What Does Gov. Walker’s Recall Victory Mean for Business?

Pundits are already flooding the media with conjecture about the knock-on effects for putting Wisconsin in play for the general election in November. So what does Walker’s victory mean for business across the US? Will what happens in Wisconsin stay in Wisconsin?

June 8 2012 by JP Donlon

What does Governor Scott Walker’s victory in his recall election last week mean for business?

Pundits are already flooding the media with conjecture about the knock-on effects for putting Wisconsin in play for the general election in November. Nick Pinchuk, CEO of Kenosha, WI-based Snap-on Tools thinks it’s a stretch to read too much into the results. A supporter of Walker, Pinchuk nevertheless thinks that what happens in Wisconsin, stays in Wisconsin. The Badger state is a very liberal state—the home of Progressive politics going back to Bob LaFollette. Republican Rep. Paul Ryan may have been re-elected six times but from a more conservative and rural part of the state.

The recall vote margin for Walker expresses what he calls a return to sanity among all voters who have come to terms with the fact that the state’s resources are finite and that state employees, who already outearn those in the private sector, have to accept the same reality as everyone else.

Pinchuk also adds that he has many Democrat friends that were appalled that the recall was used as a cudgel over policy differences. “Most of us believe a recall should only be used when an official commits fraud or misfeasance,” he says. Nick’s certainly right about this. Walker’s only “crime” is having shaved a full percentage point of the state’s unemployment rate and made it more attractive to work and invest.

The larger implication of the state election is for states like Illinois, California, and New York—all of which rank among the worst in Chief Executive’s Best and Worst States for Business survey. If a liberal state like Wisconson can get its arms around runaway state spending, stare down the trade unions, and restore fiscal responsibility, what excuses will these other progressive states offer? Further, it will give ammunition to officials in states like Ohio that are already taking their cues from nearby Indiana, that political will and determination can also be vindicated at the polls.

The Manhattan Institute’s Steve Malanga believes that many of Walker’s reforms, many of which haven’t kicked-in yet will make the state even more attractive for job makers. “Over time, the cost savings to local government should pile up. Many school systems, including Milwaukee’s, haven’t yet taken advantage of Walker’s reforms because contracts with employees remain in force for several years.” Malanga observes. “ But if Milwaukee’s schools follow the pattern of the city and other districts, the school system could save about $64 million a year just on health care costs once its current contract expires.”

Wisconsin is still not out of the woods, but by being frank with its citizens about the state’s finances and proposing remedies everyone can see, he has treated the people of the Badger State with respect. Not everything he proposes is palatable, but he has changed the political landscape by showing there is a way out of the present situation. And business leaders have a certain level of certainty about state policies—say in contrast to California or Illinois—that allows them to plan and operate.