Friday, October 31, 2014

While the Obama Recovery picks up steam, Wisconsin sputters

If you looked at the national figures relating to the economy, things have been going very well. Just this week, 3rd Quarter GDP was released, and showed a gain of 3.5%. This is after the 2nd quarter gain of 4.6%, and all of a sudden, a decent last 3 months would mean we’d end up with growth near 2.5% for 2014, even with the polar vortex winter setting us back. It was a GDP strong report across the board, especially with increases in investment of 5.5%, and exports up 7.8%. Inventories were also drawn down, taking away 0.57% in growth, so the total gain in final sales was over 4.0%.

As these charts show, GDP growth is back on the growth track that it’s been over the last 5+ years of this Obama Recovery, and note the pickup in the last 6 months.

This has translated into increasing job growth, as the country is on pace to add more than 2.7 million jobs this year, the fastest since the Clinton presidency. Here’s a story from the last monthly jobs report, which covered the month of September (October’s comes out next week)
With hefty upward revisions to the prior two months, job gains have averaged 227,000 per month in 2014, the strongest pace since 1999. There were a few blemishes: The labor force participation rate sank to a fresh 36-year low of 62.7%.
And certainly the low participation rate is a bit of a concern, but it’s also a reflection of aging Boomers and related demographics. The job growth and demos reflect in unemployment that has dropped from 6.6% at the start of the 2014 to 5.9% in September.

New unemployment claims also are dropping in the U.S., as they reached their lowest one-week levels since 2000 earlier this month, and the four-week average is down to 281,000, a level never reached once during the George W. Bush presidency.

Even the U.S. budget deficit is now in much better shape, as Fiscal Year 2014 ended with the deficit down to $483 billion, the lowest it’s been since the Great Recession started in Fiscal Year 2008. This was in no small part due to increased revenues resulted from more jobs being created, and less need to pay for stabilizers like unemployment benefits.

So with all these good stats, why isn’t Wisconsin’s economy booming and it’s budget in great shape? We’re going the other direction- on pace for the lowest amount of jobs added in 5 years (at less than 2,000 a month), along with large budget deficits looming for 2015. Even the job growth that has come around since 2010 hasn't helped much, as UW-Milwaukee labor economist Mark Levine released a study this week showing that the jobs we are adding are low-wage, menial work instead of good, family-supporting jobs.

Levine’s study breaks down the job market in Wisconsin into three different segments- low wage (less than $12.50 an hour), middle wage ($12.50 an hour to $24.99 an hour), and high wage ($25.00 an hour or more). You will see that middle-wage jobs have been disappearing from the state over the last 14 years. What’s somewhat alarming is that since Scott Walker took over as governor in 2011, good paying jobs still have yet to come back to the state, despite the ongoing Obama Recovery.
Employment growth in Wisconsin between 2000-2007 was marked by the polarized pattern identified by David Autorand others nationally: jobs increases in low and high wage occupations, shrinking employment in middle wage occupations. During the 2007-2010 recession employment in Wisconsin declined across all wage levels, although the losses were heavily concentrated in occupations paying “middle wages” (90 percent of the 2007-2010 job losses in Wisconsin were in middle-wage occupations). Finally, between 2010-2013, employment continued to decline in both middle and high wage occupations in Wisconsin; all of the net job growth between 2010-2013 occurred in low wage occupations. More troubling still: over 60 percent of the 2010-2013 growth of employment in low-wage occupations in Wisconsin occurred in very low-wage occupations –those with median hourly wages below $10.00 (in inflation-adjusted 2013 dollars). This marked a continuation of the decade-long trend: between 2000-2013, the number of Wisconsinites working in very low-wage occupations grew from 234,450 to 405,780, an increase of 73 percent.
In fact, Levine says that since 2010, the number of high-wage jobs in the state are down 2.9%, and the number of middle-wage jobs are down 1.3%.

Another scary stat from Levine’s report deals with the drop in wages for those who stay in the same job. And it doesn’t include the drop in take-home pay suffered by hundreds of thousands of Wisconsinites due to the changes in Act 10.
Several occupations that were “middle-wage” in 2010 --such as laborers and freight, stock, and materials movers; nursing assistants; and driver/sales workers -- all saw their inflation-adjusted median hourly wages drop below $12.50 by 2013, thus adding thousands to the low-wage segment of the Wisconsin labor market. Moreover, perhaps as ominously, even in many occupations that remained “middle-wage,” especially in manufacturing, real wages fell noticeably between 2010 and 2013.The inflation-adjusted median hourly wage for production occupations in Wisconsin fell by 5.2 percent between 2010-2013. Even in occupations like welders or CNC machine tool operators, supposedly in such high demand that employers claim there is a “skills gap” in Wisconsin, real wages fell by 6.5 percent and 4.7 percent respectively between 2010 and 2013. While the median hourly pay in these occupations remained solidly in the middle-wage category through 2013, ranging between $15 and $18 an hour, the downward trend in real wages suggests a pervasive, continuing erosion of the middle-tier of Wisconsin’s occupational wage structure.
With this in mind, isn’t is obvious that things aren’t working out for the majority of us in the Age of Fitzwalkerstan? And isn’t it equally obvious that the answer isn’t more giveaways to corporations that’ll hoard profits for themselves and refuse to give the higher wages that lead to true economic growth.

So does this state want to keep lagging behind the rest of the country, and continuing down the same path? Let’s be honest, a second Walker term (for as long as it lasts) would be the same path, except possibly on steroids. Remember mega-donor Diane Hendricks asking Walker for "right-to-work (for less)" laws? Levine’s study showing the drop in wages indicates that’s the LAST thing we need to be considering in this day and age, and instead we should be following Mary Burke’s call for a higher minimum wage to help drive the wage scale back to where it was 4 years ago.

If I was on the stump as a Dem candidate, I'd probably close with something like this.

"Do we change directions, expand Medicaid, raise the minimum wage above poverty level, and properly fund public schools? And do we stop the “divide and conquer” governance that leads to “winner take all” mentality which manifests itself in Wisconsin corporations taking all the profits from the Obama Recovery and keeping it for themselves, along with the passage of similar policies that don’t benefit anybody but the governor’s “inner circle?” This includes the end of giving big-money government appointments to hacks like the 2-time DUI recipient and college dropout that was the son of a lobbyist, or giving a 6-figure executive position at WEDC to a 32-year-old college dropout with no private sector job experience?

We can stay on this path, pick Walker, and keep losing ground on the rest of the country. Or we can change the path, and pick Burke. Those are the choices you have on Tuesday. Choose wisely, my friends.

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