>> I'm Frederica Freyberg.
Tonight on "Here and Now,"
a first look at a new book on Janesville.
Before, during and after the General Motors plant.
After that, a closer look at tax credits for manufacturing and
farming.
Then in our look ahead, stubborn future challenges for Wisconsin
milk producers.
It's "Here and Now" for April 28.
>> Funding for "Here and Now" is provided in part by Friends of
Wisconsin Public Television.
>> A first look tonight at Janesville and what happened to
the city and its people following the devastating
closure of the General Motors plant there in 2008.
The last Chevy Tahoe came off the line just before Christmas
that year, knocking 9,000 people at GM and other businesses out
of work.
Our next guest called it an economic earthquake in her new
book "Janesville: An American Story".
Pulitzer Prize winning Washington Post journalist Amy
Goldstein tells the then and now story.
A story we all followed but not like this.
She joins us now.
Thank you for being here.
>> Glad to be with you.
>> The reason I say not like this is because this was
amazingly thorough reporting, putting it kind of all together.
Why did you want to go to Janesville?
>> I had this idea that you think back several years ago
after the great recession and the economy still wasn't very
good that people across the country knew the unemployment
numbers and there was all this discussion about the
government's policies and whether they were or were not
helping the country recover from this bad economic time.
But I thought people might not really understand what it feels
like to people and to a community to have the best of
its work go away and that's the story that I wanted to tell.
I chose Janesville because so many jobs went away.
I was also drawn to it because unlike a lot of places in the
Midwest that had industry, Janesville had never been part
of the Rust Belt.
I was interested in telling the story of what had happened out
of this bad economic time, not kind of an accumulation of
economic decay over the decades.
>> How would you describe current day Janesville eight
years later since GM closed.
Has it recovered from the earthquake?
>> I think it depends how you measure recovered.
If you look at unemployment numbers, unemployment had shot
up to over 13% in early 2009, a few months after all these jobs
vanished.
Now it is under 5%.
If you think of it in those terms, things are much better.
If you look at the jobs that people have and what they're
paying, it's not what it was.
At the time that the assembly plant closed in Janesville,
General Motors was paying the UAW workers $28 an hour.
It's hard to find working class jobs in Janesville today that
pay anything like that.
>> Meanwhile the "Janesville Gazette" editorialized this
week, describing the city's current economic prospects as
brighter than expected after the GM plant closed and they credit
today's anti-union environment.
Do you think it's true that the economic prospects of Janesville
exceeded expectations?
>> Certainly Janesville and Rock County are places that have been
trying very hard to recover economically.
There has been a county-wide coalition, Rock County 5.0 that
has been working since shortly after the announcement that
the plant was going the close to try to bring back jobs.
There are some things to point to.
Tangible things.
There is a startup called Shine Medical that has been for
several years now kind of working its way through a pretty
complicated federal approval process to try to begin
manufacturing a medical isotope in Janesville.
Now, that company, assuming that the manufacturing can begin, is
going to bring good jobs.
It is going to bring about 150 jobs.
If you think about the number of jobs, the thousands of jobs that
went away and how many will come when this new company if it gets
going actually starts, you can see it is not filling in much of
the gap.
>> You also describe in your book Janesville as kind of
divided.
The haves and the have less.
Is this kind of the local expression of the American story
as your title would suggest?
>> Well, my whole idea in doing this work was to write about a
place that could serve as a microcosm.
Not every community can stand in for every place in the United
States.
I didn't think that was what Janesville was.
But certainly over time, what had been a pretty cohesive
community has become a little more polarized.
That's true in many parts of the country as people's economic
experiences have diverged with the number of good working class
jobs shrinking a lot and there's been political division that has
heightened.
>> To me in all of this the most striking findings that you
describe have to do what usually seems to be the first response
to layoffs or joblessness and that is worker retraining.
I just want to cite some of the things you found.
You report that job training was not a path to more work
or better pay in and around Janesville.
That laid off workers who went to school were less likely to
have a job after they retrained than those who had not gone to
school and that most of those who retrained were not earning
any money at all.
How surprising was it to find these things out?
>> They certainly weren't what I expected.
You know, the whole question of what should people do when a job
they expected to have their whole life suddenly disappears,
and, you know, is there a road back to being in the middle
class?
These have been, as we say, very well-paying jobs.
It was a very interesting question to me.
I work with a couple of labor economists to take a look at a
group of people who were unemployed in southern Wisconsin
in and around Janesville who had and had not gone back to
Blackhawk Technical College, the main place that people went to
try to get job retraining.
And we looked statistically at what happened to people who went
back to school and people who didn't.
It is not that nobody retrained and benefited from it.
But as is true at community and technical colleges all around
the country, many people went back to school who didn't finish
their programs and even some of those who did found that at the
end of this hard work, there wasn't a job waiting for them or
not a job in their field.
So there was kind of a double whammy that people had lost a
job they thought they had identified a path forward, and
at least these data are from a few years ago now.
At least several years after all this work went away retraining
wasn't proving to be the panacea that sometimes people think it.
>> And meanwhile a lot of money was put toward that.
>> That's right.
Federal policies really encouraged people to retrain.
There was coming through the Rock County Job Center a lot of
federal aid for what is called dislocated workers to help
people go back to school.
And if you think about it, you know, imagine yourself having
been a factory worker in your 30s or 40s.
You haven't been a student for half your lifetime.
You didn't think you needed higher education to get a solid
job with a solid income.
You have lost your work.
You don't know what is going to come next.
You haven't necessarily been somebody who likes school very
much and there is all this economic trauma and then you are
expected to study on top of it.
It is a hard thing.
Let me just say that, you know, as I got to know the people at
Blackhawk Tech I was very impressed with the work they
were doing.
They tried very hard to figure out what factory workers coming
back to be students needed and to provide it.
So I don't think that these results were anything denoting
that the college hadn't been trying hard.
It's just that there weren't always jobs for people to come
out and get.
>> With just about a half minute left, if Janesville can make a
kind of recovery after the loss of GM, will the city ever forget
that part of its history, do you suppose?
>> You know, I think that General Motors was so essential
to the identity of Janesville for so many decades.
This was an assembly plant that started turning out tractors in
1919 and the first Chevy came off that assembly line in 1923.
That's a hard thing to forget.
>> All right. Amy Goldstein. Thanks very much.
>> Thank you.
>> A closer look now at tax credits.
The manufacturing and agriculture tax credit was
passed in 2011 to help two of our cornerstone industries, but
the credit will cost the state 1 1/2 billion dollars over its
first seven years and it won't get any cheaper going forward.
As the legislature considers how to pay for schools and roads,
part of the debate asks if this tax credit helps create jobs or
if it's just a big giveaway.
Zac Schultz reports.
>> Belmark has been producing food packaging materials in De
Pere, Wisconsin for 40 years.
>> It's very safe to say you go in the grocery store, you look
left and right and you will see our products.
>> About a decade, Belmark President Karl Schmidt decided
future growth would come outside Wisconsin and they built a
facility in Phoenix, Arizona.
But in 2011, Republicans in the legislature slipped a tax credit
into the budget that forced Belmark to rethink their
business plan.
>> The tax credit itself changed that strategy and we said you
know, this is now an economical place to work.
We can build some scale here.
>> It's called the manufacturing and agriculture credit
or MAC for short.
>> The thought was let's take
the two largest industries in the state.
Manufacturing and agriculture and let's encourage them
with this credit.
>> Jason Culotta is the senior director of government relations
for Wisconsin Manufacturers and Commerce, the influential
conservative business lobby.
The tax credit didn't actually go into effect until 2013.
It started small and grew larger each year.
>> The thought was, if we phase it in
we can control how much it is.
>> The MAC reduces the state income tax for all manufacturing
and agricultural producers in the state.
But 91% of the money has been claimed by manufacturers.
Wisconsin's top income tax bracket is 7.65% for individuals
and 7.9% for corporate filers.
In the first year, the mac cut taxes by around 2% but now that
it's fully phased in, it reduces taxes on income by 7 1/2%.
So the MAC essentially wipes out the state tax burden
for about 10,000 filers.
>> It is hard to imagine there being a less effective use
of an awful lot of money.
>> Democrat Gordon Hintz has been criticizing the MAC
for six years.
>> Year after year we'd ask for new numbers and each year those
numbers got bigger and bigger and bigger.
>> The MAC has cost Wisconsin $468 million
in the first four years.
The state now estimates it will cost nearly a billion more
in the next three.
The nonpartisan legislative fiscal bureau estimates
for tax year 2017, the MAC will cost $228 million.
77% of that money will go to just 1,200 filers who earn more
than a million dollars a years from manufacturing or
agriculture production.
But what really grabs critics' attention is the top 11 filers.
They earn more than $30 million a year and will each save more
than $2 million on their state income taxes.
>> The goal of this cut when it was first passed, when it was
phased, was to eliminate the tax liability effectively of I think
some of the wealthiest people in the state of Wisconsin.
>> Are there people who make a lot of money
who are receiving the credit? Sure.
But they're investing in the state.
They're producing here.
They're employing a lot of people here.
>> Jason Culotta of WMC argues the money from the MAC
isn't just a blank check from the state.
>> So it's their decision ultimately what they decide to
do with it.
Many of them invest right back into the company.
The money doesn't go into my pocket.
It goes into buying that next piece of equipment.
>> Greg Clement founded Argon Industries in 2002
with four people and three machines.
>> The next two years I'm going to have to invest
almost $2 million in new equipment.
>> He now has 100 employees fabricating sheet metal
components for major companies.
Clements says if he doesn't continually upgrade his quality,
he'll lose business.
>> This machine is from 2003.
So this is where the reinvestment and the money that
comes from receiving those tax credit comes into play because
the technology now coming out is fully automated loading,
unloading.
>> He says in recent years the MAC helped him install a new
powder coat line which has helped grow his business.
>> That was 1.5 million dollars.
We added 17 employees.
>> Just because a manufacturing business expands doesn't mean
they're going to be hiring.
>> Tamarine Cornelius says hiring may be the exception,
not the rule.
She's an analyst for the Wisconsin Budget Project, part
of the non-profit Wisconsin Council on Children and
Families.
One of her concerns about the MAC
is the lack of accountability.
>> There is no requirement that jobs be created.
So a business could be laying off workers or sending jobs
overseas or closing factories and still get the tax cut.
>> She points to Oscar Mayer which is shutting down its
factory in Madison.
They will get the credit for every last hot dog produced
before the lights are turned off for good.
>> If we want businesses to create jobs in return for
getting this big tax cut, then we need to require them to do so.
>> The four years after that credit was enacted,
we saw a regain of 34,000 jobs
and there have been some more gains since then.
>> Culotta says the MAC has led to job growth
but opponents don't see it.
>> For the previous year Wisconsin lost about 4,000
manufacturing jobs.
>> Hintz says much of that growth was a rebound from the
great recession and took place before the credit even started.
>> We actually had more manufacturing job growth in the
two years before the credit was even phased in.
>> Culotta points to the increasing cost of the tax
credit as evidence of success.
Over the first five years it will end up costing $376 million
more than originally projected.
>> We think so much of that has been investment that's been
drawn from out of state or from in-state companies which would
have spent in another state and now it's being spent here.
>> Belmark is a good example of that.
Their Phoenix, Arizona facility was supposed to be the first of
many in other states.
Since the tax credit was passed, they've added on in De Pere.
>> We've had six additions, most recently opened up a 30,000
square foot office addition.
240 jobs we added here that would not have been here that
would have been in another state.
>> And there is more to come.
Schmidt says for their latest facility they did a nine-state
search and settled on Shawano, Wisconsin.
>> We're going to spend $25 million there to start.
There will be another $25 million investment over the next
five years and employ up to 120 people.
>> We're expanding the business
for our next five years of our growth.
>> Dave Zielke helped found Imperial Blades in 2008.
They are the only manufacturer of oscillating saw blades
in the United States.
>> It's a big selling point for us.
American-made products are really sought after.
>> Imperial Blades has 55 employees.
>> We're looking to hire on 10 to 15 people in the next year.
>> But they've outgrown their Sun Prairie location
so they're adding on.
>> If we didn't have the tax credit, that could be enough
where this would get delayed.
>> Imperial Blades could produce the same product anywhere in the
United States and Zielke gets offers to relocate to other
states all the time.
>> Georgia, Texas, every other week I get an email or phone
call from somebody.
>> But the MAC helps keep him loyal to Wisconsin.
>> We're growing profitable business but we put so much
money back into this just to stay ahead of our competitors
that, I mean, any little bit helps.
It really does help us.
>> I'm glad that we have a couple of examples where they
seem to be happy and they've added jobs.
But overall for the state I don't think anybody can defend
this as anything but a total loser.
>> Gordon Hintz says there are more than 9,000 manufacturing
facilities in Wisconsin and with the MAC, essentially none of
them pay state income taxes and not all of them are adding jobs.
>> I did a tour recently of a manufacturer.
I asked them about the credit.
And they said yeah, when we were doing our taxes last year
the first thing we said is we can't afford this.
And when they were talking about we, they were talking about the
state because they realized their tax liability had been
eliminated and they're a relatively small manufacturer.
If that's happening around the state, they realized just how
expensive it was.
>> Hintz says manufacturers who oppose it are afraid to publicly
criticize the MAC but he says the true impact of the MAC is
felt every two years at budget time when there isn't enough
money for schools or the university system or
transportation.
>> And so you have to look at this in what has been lost in
terms of priorities that the state could have been funding
while it was giving this money away with no accountability?
>> I hate to get into a competition because we're adding
to the pie, we're not taking from the pie by having this
credit.
>> Supporters of the MAC say you can't ignore the impact of
manufacturing jobs in Wisconsin.
>> If more people have jobs, more people are paying into the
tax system.
That's what you need.
And then you will gain that money for the roads and for the
schools.
>> And we work with seven different vendors in Wisconsin
for making our saw blades.
>> I like to look at the multiplier effect.
>> Karl Schmidt can point to a number of machines that he
bought from other Wisconsin manufacturers who can also claim
the MAC.
>> We're going to buy the best in the world,
but it's nice that you see it's coming from Wisconsin.
>> And all the people he has employed to build his new plants.
>> We've had two great builders here, Miron and Boldt.
All the block comes from County Concrete.
The electricians are here.
>> But in the end, this may come down to a debate about
Wisconsin's priorities and Wisconsin's identity.
>> I want to support our manufacturers but just throwing
a lot of money at the top with no assurances, with no
accountability is not fair to the rest of the taxpayers of the
state.
It's not very effective.
>> What is Wisconsin's core?
It's agricultural and manufacturing.
That's what we built Wisconsin on.
>> That was Zac Schultz reporting.
A study released just last week says the manufacturing and ag
credit helped create more than 20,000 jobs in Wisconsin.
UW-Madison Economics Professor Noah Williams looked at 21 of
Wisconsin's 22 border counties.
He compared their manufacturing job growth since the credit
started to counties just across the border in Illinois, Iowa,
Minnesota and Michigan.
He then applied that growth rate to the rest of the state to
reach 20,000 jobs.
However, Democrats like Gordon Hintz point out Professor
Williams was an advisor to Governor Scott Walker and
Senator Marco Rubio in their recent presidential campaigns.
Hintz says the researcher cherry picked his data pointing out the
one border county that was excluded, Trempealeau County
lost manufacturing jobs last year and that would have altered
the numbers.
In tonight's look ahead, while it's not been confirmed by state
ag officials, reportedly most of the dozens of Wisconsin dairy
farmers left without a buyer for their milk have now found
processors.
Just ahead of being cut off May 1st.
It was April 1st that their processor told about 75 farmers
they could no longer buy their milk blaming curtailed Canadian
imports.
Since then other processors have picked up contracts.
But for any farmer not picked up the choices are bleak.
Going out of business or dumping their milk.
The farm family we spoke with earlier this month did find a
processor just in time.
In trying to address the situation, Governor Walker
announced this week the Wisconsin Housing and Economic
Development Authority will offer more favorable loan terms to
dairy farmers and processors allowing them to access capital.
The larger takeaway of all of this from the owner of a small
farm near Stevens Point is that quote dairy farmers are simply
producing too much milk.
