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:
READER COMMENTS
AMW
Jun 18 2018 at 12:09am
Transferring property to a private party is – unfortunately – not unconstitutional. Kelo v. New London made that clear.
Scott Sumner
Jun 18 2018 at 1:17am
AMW, I think the Court erred in that decision; it pretty clearly is unconstitutional, at least if done for a private purpose.
Alan Goldhammer
Jun 18 2018 at 7:43am
With the current trade war with China starting to heat up isn’t it possible that Foxconn decides to cancel this project leaving the citizens of Wisconsin out of luck and money?
Thaomas
Jun 18 2018 at 11:22am
This s typical crony capitalism, “typical”in that the special treatment of the enterprise is given for narrowly “economic” reasons rather than to offset an externality. Repugnant, but given decentralized policy making, difficult to avoid except by public shaming.
Ricardo
Jun 18 2018 at 6:21pm
“I think the Court erred in that decision; it pretty clearly is unconstitutional”
Sadly, that is not how it works. If the court says it’s constitutional, it’s constitutional. I wish it were not so.
B Cole
Jun 18 2018 at 8:30pm
Unconstitutional?
The Supreme Court ruled in 1926 that local governments could determine how you develop your own property.
One of the Supreme Court justices gratuitously penned an opinion that he did not like parasitic apartment buildings intruding on single-family detached neighborhoods.
And there it stands today.
IronSig
Jun 19 2018 at 1:20pm
@B Cole
Which case is that? I thought you meant Wickard, but that was private property held as wheat.
Ed Hanson
Jun 20 2018 at 6:55am
You make a big point of how much money it will cost Wisconsin but never write of how many years the cost is spread over. For example if it is spread over 20 years the cost per household will be lost in rounding with the normal fluctuation of taxes. So how much time is the cost spread?
Ed
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