Friday, May 22, 2015

Lower Wisconsin unemployment isn't always a good thing

I was taking advantage of an amazing weather day on the Memorial Union Terrace, so I didn't get to this until now. Yesterday featured the release of the April Wisconsin jobs report, and it was a classic case of how initial looks can be deceiving.
Place of residence data: A preliminary seasonally adjusted unemployment rate of 4.4 percent in April, down from 4.6 percent in March. The 4.4 percent rate is the state's lowest rate since April 2008 and is lower than the national unemployment rate of 5.4 percent in April. Wisconsin's total employment grew by 44,600 year-over-year while the number of unemployed declined by 33,900. Additionally, the state's labor force participation rate of 68 percent outpaced the national rate of 62.8 percent.

 Place of work data: The state added a statistically significant 50,900 total non-farm jobs and 48,500 private sector jobs from April 2014 to April 2015 (seasonally adjusted). Other statistically significant changes include a year-over-year gain of 11,000 jobs and a month-over-month gain of 3,600 jobs in manufacturing, along with year-over-year gains of 8,200 jobs in construction and 4,500 jobs in financial activities. Wisconsin added 5,400 private-sector jobs over the month, and private-sector job totals remain above pre-recession levels.
Sounds really good at first glance. But take a look on page 3, and you'll see this stat when it comes to figuring the unemployment rate.

April 2015 Wis labor force vs March 2015
Change in labor force -14,000
Change in employment -6,400
Change in unemployment -7,600

So that's why the unemployment rate dropped- 14,000 people left the work force! And that shrinking labor force has been the trend in Wisconsin for the last 3 months.

Wisconsin labor force
January 2015 3,120,800
April 2015 3,096,000
Change -24,800

In fact, if the labor force stayed at January's higher level, and total employment in the survey remained the same, Wisconsin unemployment would be 5.2% instead of 4.4%

The monthly jobs report also included the preliminary release of Wisconsin's numbers for the "gold standard" Quarterly Census on Employment and Wages, which goes through the end of December 2014, and I'll contrast this passage
A gain of 35,736 private-sector jobs with 17,560 jobs added in three major sectors: construction, manufacturing and professional services.
With this passage from the December 2014 Wisconsin jobs report four months ago.
A 12-month gain in private-sector jobs by a statistically significant 54,100 from December 2013 to December 2014 on a preliminary basis (seasonally adjusted), which is the highest December-to-December gain since 1999.
So that "massive" job gain has dropped by nearly 18,400 jobs as the more accurate data has come in.

If I didn't know better, I'd swear there's something behind the Walker Administration's initial releases constantly being better than the reality we find out later. I'm not saying there is, but it's becoming a disturbing pattern.


  1. This 4.4% jobs figure is cooked. The Department of Workforce Development - - will typically deny claim after claim until an applicant gives up applying for Unemployment and applicants become statistical success stories, driving the unemployment rate down in the fictional universe of Walkerstan. Walker will of course hype this 4.4% figure that laughably understates the reality of the Wisconsin economy. If you live in Iron, central [Wood County for example] or southeastern Wisconsin, this is obvious but not many number crunchers out there [really you and the Center on Wisconsin Strategy (COWS)] willing to offer Wisconsin (and the nation) what Walker is doing and has inflicted onto Wisconsin. And Gannett Co newspapers are not exactly running investigative pieces on the fiction of the 4.4% 'unemployment rate.'

    1. MAL- Good info- there certainly seems to have a disconnect between the huge amount of mass layoffs we've seen vs the lower amount of unemployment claims.

      Unemployment RATE would be a bit less likely to be rigged this way, because it merely asks if the person has looked for work vs filing for benefits. But there certainly could be some modifications happening with how "looking for work" is defined.

      The last few months of jobs and UE rates have definitely gotten my BS detector flashing.

  2. Come now Jake, remember the (with lots of qualifiers) monthly figures showing big job losses in 2011-12 that QCEW later showed were modest gains? No, the data put out is what it is.