Chris Holman is also a district director for the Wisconsin
Farmers Union.
Thanks for being here.
>> Thanks for having me.
>> These farmers just went through a very anxious time,
perhaps a few will face some very difficult choices without a
buyer for their milk.
First tonight your response to them.
>> Well, it's been kind of a raw deal for them in the sense that
they got that letter out of the blue.
So the only thing I can say for them is that thankfully there
are a lot of people working really hard trying to find
solutions for them.
Hopefully they're long-term solutions and obviously
everybody is hoping the best and that they'll all be able to keep
milking.
>> As we noted your takeaway in all of this is that Wisconsin is
producing too much milk.
Describe what you call
the vicious cycle of over production.
>> Sure.
Well, when the price of milk is up people often want to produce
more milk so that they can take advantage of that, which makes
sense.
But then also when the price goes down, production will go up
because you need more to cover your bases, pay your bills,
things like that.
In either scenario you are producing more and more milk.
Now if markets are down and you flood the market, then prices
also go down like we have now.
It kind of exacerbates the problem.
>> But meanwhile Wisconsin has been promoting more milk
production.
How so?
>> In 2012 the governor put the dairy 30 by 20 program in
encouraging farmers to meet 30 billion pounds by the year 2020.
I believe we met that last year so we've certainly exceeded all
expectations there.
However, that program also seems to have exacerbated the problem
once again in the sense that despite all the volatility in
milk markets year to year in the past and presumably into the
future, the message from, at least that program at the state
level, was to keep producing more and more despite the fact
there was not a place for it to go.
>> Who wins under that program of trying to initiate more
production of milk?
>> Well, it's a tough question.
In a sense the people who are able to weather the storms
better are generally speaking the larger farms who often can
produce at lower cost of production and they tend to have
more advantages with banks.
They can kind of float themselves through tougher times
and Wisconsin is losing over a dairy farm per day without any
of this situation anyhow.
That production then gets picked up by those farms.
>> So is this just the price of progress and modernity with
these larger farms?
>> A lot of people look at it that way.
If you think of it strictly in terms of efficiency, then yeah.
But then why not just have one big dairy farm somewhere in the
center of the country.
Realistically what we are looking for is the rural
America.
These farms are kind of the backbone for rural America.
If they disappear so does rural America along with the
infrastructure and everything that's in place and has been
dwindling somewhat over time but is something that farmers at all
scales benefit from.
>> If we could find new or growing markets for the milk it
would pay off presumably.
How are we doing on that score finding new markets?
>> That's a great question.
You know, exports are up, so in terms of finding markets, there
seems to be places for it to go.
Though a lot of the expectations coming out of China were not met
and then couple that with the European milk coming online and
dropping its quota system and bans of imports through Russia.
Globally you have a glut situation where there is a lot
of milk and despite any sort of improvements in the American
market for exports we're still saddled with a bunch of milk
being dumped.
A lot of milk being processed at full capacity everywhere you go.
Ultimately speaking, it's just a situation with no end in sight.
>> Do you think the new WHEDA loan terms the governor
announced will help?
>> Potentially they could help some.
I'm personally not a big fan of trying to find ways to loan your
way into the future.
If you are highly leveraged it makes you more vulnerable
and in the farm crisis of the 80s that was a big deal
with high interest rates.
Interest rates are low right now and it's not exactly like the
80s.
If you continue to encourage people to leverage themselves,
then they kind of get stuck on the treadmill of sorts,
trying to pay off those bills, pay off those loans.
And if there is no markets and no place for your milk to go
anyway, then it's kinda all for naught.
>> Chris Holman, thank you very much for joining us.
>> Thank you, too.
>> Now for an update on concealed/carry permits.
Governor Walker Wednesday signed legislation that allows gun
owners five years of concealed carry permit regardless of when
the permit is renewed.
Under previous law licenses were only valid for five years after
the date they were last issued.
The measure passed through the legislature
with bipartisan votes last month.
Next week Lieutenant Governor Rebecca Kleefisch will be here.
She'll go over bills circulating at the state capitol
that address the challenges of homelessness.
I'm Frederica Freyberg.
Have a great weekend.