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.