Saturday, April 22, 2017

Why are we still losing bigly to Minnesota?

On Friday, we got another chance to see how Wisconsin was shaping up against the rest of the country with the state-by-state job report from the Bureau of Labor Statistics. And it had the strange dichotomy of Wisconsin allegedly having the 2nd lowest unemployment rate in the Midwest at 3.4% (only Iowa was lower, at 3.1%), but also one of the lowest rates of job growth in the region (also oddly, Iowa was even worse than us).

Private sector job growth, March 2016-March 2017
Mich +1.86%
Minn +1.73%
U.S. +1.67%
Ind. +1.49%
Ohio +0.94%
Wis. +0.88%
Iowa +0.67%
Ill. +0.57%

Job growth that ranks 5th out of 7 states in your area and lagging well behind the national average isn’t the sign of a thriving state to me, no matter what the unemployment rate might say.

And we especially look bad compared to our neighbors on the other side of the St. Croix. Maybe it's because the 1-year anniversary of the death of one of the greatest Minnesotans is this week and I've been listening to Minnesota Public Radio a lot this weekend, but I do want to focus in on that....after you enjoy 9 minutes of genius from the Purple One.

Minnesota gained another 5,300 jobs last month in the private sector as well as overall while Wisconsin only gained 500 in the private sector and lost 2,700 overall, and UW’s Menzie Chinn notes that after a slight lull in 2015, Minnesota has resumed the ass-kicking they have given us throughout the Walker era.

Minnesota has added 20,000 more private sector jobs than Wisconsin in the last 12 months, and nearly 40,000 more since March 2011, when Act 10 was jammed through the Wisconsin Legislature.

But how has Wisconsin’s unemployment nose-dived in the last few months to become even lower than Minnesota’s for the first time in several years (3.4% in Wisconsin, 3.8% in Minnesota)? The answer points to 2 reasons.

1. The household “employed/unemployed” survey looks at where people live , while the “jobs number” looks at where people work. St. Croix County (located right across the river from the Twin Cities) was estimated to have nearly 19,000 residents who worked in Minnesota when the number was last measured in the 2009-2013 time period, and St. Croix has continued to grow in the meantime, adding another 3,684 people since 2010. And it’s not just St. Croix, as Pierce County had nearly 9,600 people commuting to Minnesota, and Polk County had over 4,300 that survey.

Wisconsin also exports workers in the Superior-Duluth area, with over 7,300 residents of Douglas County working on the Duluth side, vs less than 3,500 coming across from Minnesota into Wisconsin. The only place that came close to reversing those large Wis-to-Minn numbers were the 4,500 people from Minnesota who come into La Crosse vs. 1,000 heading the other way.

Likewise, over 21,000 Kenosha County residents commuted to Illinois for work, and another 4,500 people from Rock County also headed across the border (more than the people from the Rockford area that worked in Wisconsin). There’s no reason to think that trend has changed any, even with the many WEDC handouts that seem to go around the state line to encourage Illinois people to locate in lower-wage Wisconsin. This means Wisconsin has more people “employed”, but the “job” is in a different state.

2. People may be moving out of Wisconsin (or not moving in), and it’s not being reflected in the totals. Take a look at the difference in the two states when it comes to population growth and especially net migration.

Population growth, 2014-2016
Minn +29,326
Wis. +9,414

Minn +37,517
Wis. +10,817

Net migration per 1,000 residents
Minn +0.3
Wis. -1.3

Minn +2.2
Wis. -0.8

This would ordinarily reflect in the growth of the labor force being smaller in Wisconsin, which lowers the unemployment rate even when the job growth figures are low. And comparing the states over the last 6 years, this largely holds up.

Change in labor force Mar 2011- Mar 2017
Minn +76,600
Wis +62,100

Granted, both Wisconsin and Minnesota have gained sizable amount of people to their work force over the first 3 months of 2017 (Wis +22,200, Minn +15,000), but that also underscores just how much further behind Wisconsin was until that time. That huge change in Wisconsin's labor force after 6 years of stagnation makes the figures in that survey all the more suspicious (particularly since it hasn't translated into higher income tax revenues), and I want to see how that Wisconsin labor force and "employed" number adjusts in later years.

And outside of that outlying unemployment figure, Wisconsin still badly trails Minnesota when it comes to both jobs and wages, which leads me to this observation. If the Packers were 5-11 and the Vikings were 10-6, we wouldn't be saying "Well, the Bears were 3-13, so the Packers are doing OK." We'd be saying "FIRE THE COACH" because being way behind Minnesota would be unacceptable. So why do we accept this type of underperformance from our state and our governor?


  1. "Why are we still losing bigly to Minnesota?"

    Too many people in Wisconsin fall victim to con artists.

    The republicans have very, very good snake oil salesmen.

    In Wisconsin we have Scott Walker, backed by big money. Nationally people went for a talking yam that promised people that he "would make America great again" while offering no real ideas or plans on how he would do this.

    Now people in Wisconsin are doomed to the ignorant decisions of people that vote against their own best interest, that cannot do a simple google search to do a little fact checking and apparently don't care about anyone but themselves.

    1. All true. You'd think Dems would recognize this situation, and do some marketing/messaging on this in reply, showing how GOPs have held Wisconsin back and that we deserve much better.

      It would have the added benefit of being true. Dems say these things amongst each other but don't give that message to the average Wisconsinite living day-to-day (and increasingly under Walker, paycheck-to-paycheck). I don't get it.

