Tuesday, May 15, 2012

More smackdowns of the attempted alternate Wisconsin economic reality

Looks like the Walker Administration's attempt to convince people that their horrendous job record isn't so horrendous has hit a major speed-bump. And it's Forbes columnist Rick Ungar, who exposes, slices and dices the Walker Administration's attempt to change the job numbers. Ungar's been following the Wisconsin Uprising since the beginning, and has been one of the few national columnists (Greg Sargent at the Washington Post is another) who seems to have a clue about what's really happening, and he hits it on the head here.

I'll give you some key passages, first off where Ungar explains the difference between the two surveys that is the source of Walker's argument.:
Here’s the difference between the two approaches-

The Establishment Payroll Survey involves the DOL calling workplaces-both private and government- and asking how many people are employed. The results of this survey, on a national basis, is the jobs number reported every month for non-farm employment. [ed note: This is the heavily-hyped "jobs number" you see on the monthly employment report.]

The Current Population Survey, favored by Governor Walker, involves calling households to ask people if they are working. This is the survey that gives us our monthly unemployment number—the number that is consistently attacked by Obama foes because it is impacted by factors such as how many people have dropped out of the hunt for a job, expiration of unemployment benefits and other events that skew the numbers. [this is the "8.1% unemployed" number for the nation.] In other words, when people give up looking for work, it actually has a positive impact on the unemployment rate because these people are removed from the counting base, allowing for a better ratio of people who are working to those who are not. This produces a more favorable, but far less accurate, measurement of how many people are unemployed.

The Current Population Survey (household survey) is particularly tricky when applied to determining the job numbers for a state because of the many people who live on the ‘edges’ of a state who are employed across the border in a different state. By way of example, someone living in Racine, Wisconsin may be able to answer in the affirmative when asked if she has a job. However, what is not asked is whether the respondent is employed in Wisconsin or driving across the border into Illinois to go to work. This makes such an individual’s response useful in determining how many people are working on a national basis but perverts the numbers when attempting to determine how many people are actually working in Wisconsin.

For these reasons, the Establishment Survey has long been the primary tool for measuring how many jobs exist in a given state rather than the household survey.
Then Ungar continues, with a great quote from Laura Dresser at the Madison-based COWS:
In the presentation noted above, [DOR economist John] Koskinen argues that were the DOL to use the old benchmarking readjustment standards (the Labor Department uses up-to-date data each year to go back and make adjustments to earlier estimates), involving making corrections to the 2nd quarter job numbers of the previous year rather than the current standards of readjusting the 3rd quarter of the previous year—it would also look better for Wisconsin. Accordingly, Walker is choosing to use the old standards because…well, I think the reason is sufficiently obvious.

Still, every single other state in the union uses the current standards of readjusting 3rd quarter benchmarks and it is that number which is used to compare relative success or failure among the 50 states.

According to Laura Dresser, a labor economist at The Center On Wisconsin Strategy at The University Of Wisconsin, Walker’s new numbers are little more than an incredibly transparent effort to create a false reality just in time to mislead Wisconsin voters who will cast their ballot in a few short weeks. Pointing out just one of the flaws in the ‘new and improved’ Walker method of measuring job growth, Dresser says, “It seems that they’re attributing employment growth in other states to Wisconsin.”

Dresser further points out that even if we were to go along with Walker’s preferred metrics, despite their being completely out of synch with the remainder of the country, we simply end up “dancing around zero.” While the Establishment Survey puts the numbers of jobs lost slightly below zero, the alternative survey preferred by the Walker people puts them just above zero. At the end of the day, we’re talking about zero job growth—even under Walker’s favored, if completely unorthodox, approach.

Basically, the Walker folks want to say that they're oranges when every other state is an apple. No sale here, and the way they're complaining, it sure seems like Thursday's job report might not amount to much. (As a reminder, Wisconsin needed to create 2,500 jobs in April to keep up with the U.S., and to avoid having the Walker jobs deficit increase from its current level of 65,000 jobs.)

There's a related addition to this rightie attempt to change the reality of Fitzwalkerstan's economic failures. Steve Eggleston wrote a breakdown of Koskinen's presentation, and while a lot of it is propaganda, it is worth a read because you can see where the Walker folks reach for these arguments. Ungar's already talked about the jobs part, so I'll leave that out, but I'll discuss Eggleston's arguments about Wisconsin income growth.
The Bureau of Economic Analysis said that per-capita personal income in Wisconsin grew by 4.8% in between 2010 and 2011. That is not only significantly higher than the national average of 4.3% growth, but was the 11th-highest in the country.

In part because of that, and in part because the Republicans repealed the “millionaires’ tax” and combined reporting instituted by the Democrats when they had total control of state government in 2009, general-purpose revenue increased by an adjusted 4.3% for the first 10 months of FY2012 from FY2011 (that adjustment is downward from 6.0% due to more pay periods this time around). That includes an adjusted 4.5% increase (7.8% unadjusted) in individual income taxes, a 4.8% increase in sales taxes, and 5.4% in corporate taxes. Of note, FY2012 started in July 2011, when the CES measure of employment began to wildly diverge from the other two measures.
Makes some sense, until you take a look at the BEA report on personal income, and what happened to it in Wisconsin once Walker's policies took hold. Remember that Act 10 was passed at the end of Q1, and Walker's budget became law at the start of Q2.

State personal income % change by Quarter, Wisc. and Midwest 2011
Iowa 3.1, 1.1, 1.0, 0.9 - +2.92% last 3 quarters
Ohio 1.6, 0.9, 1.0, 0.6 - +2.52% last 3 quarters
U.S. 2.1, 0.9, 0.8, 0.8 - +2.45% last 3 quarters
Ind. 2.2, 0.9, 0.9, 0.6 - +2.45% last 3 quarters
Ill. 2.3, 0.8, 0.7, 0.7 - +2.19% last 3 quarters
Wis. 2.3, 0.7, 0.9, 0.5 - +2.17% last 3 quarters
Minn 1.9, 0.7, 0.2, 0.7 - +1.68% last 3 quarters
Mich 2.8, 0.0, 0.9, 0.7 - +1.54% last 3 quarters

So Wisconsin was 5th out of 7 states in the Midwest for income growth and below the U.S. average. But even that is masked by the fact that more than half the income growth happened in a time when Jim Doyle and the Dems' 2009-2011 budget was in place and public employees had collective bargianing rights. So once that 1st Quarter of 2011 drops off, Walker's numbers are awful the rest of the time, and Eggleston's theory that Walker policies have grown incomes looks to be completely wrong.

Eggleston's other argument worth hacking apart is the argument that unemployment claims are down compared to when Walker took office.
Perhaps the data that is most damning of the CES “job loss” is initial unemployment claims. The DOR produced a chart showing that those claims are the lowest in 5 years.
First of all, just because there are fewer jobs doesn't always mean there has to be higher unemployment claims. Remember the record retirements from public workers in 2011? Those people never filed for unemployment. Neither did people who may have moved or gotten work in other states, and we know about half of the drop in unemployment in Wisconsin from 7.6% to 6.8% under Walker have been from people leaving the work force (i.e. not because they got a job).

And as we also know, after Act 10 was passed, Wisconsin lost the edge it was having on the rest of the nation, actually seeing the change in their year-over-year unemployment claims rise vs. the rest of the nation, instead of staying well below the rest of the U.S. like they did in 2010.

So the Walker folks can continue to try their deceptions and claim they're right while the measures for every other state are wrong. But the data tells otherwise, and if our media gives this even a modicom of analysis (instead of "he said/ she said" bullshit), Walker's going to look even more foolish than he already does.

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