Friday, December 11, 2015

Wisconsin economy's recent "growth" unimpressive, outlook sketchy

It’s interesting that this blurb in yesterday’s U.S. unemployment claims report largely escaped the notice of Wisconsin media and politicians.
The largest increases in initial claims for the week ending November 28 were in Wisconsin (+4,677), Ohio (+2,212), Kentucky (+1,953), Kansas (+638), and Arkansas (+612), while the largest decreases were in California (-20,308), Texas (-7,225), New York (-3,042), Florida (-2,898), and Oregon (-2,432).
Sounds awful, but remember that a lot of this is seasonal and there usually is a spike around Thanksgiving week due to the combination of colder weather and deer hunting starting up. Likewise, there should be a significant drop in the number of new claims next week, as there always is this time of year.

Also noteworthy is that this same report showed a number of other Midwestern states reporting spikes in advance claims for the first week of December (Illinois +5,119, Minnesota +3,097, Iowa +2,341), while Wisconsin was comparatively unchanged (+330). So I wanted to take a look at the aggregate 2-week change in claims and see if there really was a disparity going on between Wisconsin and the rest of the Midwest.

Total change in unemployment claims, last 2 weeks)
Ill. +4,897 (+33.6% vs 2 weeks ago)
Ind. +1,235 (+32.4%)
Iowa +2,372 (+48.9%)
Mich +2,329 (+22.4%)
Minn +2,093 (+24.5%)
Ohio +3,252 (+34.1%)
Wis. +5,007 (+59.9%)

Turns out the answer is yes, that Wisconsin’s spike in unemployment claims in the last 2 weeks is higher than what we saw out of our Midwestern neighbors. This might not be a huge deal in the long run, but may be worth keeping an eye on when the November and (especially) December jobs reports come out.

On the other side of the spectrum, there is an interesting note on the jobs being created. Gov Walker and his Department of Workforce Development have been trying to improve voters’ confidence that the Wisconsin economy is growing and that things are getting better. An example of which was this line from October’s Wisconsin jobs report.

Place of work data: Wisconsin added a statistically significant 15,100 private-sector jobs and 16,100 total non-farm jobs from September 2015 to October 2015 (seasonally adjusted). The addition of 15,100 private-sector jobs over the month is the largest one-month gain since April 1992, based on publicly available data….

"With the largest one-month gain in private-sector jobs since 1992, Wisconsin employers are creating more opportunities for thousands of current and new workers to support themselves and their families," Secretary Newson said. "With significant job gains across various industry sectors, an unemployment rate of 4.3 percent and a state labor force participation rate that is more than 5 points higher than the nation's, Wisconsin continues to be a land of opportunity for our world-class workforce."
I’ve already mentioned that the low Wisconsin unenmployment rate is due to people dropping out of the work force over real job growth, and that it seems likely this jobs gain is overstated and will be revised down in the next few months, but let’s take the Wisconsin DWD at its word for a second, and that there were major job gains in October. What’s not mentioned in that release is that September’s numbers were drastically revised down, by 5,700 jobs in the private sector and 7,400 overall, which meant a significant job loss in that month.

So when you combine the two months together, you get the following figures.

Combined Sept-Oct change in jobs, Wisconsin
Private sector: +9,400
Total jobs: +10,100

That still beats job losses, but when you move back to the upwardly revised jobs figures in the U.S. for those two months, and plug the figures into the Walker jobs gap calculator (which figures the difference between the jobs that would have been added had Wisconsin grown jobs at the same rate as the rest of the U.S., and what has actually happened in Wisconsin), here’s what you get.

Walker jobs gap
Private sector, Aug 2015 90,734
Private sector, Oct 2015 92,688

Total jobs, Aug 2015 81,792
Total jobs, Oct 2015 80,975

Not much of a difference, is there? In fact, the private sector jobs gap has grown by nearly 2,000 over the last 2 months, leaving us in the same ditch we were before. And those October jobs figures are before mass layoffs such as the Oscar Mayer plant in Madison, the Tyson Chicken plant in Jefferson, or Harley Davidson in Milwaukee were announced.

So despite the rosy picture being painted by the Walker Administration, the Wisconsin economy isn’t looking to be all that hot as 2015 comes to an end. And with higher property tax bills coming in the mail and the administration continuing its blackout on certain economic data, I’m not seeing where things get better as the winter sets in (well, if winter ever sets in this year).


  1. I wonder how the changes in unemployment compensation regulations will change the state's figures.

    1. Not much for overall jobs gained/lost, but it could be holding down the unemployment claim numbers, either due to people getting turned down/delayed, or because it becomes too much of a pain in the ass to apply for benefits.

      A cynical person might say the latter result (discouraging people to apply) is by design.