  2. I lived in Minnesota from '83 to '86, with a mixed experience. Prince and the Twin Cities was big, but the rest of the state was just like Wisconsin's rural areas. At the time, I noticed that Wisconsin had a more manufacturing-based economy.

    Fast forward to now, Governor Dayton (heir to the Target fortune, but kind of working aginst his class) has taxed bigger income earners more on a progressive scale. Dayten has also raised the minimum wage, which has fueled spending for everyday service businesses.

    Taxing the rich and bigger income earners has produced budget surpluses, where you actually have money to pay for needed infrastructure, schools, and other social services--which most Americans don't have a problem with.

    1. Yeah, funny how that stuff works, isn't it? And people actually choose to live in places that provide that infrastructure, schools, and social services, which keeps the cycle going.

  3. The cross border employment situation is an interesting addition to the comparative evaluation of the states. Thanks for that insight.

  4. One important change in the number of people working across state borders is to include stats that include more than one County deep. When running the stats, include counties like Dunn and Eau Claire counties against twin Cities counties. It's common for commuters to drive through several counties in Wisconsin to get to work several counties in MN. Example: for a while I drove from exit 45 in Dunn County to western Dakota County or even Hennepin County/Bloomington strip area. It is easier than you would think. When comparing LA Crosse vs l LA Crescent/winona, the stats show one thing but you need to add in Olmstead County mn and all LA Crosse counties to see the real number. Those of you that haven't been reading about the 6.5 billion MAYO Destination medical center need to look deeper because that development amount only includes MN state and mayo investment amounts...private investment will easily be several billion more. Estimated jobs created could be 20k to 50k and mn market is very tight so buses are being discussed to pull workers from the entire region including LA Crosse and northern iowa/Mason city areas. My point is...the number of people working over the border is going to increase a lot from right now. LA Crosse used to be larger than Rochester in 1950, just like Superior was once larger than Duluth but the battle always seems to be won on the MN side given enough time. The reason in my opinion is the differences between state constitutions. In MN, annexation is controlled by the state Capitol, so instead of one big city like Madison or Milwaukee, the Twin Cities has hundreds of unique independent suburbs. If you dislike yours,you have endless options for other choices. MN has nearly the same number of counties as wisconsin even though it has 49% or nearly twice the land so that saves $$. The WI constitution forces residential and commercial taxes to be the same where MN taxes residential less and commercial the a average worker saves a lot in taxes overall from property tax to car tabs on vehicles 10 years old to income tax on lower wages so mn attracts working age people better than wisconsin. MN also has no tax on food, clothing and necessity items. This causes people to buy these items in MN vs WI. MN will also start selling Sunday liquor for the first time since statehood in July. That change alone could deely hurt WI by people crossing the border the other way for better prices at high volume liquor stores. Will as many MN residents stay at WI Dells with more casino and private water parks on the MN side of the river? In the past more people used to shop on the WI side but with more competition and cheaper prices in MN, it seems to me it's going the other way.

    1. Good point, especially interesting about the commercial vs residential taxation in Minn. I was just doing the "quick and dirty" stuff on the commuting totals, and I'd love to see an update on them today.

      And yes, Sunday beer is always a smart step. Hudson convenience stores have to be hating that.

    2. I think you are definitely on the right track on what is happening as far as employment rates vs job creation. MN Does actually help send jobs to Wisconsin when they can't afford to stay on the MN side also. Wisconsin picked up the United distribution center from Eagan that moved to Hudson, another company from Newport ran out of space and needed more space and land. They were also having trouble
      Competing for candidates due to higher minimum wage so cottage Grove mn and Prescott with threw out better offers since Newport had no land and money to offer and Prescott had the best options so that project should be under construction right now. Prescott also landed the big whole foods distribution center. Hammond picked up a fruit distribution center refrigeration center and a few other mn places. Baldwin, Woodville, Menomonie, Eau Claire and Chippewa Falls have all picked up companies recently like Fleet Farm's new state of the art distribution center moving from Green Bay area. So if you want to see the success story in WI, the border counties have done fairly well from what I've seen on distribution, transportation, manufacturing and services. Even Superior and LA Crosse have picked up a few businesses. The MN border counties alone can't save the whole state, but they are probably making a big impact for the state as a whole. The problem is that most people In southern WI, most people aren't very familiar with how things are over here because they are so far away. The updated border stats would be interesting with more counties added for sure though. One other thought on the Twin Cities region is that the actual twin Cities today is about 20 counties in size and is centered in a circle of the midsized cities of Rochester, mankato, St Cloud, Eau Claire, LA Crosse and back to Rochester. Those areas are growing toward the Twin Cities and the Twin Cities growing out to them. If you look at population numbers of places like Dundas, St Francis, Owatonna, Canon Falls, Woodville, North Branch, New Richmond, Princeton, Otsego, New Prague, Hutchinson, Big's hard to find many cities that are shrinking. Then try running the same test in areas outside chicago or any other city and it can show you the economic power of an area. The population stats for both sides of the river here are fairly similar...possibly a bit stronger on the MN side due to some of the tax advantages but if you search outside Chicago or Milwaukee,the numbers tell a very different story. According to articles I read recently, Cool County had the largest population losses for major cities in the US and Milwaukee County was in the top 10, so both of them appear to really be struggling and solutions to fixing the issues might be more complex than we realize. It seems they are both struggling to compete with other areas.