Out-foxed and conned?
By Scott Sumner
President Trump is taking credit for a new Foxconn LCD panel manufacturing plant, which is now under construction in southwestern Wisconsin. It’s actually not clear why he is claiming credit, but in any case it might be better if he distanced himself from this project. While Foxconn has suggested that the project might eventually employ 13,000 workers, they have only promised 3000 jobs in the initial facility.
More importantly, the estimated cost of government subsidies has soared to $4.5 billion, or $4.1 billion if you exclude highway improvements that might have eventually occurred in any case. That’s about $1774 per household in Wisconsin.
It’s difficult to say exactly how big the subsidies are per job created, but most of the estimates I’ve seen are in the $300,000 to $600,000 per worker range. That’s a lot of money to create jobs that pay roughly $50,000/year.
I suppose one could argue that it’s worth subsidizing these jobs, as unemployment can impose severe costs on workers and their families. But that raises another important question—just where are these unemployed workers going to come from? Wisconsin’s unemployment rate is currently 2.9%, the sort of number you generally see only in places like Switzerland and Japan. So where will Foxconn find the workers?
Governor Scott Walker has a solution, spend even more money bringing in out of state workers:
Gov. Walker has also pledged to spend $6.8 million on an ad campaign to help attract out-of-state residents for Foxconn. “We need bodies,” he confessed. The Fiscal Bureau had estimated that about 10 percent of Foxconn workers will be Illinois residents, but a preliminary analysis commissioned by Walker’s Wisconsin Economic Development Corp. estimated as many as half of the construction workers and Foxconn workforce could come from other states, primarily Illinois, as the State Journal reported.
If you look at a map of southeastern Wisconsin, you’ll notice that the huge Chicago metro area lies just across the border, connected to the new Foxconn plant by I-94. And the unemployment rate in Illinois 4.6%, far higher than in Wisconsin.
So Wisconsin taxpayers will be spending an enormous sum of money subsidizing a new LCD factory, and then spend even more money bringing in Illinois workers to staff the plant. If people would explain all this to Donald Trump then he might stop trying to take credit for the project.
Update: This Reason TV video suggests that homeowners are being forced out for what is a private project, which is unconstitutional.
The plant lies between Racine and Kenosha, along I-94: