Thursday, January 22, 2015

Strong Wisconsin jobs continue for December. Is it real?

Apparently the country’s job boom has finally been hitting Wisconsin over the last few months. We saw further evidence of this in the Wisconsin Department of Workforce Development’s release of the December 2014 jobs report for the state. The top-line numbers are very good, with 7,600 private sector jobs added, and 5,100 overall, and November’s figures being revised up by 1,500 more private sector jobs.

The biggest-gaining sector in the state was in Construction, which had lower-than-normal seasonal layoffs in December (7,000), resulting in a seasonally-adjusted gain of 2,900. The Transportation, Warehousing and Utilities category also did well, up 1,900 with the seasonal adjustment. Manufacturing took a bit of a dip in December (down 200 jobs) but with November’s figures being revised up by 600 in that sector, even that number is better off than we knew last month. The state's unemployment rate did not change from 5.2% while the U.S. dropped by 0.2% to 5.6%, but it still indicated slight gains in both the number of people employed and in the total labor force, which should be taken as a positive sign.

It’s been a remarkable run-up of jobs in these monthly reports since June, with 46,300 private sector jobs added in the last 6 months, and 45,300 overall. It’s cut a significant chunk out of the Walker jobs gap from more than 74,000 private sector jobs in August to less than 53,000 today, and it ends the first Walker term at just over 158,000 jobs. Not exactly the 250,000 the Guv predicted, but it was apparently enough to keep a sufficient amount of Wisconsin voters from kicking him out. You can see the upswing on this chart which goes back to the start of Walker's term in office.

This all sounds good, and certainly the “Help Wanted” signs I see around Madison indicate things are in a better spot than they were at the start of this decade, at least in the Capitol City (funny how these things happen in a highly-educated liberal town where people want to move to). However, I’d approach the recent positive job reports with some skepticism. These alleged gains have yet to manifest themselves in increased tax revenues (as mentioned earlier this week, Wisconsin’s income tax revenues continue to badly lag projections), which shouldn’t be happening if the job market is truly booming. There’s a disconnect here that does not make sense, unless all of the jobs being added pay very low wages (which is a possibility, as UW-Milwaukee Professor Marc Levine noted last year that low-wage jobs were the only ones that had increased in the Age of Fitzwalkerstan).

Secondly, these figures are due for annual benchmark revisions that come out with the next monthly jobs report, which will be in early March. These revisions are often based on figures from the “gold standard” Quarterly Census on Wages and Employment, and those figures have yet to show the same amount of growth- Wisconsin still lingered in last place for Midwestern job growth in the 12 months leading up to June 2014. Now maybe that’ll change with upcoming QCEW releases, but we saw this same pattern last year, when the monthly reports indicated private sector job growth of 39,700 for all of 2013, but the QCEW said the state only added 29,723 that year.

Those caveats certainly won't stop Scott Walker from trying to take credit for the latest good job figures in this monthly report, as a way of selling his presidential campaign to unsuspecting folks from out of state. You can see why he might do this, but watch for more information over the next few weeks that confirm or deny whether we are really living through a “Wisconsin comeback” or a “dead cat bounce" that'll soon see the state reverting to the subpar job growth that has been the general rule in the Age of Fitzwalkerstan.


  1. Looking at the QCEW total jobs and comparing them to the change in UI claims, the from December CES reference week to December CES reference week:

    Dec 2008 - Dec 2009: -119,175 jobs, continued+initial UI claims +34,276 (-3.48 jobs/UI claim)
    Dec 2009 - Dec 2010: +33,660 jobs, continued+initial UI claims -46,566 (r-0.72 jobs/UI claim)
    Dec 2010 - Dec 2011: +21,662 jobs, continued+initial UI claims -20,404 (-1.06 jobs/UI claim)
    Dec 2011 - Dec 2012: +33,353 jobs, continued+initial UI claims -8,155 (-4.09 jobs/UI claim)
    Dec 2012 - Dec 2013: +28,095 jobs, continued+initial UI claims -11,243 (-2.50 jobs/UI claim)

    Dec 2013 - Dec 2014, continued+initial UI claims fell by 17,918. CES suggests a total job gain for 2014 of 53,300, which would imply a jobs/UI claim ratio of -2.97. That's plausible looking at the UI claims, although they don't do a very good job of nailing it down.

    Unadjusted CES agrees almost perfectly with QCEW for the first six months of 2014 (+57,600 vs +55,929), so the second half bounce is not obviously a correction to a first half undercounting.

    53,100 total jobs in 6 months though would be without precedent, a big shift from recent history and hence more than slightly implausible.

    Regardless of what the exact case may be, going by withholding tax receipts if jobs gains are actually as great as 50,000 then wages are flat.

    1. Geoff- And by "flat" wages, that means 0% BEFORE inflation , if I'm doing the math right. It would match Levine's research that the only jobs being added are low-wage ones.

      Or else the job gains are overstated. Neither makes the current situation seem as sunny as the jobs numbers would seem