The Wisconsin Policy Research Institute

Milwaukee: "Spreading it Around"

By Steven Pigeon

With Wisconsin’s presidential race having been conceded to Senator Obama and his desire to distribute “Joe the Plumber’s” income, Wisconsin’s implicit approval of this economic arrangement has provided the green light for local communities to seek measures that will spread their community’s own income. Specifically, Milwaukee residents will have two opportunities to spread income around on the November 4th ballot.

The first opportunity is to vote in favor of a measure that would mandate City of Milwaukee employers provide 9 paid sick days to full-time employees. The Metropolitan Milwaukee Association of Commerce (MMAC) has been the most vocal opponent to the ballot measure, bluntly stating that the mandate would be a job killer for the City of Milwaukee. The mandate would also provide businesses an incentive not to expand, or establish a presence in the City of Milwaukee.

Even with the MMAC’s dire prediction, proponents of the measure continue with their desire to “spread” the earnings and payroll budgets of businesses to employees. For a business with 11 employees, this equates 99 days of payroll that the business owner is mandated to pay, but for which he may not receive a direct benefit.

Assuming these 11 employees work the approximate 252 business days of the year, the 9 sick days would represent more than 3.5% of their total work days. If their employer was forced to hire temporary employees to cover for sick ones, the employer may see their labor costs go up by about the same percentage because of the need to pay two people for the work of one. This additional cost, and loss of flexibility, is what would drive business out of the city of Milwaukee.

The second ballot question would increase the Milwaukee County sales tax by 1 cent with the funds presumably being spent on property tax relief, and funding for Milwaukee County transit and parks.

If passed, the costs associated with Milwaukee County parks and transit will be “spread” to both county residents and non-residents that make purchases in the county. However, the burden will also be spread to low income individuals in the county because a greater portion of their income will be spent paying the higher sales tax and not towards the cost of actual purchases.

Milwaukee County, by having a sales tax 1 to 1.5 percentage points greater than neighboring counties, will also spread where high dollar purchases are made. Why would a customer purchase a television, furniture, or a school clothes in a county with such a sales tax difference?

By creating a tax island, Milwaukee County will spread revenue from items that are currently purchased in the county to neighboring communities. This will also spread overall tax receipts, businesses, jobs, and people away from Milwaukee County to neighboring communities while driving up the cost of living in Milwaukee County.

Ultimately, the impact of these referendums may expedite the spread of the region’s population from the City of Milwaukee to the suburbs, other Wisconsin communities, and even out of state. If these measures pass, businesses and people will vote on these referendums with their feet and “spread” their wings out of the county or state. When this occurs, the individuals who remain and that approve of these measures to “spread it around,” can spread the crumbs that remain among themselves.

October 30, 2008

Milwaukee: "Spreading it Around"

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