career-ending injury before they were ever able to earn a single dollar for all of their work and talent?

Whether universities should actually pay athletes a salary outside of scholarships is certainly questionable. Universities are not in the business of sports and public universities, in particular, should not use tax dollars to pay athletes. But if a local car dealership, law firm, or restaurant wants to pay a prominent college athlete to use their likeness in their advertising, why should that be prohibited? Who is harmed by that transaction? Nobody.

Several states and the NCAA are already moving to allow college athletes to earn money for themselves as they are earning money for everyone else. Wisconsin should be the next state to do so.

Time to let college athletes be compensated

My column for the Washington County Daily News is online and in print. Here’s a taste:

Everybody is making money — big money — in college athletics except the athletes playing the games. That needs to change.

[…]

College athletes are adults. It is fundamentally unjust for thousands of people to make money off of their talent while they are prohibited from doing so. This is especially true considering that the athlete is assuming all of the risk. How many times, for example, has a star college athlete destined for the pros suffered a career-ending injury before they were ever able to earn a single dollar for all of their work and talent?

Whether universities should actually pay athletes a salary outside of scholarships is certainly questionable. Universities are not in the business of sports and public universities, in particular, should not use tax dollars to pay athletes. But if a local car dealership, law firm, or restaurant wants to pay a prominent college athlete to use their likeness in their advertising, why should that be prohibited? Who is harmed by that transaction? Nobody.

Several states and the NCAA are already moving to allow college athletes to earn money for themselves as they are earning money for everyone else. Wisconsin should be the next state to do so.

 

CBD Glut

The market is still trying to find equilibrium.

About 65% of U.S. hemp farmers lack a buyer for their crop this season, leaving them few alternatives, according to a July survey by Whitney Economics. Hemp has less infrastructure than other crops, so farmers cannot rely on selling their crop to a local grain elevator.

“People entered in on speculation,” said Chase Hubbard, hemp commodities analyst at The Jacobsen, a price reporting agency. “The results could be tragic for some small farmers.”

The 2018 Farm Bill coincided with a boom in the market for food, drink and cosmetic products laced with CBD, an industry that Wall Street firm Cowen & Co has estimated to grow to $16 billion by 2025.

Enticed by projections that hemp would bring $750 in profits per acre – well above the $150 or less from a typical acre of soybeans – farmers placed their bets on a crop that had been illegal for most of their lifetimes.

Last April, as farmers planted, a pound of hemp biomass sold for about $40. Now, as farmers harvest and take their crops to market, the same amount sells for $18-$25, according to PanXchange, a commodities platform.

Fed Pumps Money into Market

Inflation to come.

The Federal Reserve Bank of New York is boosting the amount of temporary liquidity it is willing to make available to financial markets starting this week, the bank said on Wednesday.

It said that as of Thursday, the minimum size of its overnight repurchase-agreement, or repo, operations will rise to $120 billion, from what had been at least $75 billion. Longer-term operations will rise from a minimum daily offering size of $35 billion and go up to $45 billion in interventions scheduled for Thursday and Oct. 29. The longer-term repo operations are scheduled to carry over into November.

The Fed said it was raising the minimum operation sizes “to mitigate the risk of money market pressures that could adversely affect policy implementation.”

Fed repo operations add liquidity to financial markets by loaning cash to eligible banks in return for taking in Treasury debt, which effectively functions as collateral for the loans. The Fed restarted large-scale repo operations a month ago when confronted with unexpectedly big swings in money market borrowing rates.

Interest rates spiked ahead of the September Federal Open-Market Committee meeting for a number of factors. Much of it was due to tax payments and Treasury debt settlements. But as part of an effort to tamp down on market volatility, the New York Fed have made large-scale repos a regular occurrence again.

No New Jobs for Inner City Milwaukee

Ah, the classic American tale. Company wants to move into the inner city to create jobs and build the community; protesters crap all over it; company takes its business elsewhere. Nice job, Milwaukee.

Strauss Brands announced Monday they will not be relocating from Franklin to Milwaukee — taking with them up to 500 potential jobs.

[…]

In September, the city announced Strauss Brands would be moving its headquarters — and meat processing facility — to the city’s northwest side. The company was planning to build a 170,000-square-foot building on 20 acres, and planned to slaughter 500 cows every day starting in 2021.

Milwaukee city officials celebrated the ability to get a large production facility to move into the struggling business park.

Alderman Khalif Rainey, who represents the district where Century City is located, was in support of Strauss Brands moving into the area. He said those jobs were needed.

But after intense criticsm over the slaughterhouse, the common council decided to revisit the proposal, planning to do so Tuesday, Oct. 29.