Add outsourcing loopholes to the list of complaints about Gov. Scott Walker’s flagship job creation agency, the Wisconsin Economic Development Corporation (WEDC).
Despite promises that WEDC wouldn’t allow companies that take taxpayer dollars to outsource jobs, a new investigation shows that the public-private agency, chaired by Walker, has done little to fix the problem.
An investigation of publicly available records conducted by Citizen Action of Wisconsin found that WEDC had made only two small changes in its policies regarding companies that outsource jobs:
■ Companies that receive WEDC loans, grants or tax credits must notify the state within 30 days after laying off workers. Nothing in WEDC’s policies prevents these companies from laying off any workers while receiving taxpayer money.
■ Companies are prohibited from using taxpayer money to outsource jobs. Once again, there’s nothing preventing these companies from sending jobs elsewhere; they just have to argue that they are using privately generated monies.
Robert Kraig, executive director of Citizen Action of Wisconsin, said that Walker and WEDC have failed to protect taxpayers from underwriting companies that outsource jobs.
“You can outsource all you want while taking WEDC money, you just have to use your own money to do it,” Kraig said.
Kraig said there were easy ways for companies to exploit the loopholes WEDC has left in place.
“For example, WEDC could be paying a company to create 100 jobs and at the same time the company is outsourcing 200 or 300 other jobs, so we’re not gaining any ground,” Kraig said. “Or the taxpayer could be funding the infrastructure you need to downsize parts of your workforce.”
Citizen Action of Wisconsin found another loophole that could cost taxpayers even more—huge tax breaks were given to manufacturers that failed to include any accountability measures to ensure that these manufacturers create even one job in Wisconsin.
Republican lawmakers inserted the tax breaks into Walker’s first budget. The nonpartisan Legislative Fiscal Bureau calculated that the tax breaks would cost the state $360 million in revenue in their first four years.
Citizen Action of Wisconsin could find no evidence that lawmakers or WEDC have added any job-creation requirements to the multimillion-dollar tax breaks.
WEDC didn’t respond to the Shepherd’s request to refute Citizen Action of Wisconsin’s allegations.
But according to Gillman Halsted of Wisconsin Public Radio, “WEDC spokesman Mark Maley wrote in an emailed statement that the agency has put new language in contracts for companies that get loans or tax credits barring them from using any WEDC money to outsource jobs. He declined to confirm whether that restriction prevents companies from offsetting outsourcing they may do, by using WEDC grants to create jobs in Wisconsin.”
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Outsourcing Jobs a Campaign Issue
The issue of outsourcing jobs became a hot-button issue during this year’s gubernatorial campaign, with Walker accusing Trek Bicycle, founded by Democrat Mary Burke’s family, of outsourcing jobs to China.
Walker upped the ante, telling reporters that he’d prevent state taxpayer money from going to companies that outsource workers. He backed proposals by state Rep. Peter Barca (D-Kenosha), a WEDC board member, to tighten controls on outsourcing.
But Citizen Action couldn’t find any public record indicating that WEDC fully closed the outsourcing loopholes. That said, it wasn’t easy to track down that information.
“It was very hard to research this,” Kraig said. “WEDC is not a real public agency. All we had to work with were minutes from their meetings.”
About a month after Walker made headlines claiming to crack down on outsourcing, it was revealed that WEDC signed off on a $6 million tax credit for Ashley Furniture while also allowing it to lay off up to half of its Wisconsin workforce.
A month after WEDC made that deal, Ashely Furniture’s owners donated $20,000 to Walker’s campaign. Walker’s spokeswoman denied that there was a connection between the tax write-offs and the contributions.
WEDC has come under heavy criticism almost since Walker decided to replace the state’s Commerce Department with this public-private entity in 2011. In its first two years, it was revealed that WEDC also lost track of $8 million in loans because of its sloppy record-keeping, repeatedly broke state law and suffered from a high volume of staff turnover.
