Thursday, April 20, 2017

Wisconsin's jobs riddle- low unemployment and low job growth

Today had another Wisconsin job report, and ahead of it, Governor Walker gave away a key finding of it this morning.

And indeed, the March report from the Wisconsin Department of Workforce Development trumpted the state’s lowest unemployment rate since the height of the Dot-Com Boom.
Place of residence data:A preliminary seasonally adjusted unemployment rate of 3.4 percent in March 2017, down a significant 0.3 percent from February and at its lowest rate since April 2000. The rate remains lower than the national unemployment rate, which was 4.5 percent in March 2017. Wisconsin's labor force participation rate increased to 68.4 percent and continues to outpace the U.S. rate of 63.0 percent in March. Both total labor force and employment in Wisconsin remained at an all-time high in March, while the number of unemployed individuals was its lowest since June 2000.
What DWD didn’t talk as much about was the fact that the 12-month “jobs added” figure from the place of work/payrolls survey is very small, and it didn’t even bring up that 2,700 total jobs were reported to be lost in March.
·Place of work data: Based on preliminary data, the state added 25,100 total non-farm jobs and 22,100 private-sector jobs from March 2016 to March 2017. Other significant year-over-year gains include 6,100 jobs in Health Care and Social Assistance.
Much like we saw with the US job figures for March, the household survey said things were great, while the business payroll survey said things slowed sharply from February.

Change in Wisconsin jobs, March 2017
HH survey of Wisconsinites “employed” +16,400
Total private-sector payrolls +500
All Wisconsin jobs -2,700

The same pattern repeats when you look over the totals of the last year, where the household survey indicates strong job growth, while the payrolls survey says Wisconsin isn’t doing well at all.

Change in Wisconsin jobs, Mar 2016 - Mar 2017
HH survey of Wisconsinites “employed” +45,000
Total private-sector payrolls +22,100
All Wisconsin jobs +25,100

The 45,000 is in line with the annual increases of 35,000-50,000 we’ve mostly seen in the household report for Wisconsin over the last 4 years. On the flip side, the 12-month payroll increase in total jobs is only at 0.86%, well behind the US rate of 1.52% (Wisconsin is equally further behind in the private sector stat- 0.88% vs 1.67% nationwide). Combined with January and February, this is the first time Wisconsin has had 3 straight months of private sector job growth below 1% under Walker/WisGOP policies.

So one of these numbers has to be off, and/or the previous months on one of these surveys have to be off. Which leads one to ask “Which one is right?”

One thing that makes me skeptical of the low unemployment and high “employed” figures in the household survey is that we have not seen significantly higher income and sales tax revenues in that situation. The most recent figures released have been from February (March’s should be out in the coming week), but here’s what we had in February- a month where refunds were delayed compared to 2016. This meant that income tax figures should be, if anything, artificially inflated.

12-month change in tax revenues, Wisconsin
Income tax
FY 2016 +5.67%
Feb 2017 +5.33%

Sales tax
FY 2016 +3.41%
Feb 2017 +2.85%

If anything, that rate of revenue growth has fallen, and since there haven’t been many major initiatives that cut income or sales tax rates over those 8 months, that would seem to shoot down the Walker Administration’s impression that Wisconsin is seeing significant job growth.

I’m also inclined to buy that the lower payroll numbers are more likely to be accurate because the state has had a consistent decline in job growth that started around the time Walker’s “presidential” austerity budget was introduced in early 2015, with our job growth being half of what it was 2 years ago.

These job numbers were benchmarked to the “gold standard” Quarterly Census on Employment and Wages, which has consistently been below the Walker DWD’s original figures as well as the household figures over the last 2-3 years.

As I alluded to earlier, new revenue figures for March and new revenue estimates from the Legislative Fiscal Bureau in the next 3 weeks will likely give a clearer indication whether the “slow growth” or “Trump/Walker Boom” scenarios are closer to the truth. But for now, I’d say your evaluation of Wisconsin’s job situation is likely very related to what survey and outcome you want to believe, no matter what side of the political spectrum you fall on.


  1. I'm still struggling to get my head around the month to month numbers, but could a combination of an aging population, slow population growth and a six year campaign of wage suppression start to explain the high workforce participation, low unemployment and slow revenue growth over time?

    I wouldn't be shocked to find that the immigrant population and the lower end of the working class might be declining here too. If we are losing numbers among the paycheck to paycheck brigade, I think we'd see a loss in economic activity, but I'm not sure how that population shows up in the employment numbers.

    1. I definitely believe the Koch/ALEC agenda is basically to make people into desperate wage slaves, which would be the "high participation, low wage" situation you describe. And given the increasing number of Wisconsin counties that are losing population, with more deaths than births, the pattern gets worse.