Monday, May 21, 2018

Sure, Wisconsin incomes have risen in the 2010s. We're still losing

Here's an example of something that sounds pretty good, especially if you don't have any context.

Wow, a 16% increase in income! Things must really be thriving in Wisconsin!

Not really, and not just because Walker was using nominal and not inflation-adjusted dollars. A report that came out a few days after Governor Walker released this piece of cherry-picking showed how that increase in income for Wisconsin isn't really anything to brag about.

Let me direct you to the Bureau of Economic Analysis' report for state and metro incomes. This report now goes through the end of 2016, and what’s interesting about this report compared to the state personal income reports that were released earlier this month is that it adjusts for the cost of living in certain areas of the country, using a statistic called Regional Price Parities (RPPs).
The RPPs are calculated using price quotes for a wide array of items from the CPI, which are aggregated into broader expenditure categories (such as food, transportation or education).

Data on rents are obtained separately from the Census Bureau’s American Community Survey (ACS). The expenditure weights for each category are constructed using CPI expenditure weights, BEA’s personal consumption expenditures, and ACS rents expenditures. The broader categories and the data on rents are combined with the expenditure weights using a multilateral aggregation method that expresses a region’s price level relative to the U.S.

For example, if the RPP for area A is 120 and for area B is 90, then on average, prices are 20 percent higher and 10 percent lower than the U.S. average for A and B, respectively. If the personal income for area A is $12,000 and for area B is $9,000, then RPP-adjusted incomes are $10,000 (or $12,000/1.20) and $10,000 (or $9,000/0.90), respectively. In other words, the purchasing power of the two incomes is equivalent when adjusted by their respective RPPs.
That adjustement helps Wisconsin in these rankings, as Wisconsin’s RPP of 92.8 means that incomes in our state goes further in this survey than it does for the US as a whole. And our low population growth moves us up compared to many other parts of the country when it comes to figuring out income growth per capita, even if low population growth is a limiting item when it comes to job growth or other economic measures of well-being.

Wisconsin performed fairly well by this standard in 2016, having their inflation-adjusted incomes rise by 1.3% vs 1.1% for the US as a whole. But we badly lagged the country in the 4 years before, which correspond to when Scott Walker and the Wisconsin GOP came to power in 2011, Wisconsin ranks a subpar 5th in the Midwest for both real income growth, and real income growth per capita in that time. We also trail the figures for the US in general.

So yet again, THANKS OBAMA for helping us along.

Worse is what things look like at the local level, especially in Wisconsin’s largest metro area of Milwaukee. Between 2011 and 2016, real per capita income in the Milwaukee metro area barely grew at a rate of 1% a year, far behind other Midwestern metropolitan areas, and the US as a whole.

By comparison, Madison and the Twin Cities had incomes grow nearly twice as fast as Milwaukee (even with both metros increasing their populations at a faster rate), and the “declining” Chicago metro area had per-capita income growth nearly 3 times as fast as Milwaukee – even after taking into account the higher costs to live in Chitown.

The disparity in income growth means that both Madison and the Twin Cities has zoomed past the Milwaukee metro area for income per person during the Age of Fitzwalkerstan, and Chicago has nearly caught the Brew Town area as well. And if you’re wondering about the cities in the rest of Wisconsin, they pay even less than Madison and Milwaukee. While most grew during the Obama Recovery/Age of Fitzwalkerstan, the gap in per-capita income for all mid-size Wisconsin metros (other than Sheboygan!) is still between $2,200-$9,700 from the big 2 of Milwaukee and Madison.

The last item to note in this report is that much like the rest of rural America, the non-metro Wisconsin lagged when it came to income growth compared to what was going on in the bigger cities. To begin with, incomes were already less in rural Wisconsin in 2011, even with the lower cost of living. But the gap widened from $3,000 in 2011 to $3,700 by 2016.

One positive note is that while rural Wisconsin had income growth below the state average and the US as a whole, they did outpace the “forgotten people” in other parts of rural America, particularly in 2015 and 2016.

But the only type of person that would promote these income figures as proof that Walker’s and WisGOP’s policies are making Wisconsin prosperous would be someone who thinks the average citizen is too stupid and sheltered to recognize that most of the Midwest and the nation were rebounding better than we were. That goes double for the pro-Walker oligarchs at the Metropolitan Milwaukee Association of Commerce (MMAC), who continue to give big money for a corporatist agenda that is leaving Milwaukee in the dust for both incomes and for job growth.

As usual, the only saving grace for these income figures is the growth that continues in Madison, where education and wage levels are higher, and there is a quality of life that encourages more talent to come there. You’d think we’d try to emulate that successful liberal town, and kick the right-wingers out that have been holding back the rest of the state.

1 comment:

  1. Thanks for doing this. I noticed Noah Williams' tweet yesterday that touted the "income growth" without any context of comparable figures elsewhere. Obviously, Wisconsin doesn't look good in comparison even in the midwest.