Wages Soar More Than 25% in Key Region of Battleground State
(Bloomberg) -- Perhaps no investment project in the U.S. has been more controversial in recent years than Foxconn’s construction of a manufacturing complex in Wisconsin. Between the multibillion-dollar tax breaks and Foxconn’s quick scaling-back of investment plans, critics have relentlessly blasted the deal as corporate welfare.
But for all its flaws, the project now appears to be playing a role in a very different story line that’s begun to emerge: Workers’ wages in that corner of Wisconsin, right along the southwestern shore of Lake Michigan, are climbing faster than in any other part of the country.
Two of the region’s metropolitan areas -- Fond du Lac, just north of Milwaukee, and Racine, just south -- rank first and fifth nationally in wage gains, with both posting increases of more than 25% in July from a year earlier. A third metropolitan area, Sheboygan, ranks 35th -- out of a total of 389 in the U.S, according to data released last week.
It’s a surprising development in a state that, by all accounts, will be one of the most important battlegrounds in the November presidential election.
While much of Wisconsin’s economy is sputtering -- its massive dairy farms have been hit hard by President Donald Trump’s trade wars and the pandemic -- the Foxconn project is Exhibit A of a growing investment boom in manufacturing around Milwaukee that has become a major bright spot.
Companies including Advent Tool & Manufacturing and Nexus Pharmaceuticals and the candy maker Haribo have either set up operations in the area recently or announced plans to do so.
When Foxconn, a Taiwan-based electronics giant, began hiring in Racine, it helped push the county’s wage gains to their highest on record. (The county held the No. 1 spot in pay increases nationally for several months in 2019.)
Not even the pandemic has had much of a cooling effect on the region. The jobless rate quickly fell back below 10% after surging in April, the pace of pay increases has barely slowed and consumers keep spending at a red-hot clip.
“The Foxconn development has already provided major investments in construction and manufacturing,” said U.S. Rep. Bryan Steil, a Republican who represents the district and also co-founded the Future of Work Caucus.
Democrats, mindful that Trump unexpectedly won the state in 2016 by less than 23,000 votes, were planning to hold their convention in Milwaukee this past week until they opted for an entirely virtual event instead. Trump, who had celebrated the Foxconn deal alongside then-Wisconsin governor Scott Walker back in 2017, traveled to Wisconsin last Monday. Two days later, Vice President Mike Pence did too.
The arrival of these manufacturers to the area is creating labor shortages that are driving the wage gains, said Kevin Muhs, executive director of the Southeastern Wisconsin Regional Planning Commission.
“There has been a very pronounced shift to moving to the Milwaukee area -- there’s a coolness factor,” said Zach Messitte, president of Ripon College, where Pence spoke in July. “The area is an affordable option and there are a lot of job opportunities.”
Low wages were traditionally part of that affordability. The state has kept its minimum wage at just $7.25-an-hour, the lowest level allowed by the federal government, for more than a decade. Racine Mayor Cory Mason has been among those politicians pushing -- unsuccessfully -- to raise it to $15-an-hour, which would put it on par with coastal cities including San Francisco and New York.
A quick perusal of the jobs site Indeed.com shows that Foxconn has many openings at the plant site. They offer at least $15-an-hour. And some promise as much as $75,000 a year.
More than 1,000 local workers and 100 companies have been involved with developing Foxconn’s Wisconsin technology park, according to an April letter from the company to the state’s economic-development agency. The letter also said Foxconn employed more than 550 people full time at the end of last year.
While still far short of what was promised in exchange for $4.5 billion in government incentives -- one of the largest public-subsidy packages handed out to a foreign company in U.S. History -- the job creation indicates that the project has moved forward some since early 2019, when Bloomberg reported that Foxconn was hiring at a glacial pace and that investment goals were overhauled repeatedly.
Last year, Moody’s Investors Service raised concern about Racine’s finances, citing the more than $100 million of debt the county took on to help the state offer that incentive package. Standard & Poor’s has been more upbeat on the project. The plant, S&P said in a March report, should “have a dramatic effect on the local and regional economy.”
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