Pulse Price Report: Wisconsin Manufacturing Decline Cushioned by Tax Credit

The decline of manufacturing in America was a hallmark of the presidential debates, and the discussion has continued in 2017. In Wisconsin, a University of Wisconsin-Madison professor thinks the fall would be worse without a tax credit implemented in 2013.

The Manufacturing and Agriculture tax credit (MAC) provided income and corporate tax cuts to manufacturers. The legislature passed MAC in 2011 and it began taking effect in 2013.

Meanwhile, the jobs figures from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages found that Wisconsin lost more than 4,000 manufacturing jobs between September 2015 and September 2016.

UW-Madison Professor of Economics Noah Williams recently released his own report on the effects of MAC. Comparing Wisconsin with neighboring counties across state lines, he found that MAC helped hold onto many manufacturing jobs.

“The focus of my report was trying to figure out, of the growth that we have seen since 2013, how much of that could be explained by the tax credit,” said Williams.

Williams determined that MAC resulted in a 6.6 percent higher rate of manufacturing employment than counties neighboring Wisconsin, gaining 20,000 jobs. The credit also spilled over into other sectors, leading to a 2.5 percent higher total employment against the same out of state counties.

Williams’ data suggests the success of the tax credit seems to be at odds with the decrease in manufacturing jobs, but he doesn’t quite see it that way.

“The reconciliation of those would be that if the tax credits had not taken place we would have been in a much worse place,” said Williams.

Wisconsin was just one of 27 states that lost manufacturing jobs over the same one-year period.

“Certainly the overall hiring rate has slowed down in the last year,” said Williams, explaining one possible cause for the decline. “We’re basically near full employment. The labor force isn’t growing very fast. Population growth is very low in the state.”

The Legislative Fiscal Bureau determined that the tax credit will lead to a loss of more than $300 million in tax revenue for the state.

Crop prices (May 30)

Rio Creek Feed Mill – Algoma

Fox River Valley Ethanol – Green Bay

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States: $2.37

United States one year ago: $2.32

Wisconsin: $2.36

Wisconsin one year ago: $2.38

Northern Door: $2.40

Sturgeon Bay: $2.35

Other Commodities

Gold: $1,261.90/troy ounce

Silver: $17.40/troy ounce

Oil: $49.69/barrel

Sources: aaa.com, agweb.com, gasbuddy.com, money.cnn.com, Forbes, Wisconsin Public Radio