The Price Wisconsin Will Pay For the Foxconn Deal

The news on Wednesday about developments in Foxconn’s plan to build a plant in Wisconsin provides a sharp contrast to what I just wrote about how Minnesota’s Fiscal Disparities Act has fueled growth in the Twin Cities metro region.

For some background, you might remember that last summer Donald Trump travelled to Wisconsin to celebrate with Republican Governor Scott Walker and then-House Speaker Paul Ryan at the ground-breaking for Foxconn’s new plant just outside Milwaukee, WI. The state had to pretty much give away the store to get the deal.

Trump, characteristically, took all the credit. “Everybody wanted Foxconn,” he said. “Frankly, they weren’t going to come to this country. I hate to say it, if I didn’t get elected, they wouldn’t be in this country. They would not have done this in this country. I think you know that very well.”

But what probably sold Foxconn on Mount Pleasant were the massive tax breaks Wisconsin offered to seal the deal – breaks that could end up costing the state $4.8bn if the project hits all of its targets. It’s the latest giveaway in a series of corporate welfare cheques cut for highly profitable tech companies and the largest to a foreign firm ever in the US…

The benefit of such deals to taxpayers, especially in an economy with low unemployment, is increasingly being questioned…

…Walker will have to make good on the promise that Foxconn will help create 13,000 new jobs in the region and transform an area still feeling the cold winds that followed the hollowing out of the US manufacturing industry.

Foxconn itself has been more circumspect on the number of jobs it will create, saying in a press release it will “create 3,000 jobs with the potential to grow to 13,000 new jobs”. Even if 13,000 new jobs are created, Wisconsin would be paying $346,153 per job at a subsidy of $4.5bn. An astronomical sum, but nothing compared to the $1.5m per job cost if the deal ends up creating just 3,000 new positions.

In other words, on the promise of 13,000 new jobs, Wisconsin Republicans gave up over $4.5 billion in potential tax revenues from Foxconn. That would be bad enough for the public services that the state’s citizens depend upon. But on Wednesday, the news got even worse.

Earlier this month, Foxconn, a major supplier to Apple, reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.

It is unclear when the full 13,000 workers will be hired.

As is so often the case, the media focus will be on whether or not those 13,000 jobs ever materialize (which is highly unlikely). What we won’t hear as much about is the debilitating effect such a huge tax giveaway will have on the quality of life measures that have proven to be so effective at producing growth in the Twin Cities. The Donald Trump—Paul Ryan—Scott Walker approach to job growth will once again prove to not only be bad for the people of Wisconsin, but for their overall economy as well.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly. Follow her on Twitter @Smartypants60.