Thursday, November 21, 2013

October Wisc jobs good, but overall picture still bad

We finally got the release of both the September and October jobs numbers for Wisconsin today, after a one-month delay due to the federal government's shutdown. And at first glance (the only glance the Walker folks want you to take), the situation sounds really good.
In brief, the estimates show:

Place of residence data: A preliminary seasonally adjusted unemployment rate of 6.5 percent in October, down from 6.6 percent in September and the state's lowest seasonally adjusted rate since December 2008. The rate is below the national unemployment rate of 7.3 percent.

Place of work data: Seasonally adjusted private sector job growth of 12,400 from September to October and 41,700 from October 2012 to October 2013; year-to-date private sector job growth of 34,400, the best since 2004.
And all of these stats are true, but they leave out some very important background.

First of all, the unemployment rate dropping has very little to do with people getting jobs. The household survey that determines the unemployment rate only saw a seasonally-adjusted increase of "employed" people of 700. What caused the rate to drop from 6.7% to 6.5% was that a seasonally-adjusted 6,500 Wisconsinites dropped out of the work force, and nearly 33,000 dropped out in raw numbers. If Wisconsin had merely had a normal amount of seasonal dropouts, and had the seasonally-adjusted work force stay the same, then the unemployment rate would have stayed at 6.7% instead of 6.5%. That won't stop the Walker folks from bragging about the state's rate being lower than the rest of the nation (or not mentioning that a majority of the drop since the state's 2009 peak of 9.2% happened under Jim Doyle and the Dems), but it's important to know the context when they say these things, because you can bet our media won't.

And now onto the total jobs numbers. That private sector job growth of 12,400 in October is on the heels of a LOSS of 4,600 private sector jobs in September, and a downward revision of another 1,200 jobs in August. So we're really only 6,600 jobs ahead of where we thought we were 2 months ago, or 3,300 jobs a month. This is actually BELOW the national pace, which would have added 7,800 jobs if you reduce it down to Wisconsin's levels. It means that we've actually seen the Walker private sector jobs gap grow in the last 2 months, and it now stands at just over 51,500.

The release also included the data the Wisconsin DWD sent to the Bureau of Labor Statistics for the Quarterly Census on Employment and Wages (QCEW), aka the "more accurate jobs metric." This report featured the 2nd Quarter of 2013 and compared it with the 2nd Quarter of 2012, and that's worth noting because it includes the dreadful April jobs report, which was chilled by bad weather and awful Walker policies, and also has the bounce-back months of May and June, which saw jobs numbers rise with the thermometer.

The April drop shows clearly in this chart, as the year-over-year growth in that month sunk to less than 12,000 jobs- the worst figure in Walker's tenure in office. The next two months gave some recovery, but as of June 2013, the state was still adding less than 2,000 jobs a month over that year, and the trend was going in the wrong direction.

That graphic should also put to bed another Walker talking point- that the recall elections of 2012 slowed Wisconsin job growth, and that the economy would "take off like a rocket" once Walker was retained. Take a look at the 12 months before the recall, and the 12 months after.

Private sector job growth, Wisconsin QCEW
June 2011- June 2012 (pre-recall) +38,020
June 2012- June 2013 (post-recall) +23,968

That's a slowdown in job growth of 37% in the year after the recall election. So maybe that election did have an effect...just not in the way the Walker folks have tried to sell it.

I do think the next quarter for the QCEW should look better, as the jobs numbers have been generally improving over the last few months (although September's losses show the growth isn't steady). We'll see what the holiday-influenced figures in November and December have to say, as they will probably go a long way toward determining the narrative of "right direction vs. wrong direction" as the 2014 elections near. But with that said, there is little doubt that Wisconsin has been put in the hole over the first 2 1/2 years of Scott Walker's tenure as governor, and the good news we've had recently isn't nearly enough to drag us back to ground level. No matter how much the Walker Admin will try to lie and spin the situation, the overall record is still pretty bad.


  1. Thanks as ever for the analysis, Jake. I find the graph of the annual trend particularly starkly illustrative of the winding down of Wisconsin's jobs potential under Walker's budgets.

    Just to nitpick, the June 2011 - June 2012 private sector job growth was 37,959 (are you perhaps using a non-final June 2011 figure?).

    The June 2012 figure is final, but the June 2013 will likely be revised up by one or two thousand if it follows historical trends of revisions. But certainly not anything close to 14,000.

    Economic indicators for September have about the same year-on-year change vs June's (n.b. withholding receipts need adjustment for weekends and usually want averaging over 3 months or more; the inter-annual changes for Q2 and Q3 both stand at 3.8%).

    Unemployment claims for the mid-June week 25 show an improvement over 2012, as does the mid-September week 40. But the differences between each pair are very similar.

    There's not much here to suggest that Q3 will be any great improvement on Q2.

    CES indicates a seasonally adjusted 2013Q3 job growth of 7,000 (1,400 in the private sector) vs a 2012Q3 job growth of 6,000 (900 in the private sector). Historically poor Q3's may be the new Walker normal.

    The rosiest indicator is probably the sales tax receipts, which have had several good months in a row now. Hopefully more purchases will help stimulate demand for new jobs before struggling wages hold them back.


    The other thing I'd like to note is that in 2011 and 2012, QCEW indicates Wisconsin added 63,672 private sector jobs. In the first ten months of this year, CES indicates that another 34,400 were added for a total of 98,072 in Walker's first 34 months in charge. That leaves the asking rate for his last 14 months at 10,900/month in order to reach his 250,000 promise, compared to 2,900/month as his record so far and the asking rate of 5,200/month when he was sworn in.

  2. Duly noted Geoff, and I've updated the chart accordingly (it's not much different).

    The lower unemployment claims are the big reason behind October's large "gains", as the non-seasonal private sector jump was only 100 jobs, which = 12,400 for the seasonally-adjusted. But claims have been creeping up recently, as it normally does this time of the year.

    And as you mention, Scotty won't come close to 250,000 jobs. He may get halfway by Election Day 2014.

    1. There are only 11 more monthly releases between now and election day 2014 (and only three more quarterly ones). Going by the 98,072 jobs over the 34 months, at that point we'll be at 98,072 x 45/34 ~ 130,000. Whether we're there or not will quite possibly depend on the statistical noise in the preliminary October 2014 CES results.

  3. I've noticed something else about this DWD press release: that it's the first pre-release of QCEW data since they began in May 2012 that does not refer to them as "actual jobs data".

    The rewrite spin begins.