IL Policy Institute report: Wisconsin’s union reforms turn 3 – instead of raising taxes, should Illinois have followed Wis. Gov. Scott Walker’s lead?

February 13, 2014

Report analyzes outcomes of Wisconsin’s landmark labor laws, shows how three years later Wisconsin is prospering while IL continues to falter

Three years ago, Wisconsin and Illinois both faced fiscal crises. Wisconsin had a budget shortfall of $3.6 billion, while Illinois had a backlog of $8 billion in unpaid bills. To combat their crises, the two states took dramatically different approaches: Illinois raised taxes, while Wisconsin enacted controversial, yet landmark, reform of government unions. A report released today by the nonpartisan Illinois Policy Institute takes a close look at the outcome of Wisconsin’s reforms, and begs the question: Instead of raising taxes, should Illinois have followed Wisconsin’s lead and reformed the power of government unions instead?

The report is entitled “Wisconsin’s turnaround: How labor reform under Act 10 gave power back to taxpayers and created a multimillion-dollar surplus.” It chronicles the massive protests at the Wisconsin state capitol when the union reforms were first proposed, and what the outcome is three years later.

“In the lead-up to the union reforms becoming law, Wisconsin’s government unions spent significant amounts of money and staged massive protests trying to spread the message that this proposal would bankrupt Wisconsin and hurt workers. Three years later, the data shows these predictions were flat wrong,” said Paul Kersey, director of Labor Policy at the Illinois Policy Institute. “Wisconsin’s economy and job market have been steadily growing, and Wisconsin has a nearly $1 billion budget surplus while Illinois is still struggling to pay its bills. Wisconsin’s labor reforms helped strengthen the state for everyone.”

Highlights from the report include:

  • Before the labor reforms, known as Act 10, were enacted, Wisconsin had a budget deficit of $3.6 billion. Wisconsin now has a nearly $1 billion surplus.
  • These labor reforms were good for government workers, too; Wisconsin public sector employment levels had been dropping dramatically since 2009. Since Act 10 was passed, public sector employment has held steady and massive layoffs or job losses were avoided.
  • In 2011 Illinois lawmakers raised taxes by a record 67 percent, causing people and businesses to flee the state. Illinois is talking about raising taxes yet again because it has failed to get its fiscal house in order. Meanwhile, in WIsconsin taxpayers will see $500 million in tax relief.
  • Wisconsin’s labor reforms have allowed school districts to shop for the most cost effective health insurance rates and experiment with merit pay. This has resulted in more than $1.7 billion in savings that went to classrooms instead of inflated and unfair government contracts.

“Wisconsin’s union reforms have shown how taxpayers and public employees can work together to create a strong and competitive state economy,” Kersey said. “The only way Illinois can become competitive again and attract jobs is to follow Wisconsin’s lead with pro-growth policies such as Wisconsin’s Act 10.”

The full report is available online here: