Tuesday, November 21, 2017

Again, the Trump/Ryan tax cuts will not pay for themselves.

One of the absurd canards that Paul Ryan and others in today’s GOP try to claim is that their tax cuts will “pay for themselves”, as huge increases in incomes and economic growth would make up for the loss of tax revenues that would otherwise happen, and won’t require spending cuts to keep the deficit from growing out of control.

The Tax Policy Center took a look at the tax plan that recently passed Ryan’s House of Representatives (a bill backed by all 5 Wisconsin Republicans in the House, by the way), and found that just like Ben Stein told us 30 years ago, this tax plan will not “pay for itself”.


Sure, the Tax Policy Center says that the House bill would boost the economy because of more disposable income being available. But that boost would be limited because the tax cuts are so heavily slanted toward the rich (who spend less of their incomes) and because the economy is already in a good place without any juice needed from tax cuts.
The legislation would increase aggregate demand, and therefore output, in two main ways. First, it would reduce average tax rates for most households over the first few years after enactment, increasing after-tax incomes. Households would spend some of that additional income, increasing demand for goods and services. These economic benefits would be modest because most tax reductions would accrue to high-income households, who spend a smaller share of any increases in after-tax income than lower-income households. Second, by allowing businesses to elect to immediately deduct (expense) new investment over the next five years, the legislation would encourage firms to increase their near-term investment, further increasing demand. The boost in demand would raise output relative to its potential level for several years until higher interest rates and prices cause output to return to its long-run potential level. Because the economy is near full employment, the impact of increased demand on output would be smaller and diminish more quickly than it would if the economy were currently in recession.
Another point by the TPC is that any help that comes to corporations due to this package would come into capital over actually paying workers, and that investment would likely go down in later years.
Largely because the plan would reduce the corporate income tax rate and temporarily allow businesses to expense investment, the legislation would increase the after-tax returns to saving and investment significantly. That would encourage saving, foreign capital inflows, and investment.

Although the legislation would increase incentives to save and invest, it would also substantially increase budget deficits unless offset by spending cuts. Higher deficits would push up interest rates, which would tend to discourage investment. Thus, while the plan would initially increase investment, we estimate that rising interest rates would eventually negate the incentive effects of lower tax rates on capital income and decrease investment below baseline levels in later years.
As a result, the TPC says that while GDP might be boosted by 0.6% in 2018 with this tax cut package, that increase fades quickly, and while overall we’d stay ahead over the next 10 years vs doing nothing, we’d actually be looking at lower growth starting in 2019.

And the TPC notes that this tepid stimulus would come nowhere near making up for the losses in revenue that would result. This means the federal budget deficit would increase by a total of $1.266 trillion by the end of 2027, even if we account for the added economic growth that would result from the tax cuts.



The Tax Policy Center's analysis doesn’t even account for a few items that likely will make this tax cut even worse for the typical American. The first is that because the rich and corporate are so preferred with this tax cut, that it would encourage even more profit hoarding and wage suppression than we see today, increasing the crippling inequality and stagnant incomes that have led a large amount of Americans to feel very little of the prosperity this country has allegedly had over the last 40 years in this country.

The next problem is that the tax package will likely depress home prices due to the larger standard deduction making it less likely that people will see tax benefits from owning a house (as mentioned in this post). Just go back to 2006-2008 and find out what happens when a bubbly housing market and stock market declines. That boost of 0.6% in GDP doesn’t mean much if the economy is in recession.

And the last item to be worried about is the second part of the “tax package two-step” that makes it especially harmful on poorer and working-class Americans. The higher deficits are likely to lead to calls to reduce spending to get the balance sheet in line, and Ryan and other GOPs in Congress are champing at the bit to use that as an excuse to cut benefits for Social Security and health care- programs that have kept tens of millions of older and lower-income Americans out of poverty for the last several decades.

Not only that, but cutting benefits and other governmental spending to “get the deficit in line” would reduce economic output, and counteract any (already-fading) added growth that the tax cuts might give in a few years. It also could lead to fiscal problems at the state and local level, since some of the cuts could be in the form of aids sent down to other levels of government.

But with Republicans, the economic calamity that might follow would be a feature and not a bug. It would allow for injury of vulnerable people that they otherwise couldn’t do in isolation, and would tie the hands of Democrats that will be forced to clean up from the mess the elephants cause.

God, I hate these vandals. This tax scam and the GOPs backing this voodoo need to go down in flames, along with the oligarch slime that are the only ones that seem to be in favor of this failed regressive garbage.

Walker and rest of GOP doesn't want fair elections - harder to win that way

You may have noticed that the Wisconsin Elections Commission has been sending messages to Governor Walker’s administration and other Wisconsinites that they need more assistance in securing the state’s elections system after Russian interests tried to hack them last year.

That effort continued yesterday as the bipartisan Commission unanimously agreed to request additional staff to improve security before the voters to go to the polls to choose a new Supreme Court justice in the Spring, and vote for Senator and Governor in the Fall.
The commission approved a request for three additional workers at its Monday meeting in Madison. The agency is writing a new elections security plan to put in place for the 2018 elections.

Elections Commission Administrator Michael Haas said if they don't get the employees, they'll only be able to implement parts of the plan.

"We thought three was the minimum we needed to be confident in ourselves that we are putting in place all the best practices that are out there," Haas said….

Gov. Scott Walker cut five new positions for the commission in the 2017-2019 state budget with his veto pen (and the Wisconsin GOP-run Legislature refused to vote to override this veto). He said the commission could function with temporary or contract employees to fill any gaps, but Haas said that can be problematic.

Haas said a 28 percent reduction in staff since 2015 has weakened the ability of elections workers to address voter safety and eroded fulfilling all other state and federal law requirements.
By itself, you may think that this is simply Scott Walker being incompetent and caring too much about having money available for political talking points and WEDC favors over making sure our state’s elections are secure. But then take a look at this interview from Mother Jones over the weekend, and the reasons become a lot darker.
Republican efforts to make it harder to vote—through measures such as voter ID laws, shortened early voting periods, and new obstacles to registration—likewise “contributed to the outcome,” [Hillary] Clinton said. These moves received far less attention than Russian interference but arguably had a more demonstrable impact on the election result. According to an MIT study, more than 1 million people did not vote in 2016 because they encountered problems registering or at the polls. Clinton lost the election by a total of 78,000 votes in Michigan, Pennsylvania, and Wisconsin.

“In a couple of places, most notably Wisconsin, I think it had a dramatic impact on the outcome,” Clinton said of voter suppression.

Wisconsin’s new voter ID law required a Wisconsin driver’s license or one of several other types of ID to cast a ballot. It blocked or deterred up to 23,000 people from voting in reliably Democratic Milwaukee and Madison, and potentially 45,000 people statewide, according to a University of Wisconsin study. Clinton lost the state by fewer than 23,000 votes. African Americans, who overwhelmingly supported Clinton, were more than three times as likely as whites not to vote because of the law.

“It seems likely that it cost me the election [in Wisconsin] because of the tens of thousands of people who were turned away and the margin being so small,” Clinton said.
And guess who actively backed and then signed those voter suppression laws in Wisconsin? SCOTT WALKER. As I’ve posited before, there is no question that smaller turnouts in key Dem cities were a big reason behind Trump’s surprising win here, and regardless of whether that’s a direct effect of Walker/WisGOP voter suppression or indifference toward Clinton, the GOP were certainly happy with the results.



That graph gives the game away to me when it comes to why Walker won't add the tiny investment to help guarantee fair elections. Walker doesn’t want Wisconsin’s elections to function properly in 2018, because that chaos and rigging helps him and other Republicans win. This is a guy who is the personification of a Republican Party that doesn’t believe in any concept of “public good”, and believe the best use of government is as a means to grab more money and more power.

Frankly, Democrats haven’t done nearly enough to call this Banana Republicanism out and directly go after it. The Obama Administration and Clinton campaign didn’t actively fight Walker-style voter suppression in ALEC states like Wisconsin, Michigan, and Pennsylvania before the 2016 election, likely out of arrogance that Clinton would win and therefore there wasn’t a need to “rock the boat”. How did that work out for us?

Brian Beutler points this out today in an article titled “Grappling With a Legitimacy Crisis”. Beutler argues that ignoring that Donald Trump was AT THE VERY LEAST elected with the help of foreign propagandists and suppressed votes in key states, and that it likely affected Senate and state races as well (hi, Ron Johnson!), is to ignore that American democracy is in big trouble.
But comparably few prominent public figures are willing to suggest Russian interference changed the outcome of the election. Some are reluctant because they don’t want to look like sore losers. Others are reluctant because it implicates their own conduct. Yet more will refuse because nothing less than the legitimacy of the president is at stake.

This explains the credulous and dissonant spectacle of platform monopoly executives, who boast endlessly of the revolutionary power of their products, but now downplay the political impact of the foreign propaganda content that thrived on their networks last year.

It explains why CIA Director Mike Pompeo contradicted the intelligence community (which understand how counterfactuals work) to declare that Russian meddling didn’t sway the U.S. election result, and why the chairman of the Senate Intelligence Committee began a hearing on Russian social media agitprop with special pleading on Trump’s behalf.

If the U.S. citizenry were immune to foreign propaganda, there’d be no need to conduct any oversight. The implication of the hearing, and of the multiple Russia investigations, is that foreign propaganda can sway voting decisions. But once you acknowledge that, you have to contend with the possibility that foreign propaganda might be capable of swaying enough decisions to tip a close election—and elections don’t generally come closer than the election Trump won. Running away from that inescapable logic sends a clear signal to future saboteurs that American institutions are too paralyzed and self-interested to protect their own elections, which will thus be vulnerable to future meddling and a massive crisis of faith.
Then again, a lack of faith in government and an acceptance of corrupt Banana Republicanism is exactly what slime like Donald Trump and Scott Walker want, so that situation becomes a win for them.

To go along with Beutler’s point, I am having a hard time figuring out an appropriate response to the fact that that we may be in a state and a country with an illegitimate government, elected in no small part through propaganda and election-rigging. And if that illegitimacy cannot be rectified by the constitutional channels of government oversight, voting and impeachment, then the next option becomes a lot worse – and a lot more destructive to many of us.

Let’s not have it come to that, and start to get this cleaned over the next 12 months, shall we?

Monday, November 20, 2017

Pre-election spending increases don't make up for failure of Walker's austerity


The National Association of State Budget Officers (NASBO) released their annual State Expenditure Report last week. If you dig inside the numbers, you can see how Scott Walker’s attempt to use his 2015-17 budget as a prelude to a presidenctial so badly shortchanged the state, and how the lack of investment slammed job growth to a near-halt.

The NASBO report says that Wisconsin was only 1 of 8 states that spent less money in Fiscal Year 2016 than Fiscal Year 2015. Wisconsin wasn’t hit with the oil bust like many of these other states were, which means we fell into the other common category behind spending cuts in that year - bad leadership.

States with less spending in FY 2016
Alaska -25.3% (oil bust)
Ill. -16.3% (delayed payments due to bad leadership)
N. Dakota -5.9% (oil bust)
N.J -0.9% (Chris Christie credit downgrades)
Wis. -0.8% (bad leadership)
Mississippi -0.3% (it’s Mississippi)
Oregon -0.2% (“other state funds” had a one-year decline)
Louisiana (-0.1%, Bobby Jindal’s bad leadership AND oil bust)

It’s even worse when you focus in on the actual spending on K-12 education for 2015-16. Wisconsin was number 2 in the nation for cuts in spending and 1 of only 6 states to cut in this category.

States with less K-12 spending 2015-16
Cal. -3.3%
Wis. -2.7%
Okla. -2.6%
Kansas -2.3%
W. Va. -2.0%
Va. -0.8%
Alaska -0.5%

The California part is interesting, although I am not sure where that comes from. I do know this, when you’re cutting K-12 education more than Oklahoma, Kansas, and West Virginia, that is a BAD sign.

Also noteworthy is that Wisconsin didn’t come back with much more spending for Fiscal Year 2017, with only oil states, Colorado and West Virginia being lower on the list for the 2015-17 biennium. And no Midweste111rn state had a smaller increase in Wisconsin, including Illinois (which paid back some of their past-due bills in FY 2017)

Total spending change in FY 2017 vs FY 2015
Alaska -24.9%
N. Dakota -8.8%
Wyo. -1.5%
Col. -1.4%
W. Va. +0.4%
Wis. +2.0%
Conn. +2.1%
Ver. +2.3%

Any coincidence that Wisconsin’s job growth noticeably declined compared to the headier days of 2013-2015?



Even more remarkable is that most of Wisconsin’s spending increase in 2015-17 is concentrated in one area – Medicaid. NASBO says that of Wisconsin’s $909 million increase in total spending over those two years, $631 million of it was concentrated in Medicaid, which means spending for everything else in the state went up by less than 0.75% for those two years. That’s way below the rate of inflation for that time period, and it’s no coincidence that the state’s pothole problems and new wheel taxes and local sales taxes multiplied in those years.

Those spending reductions and the bad results that followed is what made the actions of the 2017-19 budget all the more notable. The Wisconsin Taxpayers Alliance noted this reversal of previous austerity policies by noting that the current budget increased General Fund spending by the largest amount since Scott Walker and the Wisconsin GOP came to power in 2011.
Planned spending in the recently enacted 2017-19 state budget departs from recent pat­terns in two important ways. First, general fund expenditures rise 8.8% over the two years, the largest biennial increase since 2009-11 (12.1%). Second, much of the increase is for school aid, which has grown less in recent years. K-12 aid will grow 8.3% over two years, the largest biennial jump since 2005-07 (9.0%)….

The state’s largest expenditure is for K-12 school aid, which grows significantly over the next two years. School aids are rising 3.4% ($187.4 million) this year and 4.7% ($264.3 million) in 2019 to $5.9 billion. School aids rose 5.6% and 3.9%, respectively, during the prior two biennia. Nearly all of the additional dollars are directed into a relatively new “per pupil” aid, rather than into the much larger equalization aid formula; this is a major shift in school funding.

Two other areas claim the bulk of remaining new spending. The budget uses income and sales taxes to reduce property taxes. It eliminates the state levy for forestry programs ($90 million annually) and the personal property tax on machinery, tools, and parts ($74 million); increases the school levy credit by $87 million per year, and raises the lottery credit by shifting $48 million of general fund taxes to pay lottery expenses.
But at the same time, some areas still were subjected to cutbacks in the latest budget, particularly when it came to state highway and high-cost bridge spending, which was cut by a total of $245 million for 2017-19. Yes, some of that was made up by increased local aids to streets (and you can argue that this is a better allocation of resources), but the needs on the state’s main highways will be worse in 2019, and require more costs, taxes and borrowing.

But again, those cutbacks in highway spending (done in a desperate attempt to stay on the good side of RW oligarchs by not raising taxes) make the Scott Walker/WisGOP Christmas Tree budget of 2017-19 all the more striking. It’s basically an admission the austerity gimmicks of that budget did not work either economically or politically.

So no Scotty, you don’t get to turn around and take credit for “extra investments” when your previously failed strategy set the state back. Instead, you must be held accountable for the screw-ups that you caused by deciding to value donors and right-wing oligarchs over the people of Wisconsin that PAY YOUR SALARY.

Sunday, November 19, 2017

11-0! Fun times in the Mad City



That was a lot of fun to watch yesterday. Yeah, it made for a long Saturday due to the 11am kick, but that's a mere trifle when Bucky comes through like that. And by the time UW had taken a 21-10 lead after 3, the Camp was rocking.



It's been an enjoyable ride, and the last 2 games in particular have been very gratifying (it's fun to watch a team physcially dominate like UW does). And THEY'RE NOT DONE YET.

The Budget Guy on GOP tax deform - "The End of All Economic Sanity"

As the debate over taxes continues in DC, one of the must-follow writers on the topic is Stan Collender of Forbes - aka TheBudgetGuy on Twitter. And what he wrote this weekend is especially relevant to figuring out where things stand on the tax issue.

While his approach is more fiscally conservative than I prefer, Collender is a must-read when it comes to understanding the Federal Budget and the many different proposals being floated around under the guise of "tax reform." Collender has constantly criticized the Trump/Ryan efforts to give a large tax cut to the rich and to corporations, and his most recent column proclaims "GOP Tax Bill Is The End Of All Economic Sanity In Washington."
There's no economic justification whatsoever for a tax cut at this time. U.S. GDP is growing, unemployment is close to 4 percent (below what is commonly considered "full employment"), corporate profits are at record levels and stock markets are soaring. It makes no sense to add any federal government-induced stimulus to all this private sector-caused economic activity, let alone a tax cut as big as this one.

This is actually the ideal time for Washington to be doing the opposite. But by damning the economic torpedoes and moving full-speed ahead, House and Senate Republicans and the Trump White House are setting up the U.S. for the modern-day analog of the inflation-producing guns-and-butter economic policy of the Vietnam era. The GOP tax bill will increase the federal deficit by $2 trillion or more over the next decade (the official estimates of $1.5 trillion hide the real amount with a witches brew of gimmicks and outright lies) that, unless all the rules have changed, is virtually certain to result in inflation and much higher interest rates than would otherwise occur.
Not sure I buy Collender's inflation argument too much, because unlike 50 years ago, the average worker isn't getting pay raises that match the increases in the deficit or other assets.

But I agree that it is absurd to have a major tax cut package for the rich in a time of full employment and a Bubbly stock market. I'd go further than Collender, and say a deficit-increasing tax cut would make the situation in the 2010s and 2020s worse than what we saw in the 1960s and '70s, because the only thing it'll inflate are assets like housing and gasoline. Those needs become less affordable for the average person until the asset bubbles inevitably pop - which is exactly what we saw with the 2006-2008 US economy and the resulting Great Recession that some parts of this country still haven't recovered from.

Collender adds that passing this deficit-busting tax package would lead to a structural deficit of $1 trillion, which goes along with the projections the Congressional Budget Office gave to the House GOP's bill earlier this month.



And Collender points out that those numbers grow higher into massive fiscal problems once that Bubble does pop and the economy falls into recession.
The tax hikes that will be needed to resolve the structural imbalance between federal spending and revenues will be impossible for political reasons.

Whenever the U.S. economy grows more slowly than expected or there's a downturn, an annual deficit of $2 trillion could easily become the norm.

The federal government will have far less ability to respond to economic downturns unless previously unimaginable and politically intolerable deficits, tax increases or spending cuts suddenly become acceptable.
And guess where spending cuts would have to come from? Medicare, health care, and Social Security, which is just what Paul Ryan is counting on.


As if you needed more reasons to punch this face.

And on top of that, let's not forget that the Joint Committee on Taxation said this week that the Senate bill would raise taxes on low-income workers 3 years after the tax bill takes effect. And then EVERYONE would see their taxes go up in 2027, as part of a budget trick designed to allow the tax scam to pass with 50 votes in the Senate.

There is no honest justification for the type of "tax reform" that the GOP is trying to shove through Congress (and all 5 House GOPs from Wisconsin voted for this crap last week)). But of course, this has nothing to do with good tax policy.



And yet these guys being paid with OUR tax dollars to only do the bidding of those oligarchs at the literal expense of the rest of us? They gotta go.

Saturday, November 18, 2017

UW merger may be on, but it's still not being done right

Now that the merger of the UW System's 2-year campuses with several of its 4-year campuses has been approved by the UW Board of Regents, the hard work of implementing the change will happen over the coming months and years. Faculty and staff were largely locked out of that merger decision, and that is something that former Regent and Assembly Speaker Tom Loftus contrasted with what was done 30 years ago.

In an open letter to UW System President Ray Cross, Loftus describes a listening tour that he and then-Gov Tommy Thompson took to discuss the best way to sort out some of the issues that remained from the prior merger of UW-Madison with the Wisconsin State System. Loftus says those listening sessions (which actually involved listening to and dealing with the public, unlike the hand-picked charade of friendly audiences that our current Governor does) led to new ideas and better solutions.
The result was that we came back to the Assembly and put forward a series of proposals that represented a distillation of what we had learned. And, we learned a lot. The proposals we put forward were quite different than what we thought we would do before our listening marathon.

To paraphrase Shakespeare, “there was more in heaven and earth than thought of in our philosophy.”

We sold the package to the Republicans and the Democrats; and the Governor; and Madison and the four year campuses; and, the faculty and students. What passed was a consensus that still governs much of how the System operates today…

I ask you to take back the role of speaking to the public, after you listen to your constituents.

As an early and public advocate of yours it pained me to see the actions that lead to a faculty vote of no-confidence in your leadership. Use the listening tour to show that they were heard and you came to town to listen.
If you read between the lines of Loftus letter, you can tell that he’s dismayed at the top-down and secretive manner in which Cross and the Walker-stacked Board of Regents are trying to pull off this merger. And that such a method of decision-making will doom the merger to not working out as well as it should.

But that's the suboptimal way Cross and the rest of the pro-Walker crew at the Board of Regents do things. Let me direct you to an excellent column from former UW professors William Holahan and Charles Kroncke that starts off with good news. UW-Milwaukee just recently joined UW-Madison as an “R-1” top-tier research institution, and that UWM produces a sizable amount of Wisconsin’s highly-educated work force, as 80% of its graduates stay in Wisconsin. Holahan and Kroncke also note that Milwaukee’s business community frequently relies on UWM innovation and research to improve their products and service delivery.

But despite UW-Milwaukee gaining prestige and value for the state, 7 years of budget cuts and anti-intellectual mentality from Governor Dropout and his lackeys in the Legislature and the Board of Regents is taking its toll. The professors note that talented academics are leaving UWM and going to places where their talents will be better appreciated.
Since 2010, the number of tenured and tenure-track professors in the physics department is down 24% (from 26 to 19). The story is the same in biological science—from 38 down to 26. The economics department has lost 26 % of its faculty; educational psychology 48%; history 27%. One measure of the quality lost is to look at where they have all gone: UCLA, Minnesota, Tufts, Texas A&M, North Carolina, Ohio State and Duke. Not a single program has been immune. All university stakeholders—students, parents, donors, business collaborators, alumni—should be alarmed.
Holahan and Kroncke also point to the arrogant mentality in how Walker and his hand-picked Regents administer the state’s 4-year schools, and how these right-wing “business-oriented” people have no clue about the product that comes out of academia, or how that product is made.
In most instances, the regents are successful members of the Wisconsin business and legal communities. They are far more likely to be attuned to the nuances of business organizations than to those of academic institutions. Authority in most business organizations tends to be top-down, with those at the top taking risks with their own time and money, thereby earning the right to direct employees.

Accordingly, the regents have a hard time understanding why faculty cannot be managed by university administrators. They envision faculty as “employees” and “subordinates” to administrators—even though most of those “bosses” have no understanding of what those faculty do in their research or in the classroom. The reason is that, in universities, professors normally know far more about their work than administrators. Consequently, the true job of a university administrator is to facilitate the work of the faculty, not try to lead it.

Moreover, evaluation of faculty research work relies on “peer review”—the rigorous process conducted by scholars throughout the world qualified to judge the research output of university professors. The top-down authoritarian business model being implemented at the UW system will disrupt this natural relationship between faculty, administration and the international community of scholars.

Disruption can be great for society, especially when new products or processes are introduced into the marketplace to supplant less efficient ones, but this new alternative “business” model will not advance teaching or research at the university, rather it will retard growth and stifle creativity and innovation—the very life blood of our economy and economic wellbeing [-the] essence of the contribution that the university makes to society.


And then we wonder why this state continues to stagnate and have talent flee under the ALEC crew? These mediocre corporate front men and women either do not know or do not care that they are strangling the success of the UW System, and damaging the state’s economic competitiveness as a result.

Just a thought, but when it comes to higher education we should listen less to Wisconsin’s failing, regressive business community and more to the faculty and students that are still succeeding at the UW despite the ALEC crew’s attempts to mess it up. But that’ll only come with new leadership at the top, starting in the Governor’s office, and trickling down to the Board of Regents and the Legislature.

Friday, November 17, 2017

October jobs look good in Wisconsin, but previous "gains" haven't held


Yesterday had the release of another Wisconsin jobs report, this time for October 2017. And no matter how you look at it, this one went pretty well.
Place of work data: Based on preliminary data, Wisconsin gained a significant 10,500 total non-farm, 9,500 private sector jobs and 3,400 manufacturing jobs from September to October 2017. The state also added a significant 42,400 total non-farm jobs and 39,400 private-sector jobs from October 2016 to October 2017, with a significant year-over-year gain of 13,000 manufacturing jobs. The number of total non-farm and private-sector jobs in Wisconsin reached all-time highs, according to the preliminary numbers.
It’s a nice bounce back from some bad months in the Spring and Summer, and September’s jobs were also revised up by 3,600 total and 1,200 in the private sector.

As for the state’s unemployment rate, that had good news as well, down by 0.1% to 3.4% (OK, 3.41% vs 3.46%) after a few months of rises. And unlike the national decline in unemployment, it wasn’t due to people leaving the workforce, as household employment was up 2,300 (with revisions) while the labor force only went up by 900.

Among sectors, leading the way was 4,300 seasonally-adjusted jobs in “Business and Professional Services”, and as Walker’s DWD mentioned above, 3,400 were added in manufacturing. However, I’d be skeptical of that gain in manufacturing jobs holding, and not just because these one-month figures are quite volatile.

The real reason is because the October jobs report also included the pre-release of the figures for the “gold standard” Quarterly Census on Employment and Wages for the 2nd Quarter of 2017. And if you look at those numbers, you see that manufacturing jobs are not quite undergoing the boom that Walker’s DWD is claiming to happen.

Manufacturing jobs, June 2016-June 2017
Reported by DWD +8,300
Reported in QCEW +3,771

And it’s not the first time that manufacturing jobs have been overstated in Wisconsin. As UW-Madison’s Menzie Chinn notes in Econbrowser, this also happened in each of the previous 2 years.



But still, 3,771 jobs gained in manufacturing is better than LOSING nearly 4,000, like we did in 2016. What’s less good is that total wages in the QCEW for Q2 2017 in manufacturing were only up 3.1% overall from the same quarter a year ago, which comes to less than 2.3% per person – not much above the rate of inflation for that time period.

Also interesting in the pre-release for the QCEW is that it took a significant a pickup in hiring in June to save the state from being below 1% job growth for that 12-month period.



Private jobs added, June 2017 vs June 2016 QCEW
June 2016 +34,002
June 2017 +41,849
DIFFERENCE +7,847

Much of that June pickup came from manufacturing (+9,450 in 2017 vs +7,550 in 2016) and Leisure and Hospitality (+16,300 in 2017 vs +11,900 in 2016). Now maybe that hiring up was a sign of good things to come, and that the good October figures reflect new strength in Wisconsin's job market. But it could also just be a seasonal blip that we see go back down as the snow starts flying.

For now, let’s allow the Walker people to shoot their mouths off about what is a very good October report. The lack of wage growth that still appears in the QCEW illustrates the underlying problem with Wisconsin's economy un the Age of Fitzwalkerstan, even more than our still-substandard job growth. And with prevailing wage being repealed on construction projects along with a discouraging of start-ups from a Wisconsin GOP that prefers to pay back their campaign contributors, I wouldn’t count on wages getting better any time soon.