Thursday, June 15, 2017

3.1% unemployment in Fitzwalkerstan? Don't bet on it being real

Through all of the other things going on in the state, there was another Wisconsin jobs report that was sent out by Scott Walker’s Department of Administration. And given that it was released before 9 am, you knew there was something that the Walker boys wanted people to know.
Place of residence data: A preliminary seasonally adjusted unemployment rate of 3.1 percent in May 2017, down 0.1 percent from April and at its lowest rate since October 1999. The rate remains lower than the national unemployment rate, which was 4.3 percent in May 2017.

•The rate of 3.1 percent is the second-lowest rate on record for Wisconsin (the lowest rate was 3.0 percent in May-July 1999).

• Wisconsin's January (3.9 percent) to May (3.1 percent) unemployment rate decline of 0.8 percentage points in 2017 is the steepest January-May decline since 1983.
And Walker’s DWD notes that their figures show that more Wisconsinites are “employed” than ever before (not a big deal, since the state’s population is also higher than ever before). All of these employment/unemployment stats were tweeted out by Governor Walker and numerous other WisGOP elected officials.

What wasn’t tweeted out by WisGOPs was this other part of the report.

Nonfarm payrolls, Wisconsin May 2017
Total jobs
May 2017 -3,100
April 2017 revision -1,700

Private sector jobs
May 2017 -1,700
April 2017 revision -1,500

And among the biggest sectors of seasonally-adjusted lost jobs were in manufacturing (-1,200 with revisions) and construction (-1,600 with revisions). If we focused on that part, May would be a bad jobs report.

So why is there such a difference? Let me remind you that the numbers in the monthly employment reports come from two different surveys.
Current Employment Statistics (CES): compiled from a monthly survey sent to about 5,500 employers (3.5 percent of Wisconsin employers). CES data has been shown to be volatile and subject to revision.

•Local Area Unemployment Statistics (LAUS): compiled from a monthly survey of 985 households and unemployment insurance claims. Measures the labor force, employment, unemployment, and the unemployment rate.
These numbers may be different from each other from month to month (partly due to differences in sample size and also due to variation of who is surveyed), but should generally be in the same direction over a decent span of time.

But if you look at the payroll vs household numbers from those two surveys for more than 5 seconds, and compare them to the start of the year, your BS detectors should be on full DefCon 1. Tell me how these two numbers could possibly come from the same state.

Total Non-farm Payroll Employment, Wisconsin Dec 2016- May 2017
Dec 2016 2,934,300
May 2017 2,957,100
CHANGE 22,800

Household employment/unemployment Dec 2016- May 2017
Dec 2016 2,988,100
May 2017 3,059,000
CHANGE 70,900

So household employment is three times more than payroll employment? I don’t think so. I have a hard time buying that there are tens of thousands of Wisconsinites that still live in the state, but just started working in another state in the last 5 months (which would be an explanation for this disparity of nearly 50,000 workers). There are either some serious adjustments that need to be made to the state’s household survey, or there’s a major hiring boom going on and it’ll be registered in the next 2 QCEW reports that’ll come out over the next 6 months (riiiight).

If we were truly seeing job gains of 14,000 people a month (which is what the household figures say) then we’d be seeing it reflected in strong revenue numbers. We haven’t, and in fact, income tax revenues have fallen on a year-over-year basis in 3 of the 4 months measured in 2017 (including April, which is the last month that has been released to the public).

In addition, are we to believe that Wisconsin went from 15,420 jobs gained in all of 2016 (according to the “gold standard” QCEW) to 70,000 IN FIVE MONTHS? Come on. And this would not the only time Walker’s DWD has overestimated household employment and labor force. Go back to what they were saying at the end of 2016, and the DWD ended up being way off.

Household, labor force 2016. Wis DWD estimate vs revision
Household employment, Dec 2015- Dec 2016
DWD estimate +42,400
Revised +10,200

Labor force, Dec 2015- Dec 2016
DWD estimate +24,300
Revised +7,500

Notice that those revisions happened after the Bureau of Labor Statistics looked at the QCEW and saw that all attributes of the state’s jobs numbers were being overstated. And it seems likely that 2016’s pattern of “high DWD reports revised down by the QCEW” will repeat for the start of 2017, which will come out over the next few months.

But why is this happening again? While I’m not accusing Walker’s DWD of intentional malfeasance, their constant spin and happy-talk about the state’s job market along with Walker’s and WisGOP’s having to convince the Wisconsin public that their policies haven’t failed leads me to be very skeptical of these employed/unemployed numbers. And these guys would not be below juicing up jobs numbers in order to get headlines and false memes to the public ahead of an election.


  1. Fake it till you make it?
    Esse es percipi?

    Maybe they're sampling in a way that avoids the sore spots in our state. We have localized areas with real problems that might not show up in a small sample.

    There seems to be a long-standing pattern of Wisconsin jobs numbers getting revised downward, but that could just be confirmation bias on my part.

  2. Everything having to do with filing for unemployment has to be done more calling in for anything. When a factory goes down and they have people working there over twenty years, thirty years and even forty years, most of those people don't have computer skills. It's hard for those of us who use the computer everyday to imagine, but it's a fact non the less. The online unemployment system is a challenge for people who are experts on the computer and if you've never touched one, you give up and go away. State workers at Job Centers have had to sign statements that they will not help with unemployment filing. The reason given is if they make a mistake, it will come back on the State. The real reason is if you can't file for unemployment you aren't counted as being unemployed. Go on Job Center of Wisconsin and go through the steps to register for unemployment and you tell me how easy it is and it isn't designed for many people to fail and just go away.

    1. I have strong suspicions the "lower unemployment claims/costs" are related to these barriers.

      Thanks for the input, Tess.

    2. I didn't think about it until I read Tess's response, but Scott Walker has a history of this sort of thing in Milwaukee County. 5% of calls to public assistance getting answered. 60% of denials being overturned. 20% of recipients being wrongfully removed from the food assistance program.

      Make it impossible for people to get through the system, and the numbers will go down.

    3. Correct. It is willful negligence, achieving "cost savings" by keeping people from the benefits they are entitled to. As long as there are no electoral consequences to this disgusting act (or worse, it is rewarded by dumb white people as a way to "stick it to THOSE (black) MOOCHERS," it will continue.

      Our apathy and resentment in this state leads to this garbage.

  3. The people who are suffering the most are the ones that worked for twenty, thirty and forty years at the factories that have been going down lately. The majority do not have ANY computer skills...never touched one. In order to get any unemployment they have to first create logins and passwords, register for services and create a resume all on Job Center of Wisconsin. Another requirement of the registration is an email address which then has to be created by someone who can't even navigate a mouse. The other thing Walker did was make "seasonal" workers sign up and register, plus do the four work searches. They have recall dates but were forced to do the work searches or no unemployment. After throwing a fit, many of these workers walked away also. It's all rigged...every single bit of it.