Romney's Swing-State Dilemma

Before Mitt Romney's Bain Capital problems seized everyone's attention, we were hearing about a different political minefield the candidate had to maneuver: While his campaign is based largely on the country's economic woes, several GOP governors in swing states were claiming economic success and recovery. Wisconsin Governor Scott Walker spent his recall campaign pointing to the state's recovery, while Virginia Governor Bob McDonnell launched his own ads showing his state's progress. Iowa Governor Terry Branstad was boasting on his website of "“200,000+ new jobs" and "a 25% increase in family incomes." By late June, things were coming to a head. Bloomberg News reported that Romney's team asked Florida Governor Rick Scott to quiet down his bragging about job creation in the Sunshine State. There was a disastrous Ohio rally in which Governor John Kasich hailed his state's economic gains, and then Romney took the stage to slam the national economy. All in all, at least seven battleground states (including Michigan and Indiana, which lean Democratic and Republican, respectively) have GOP governors touting economic gains. These governors are key surrogates for Romney, and articles in The Wall Street Journal and elsewhere focused on the tricky line the candidate would have to walk, acknowledging the states' successes while criticizing America's economic condition overall. 

Not too shockingly, the Obama campaign was quick to agree with the GOP governors' happy tales. After the Bloomberg article, the president's team put out a spoof memo from Romney asking Scott to stop bragging about Florida's economy. "Your facts are undermining my contention that Barack Obama is stifling the recovery, which is my whole platform," it read. "And if you see Governors Kasich, Snyder, Walker and McDonnell, it would be marvelous if you would pass the word along to them too."

The news cycle quickly moved on to Bain, however, leaving unanswered a significant question: Just how "recovered" are these states? 

The answer has important political implications. How people feel about the state of the economy is a major factor in determining their votes. Given the Romney campaign's ineptitude when it comes to dealing in nuance, figuring out a way to claim that Obama is responsible for the struggling states but not for the recovering ones—well, that's a difficult message to fit in a 30-second ad. But if workers in these states are experiencing some of the same difficulties workers elsewhere face—if the governors are overstating their economies' progress—Obama’s got the tougher job.

While unemployment in Ohio, Indiana, Wisconsin, and Virginia all fall below the national average, and Florida’s rate is the best it’s been since 2008, there’s more to an economic turnaround than job numbers alone alone. To find out how these states are really doing, I called Doug Hall at the Economic Policy Institute. Hall oversees the Economic Analysis and Research Network, which connects state-level economic think tanks. He took a look at a few of the key states—Michigan, Indiana, Ohio, Wisconsin, Florida, and Virginia—to evaluate claims of economic recovery.

His answer: It’s complicated. “It’s very tempting to grab one indicator and sort of focus on that—with the most popular one being employment growth,” he said. “You’ve got to make sure you’re looking at two or three pictures together.”

Even if the unemployment rate is looking relatively rosy, workers in several of these swing states might not feel hunky-dory, and for good reasons. Some states, for instance, have more difficult paths to job creation, depending on how rapidly the population is growing. "Job deficit” numbers show the number of jobs the states would need to have to keep up with population growth. People are moving to states like Virginia and Indiana at much faster rates than Michigan, for instance, where population growth is basically flat. The upshot: While Virginia has almost reached its pre-recession number of jobs, it still has to add hundreds of thousands more to account for population growth. Otherwise, residents—both new and old—will still struggle to find work despite the overall gains in job numbers.

 
 

Even if a state is adding jobs, the quality of those jobs also matters. Median wages in Indiana and Wisconsin have dropped more than the national average, meaning that middle-income workers in those states are watching their earnings decrease more dramatically. In Ohio and Virginia, low-income workers (those at the bottom 20th percentile mark in earnings) have seen a significant loss in earnings. Ohio is currently third in the country when it comes to wage erosion of low-paying jobs, and Virginia isn’t far behind. Michigan, a Democratic-leaning state with a Republican governor, is seeing wages go down more than the national average at both the median- and low-income levels.

 

Similarly, in Florida and Virginia, the number of workers being paid at or below the minimum wage between 2009 and 2011 has grown at rates dramatically higher than the national average.

Share of Hourly Workers Paid at or Below Minimum Wage

Those trends don't make voters feel optimistic about their states' economies. That's especially true in Florida, where despite tremendous growth in employment, the unemployment rate remains above the national average. Rick Scott's state also has one of the country's most most unequal distributions of wealth.

These governors can point to indications of recovery in their states, like dropping unemployment rates, but particularly for middle- and low-income workers, these swing states are hardly recovered. That leaves governors with a sales job—convincing voters the state is doing better economically, whether or not the voters actually feel it. In the NBC/Marist polls in May, registered voters in Ohio, Virginia, and Florida appeared to be buying that message. In all three, registered voters were optimistic about the U.S. economy, with around only 15 percent saying "the worst is yet to come" for the national economy. Meanwhile, in all three states more than three-quarters of voters listed the economy as the most important factor in determining their vote for president. That's good news for the Obama team, which has spent huge sums on those three states, producing messages similar to those of the GOP governors', each taking credit for the so-called recovery.

A governor's policies rarely change a state’s fortunes, EPI's Hall points out. “When push comes to shove,” he says, “the truth is there’s really not a whole lot governors can do, particularly in the short term, to turn around their state economy.” Still, there were some political battles that seemed to have an impact—for the worse. Take Wisconsin, where the governor used unprecedented cuts to balance the budget. Wisconsin seemed to be doing better until Walker began a series of public-sector cuts. “You could see that Wisconsin was actually on a pretty good path of recovery, and then something happened and they sort of headed off in the wrong direction, equally dramatically,” Hall says. In 2011, while most of the country was adding jobs, the Badger State lost a total of 23,900 jobs—almost 18,000 of which were in the public sector.

“There’s no question that that’s an area where the action of governors can have a detrimental impact,” Hall said. “If you’re closing your state’s budget gap by basically downsizing the public-sector workforce, that’s like drilling holes in your state’s effort to have economic recovery.”

It’s clear that the economic news isn’t quite as rosy in these swing states as their GOP governors (and Barack Obama) might want us to believe—especially for middle-class and poor workers. But that's unlikely to stop governors in painting as bright a picture as they can. That's left the Romney team trying to focus credit on the GOP governors' policies rather than the national ones. It's not an easy political message to for even the most skilled politician—let alone Mitt Romney. 

Rather than either asking governors to badmouth their own economies or trying to hold a position akin to political contortion, Romney would likely have a much easier time if he focused on wage-erosion and the need for high-quality jobs. He could acknowledge that several swing states are showing improvements in job numbers, but he could also connect with the voters who aren't feeling those gains—the many who are still barely scraping by. Shedding some light on those who are struggling would allow Romney to acknowledge the success of GOP governors in decreasing the unemployment rate while blaming Obama for the problems that remain, like the quality of jobs. He might be able to garner some extra votes from those residents who aren’t exactly feeling “recovered” yet.

But given Romney’s constant awkwardness when addressing the working class, I wouldn’t count on it.

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