    2014's figures clearly owe everything to the strongest Q4 this century: -4,306 vs the second best -10,031 from 2010. More normally it's about -12,000 if the nation is in the middle of an expansion. CES captured that with a not-seasonally-adjusted +200, although it's clearly been running a bit high since September.

    The U3 rate is and remains as ever a poor measure of the economy because as you point out, it can go down for bad as well as good reasons (or up for good or bad reasons). I wouldn't mind its emphasis in the media but for the fact that that emphasis is almost invariably accompanied by an utter lack of context.

    Getting towards full employment should be marked not by a magic U3 rate but the advent of consistent upwards pressure on wages. In the private sector, per-job these grew by 1.8% in 2014Q3 vs 2013Q3. In 2014Q4 they apparently grew by 3.5% vs 2013Q4. That's not particularly signfiicant: there have been plenty of 12-month growths exceeding this in recent history, and 2014 finished with a historically humdrum 2.6% growth, which is one of the better in recent history in real terms at 1.1%.

    1. Geoff- Ordinarily I'd agree with you, but the way this Administration operates, with politics always being the first priority? I deserve to be skeptical, especially since these favorable stats always work their way into Walker's talking points.

      I agree that wage and income tax growth would be an indicator if things were really booming, and because that's not happening, that's all the more reason my BS detector is going off

    2. Anyone in their right mind is skeptical of anything the Walker Administration says, but the State and Metro Area Employment, Hours, & Earnings is conducted by the BLS as a federal-state co-operative program. It'd take the non-political civil servants in the DWD to hoodwink their federal counterparts both now and indefinitely into the future; that's not something that Walker has the power to pull off.

      Presuming that Walker is cooking the numbers, why not cook the QCEW books too to confirm what the monthly survey was saying about 2014? If QCEW is uncookable, then any cooking of the monthly surveys would be bound to be discovered - and that well before November 2016, too. It'd be a pointless time for him to do it even if he had the power.

      The monthly survey has its issues, and clearly it's running higher than reality of late. But that's a long way from being cooked, for which the evidence is only very circumstantial.

  3. Jake, Anyone who works at a job center in Wisconsin will tell you that Walker added so many hoops to the process of applying for benefits that many people give up and go away. All of these hoops need to be done on a computer and there are still large numbers of people who don't know how to use a computer. Most of this population is made up of older workers that worked in factories for 20 to 45 years and never had to use a computer. And yes, free computer classes are available, but there are also timelines to get the information needed on the Job Net website to receive benefits. One of the things needed online is a resume...not an easy task for someone that's never had to do one. Plus, have you tried doing a job search that isn't online nowadays?
    We have it on good authority from people who work in Unemployment, that phoning in claims will be going away and eventually you will only be able to file weekly and the initial claim on-line.
    I would also welcome anyone to visit the 70,000 jobs that Walker brags about being on Job Center of Wisconsin. If you want to work part time, for a low wage or most often for a temp agency, you're in luck because that's the majority of 70,000 jobs listed. Anyone that works for the DWD will tell you in private that the real unemployment numbers are around 15% and higher in certain counties. That's not including people who are working part time and can't find full time work or the people that just gave up and went away....see hoops above.

    1. Thanks for sharing. It does seem like this administration has a strategy of making it tougher to get benefits, even if the person came upon hard times through no fault of their own. Then they can claim the poor and unemployed are "lazy" and can keep them down and have the excuse to cut services further.

      Sounds like a good reason to contact a legislator and have them look into audit the DWD's unemployment system again.

  4. Just try contacting your representatives about your concerns. They are in charge not the citizens. Instead of the Wisconsin citizens being served, they are paying for arrogant, bureaucrats that continue to line their pockets by manipulation and cronyism. We're playing a game of Survivor with the element of sin and most of us who believe in fair play are destined to lose.