Sunday, July 23, 2017

If Wisconsin's unemployment rate keeps dropping, why are jobs not growing much?

In between all the raindrops, the Wisconsin Department of Workforce Development released another jobs report on Friday. And in its typical fashion, the Walker DWD put its best face on (some of) the numbers.
Place of residence data: A preliminary seasonally adjusted unemployment rate of 3.1 percent in June 2017, unchanged from May and maintaining its lowest rate since October 1999. The rate remains lower than the national unemployment rate, which increased to 4.4 percent in June 2017. Wisconsin's labor force participation rate increased 0.1 percentage points to 68.9 percent and continues to outpace the U.S. rate of 62.8 percent in June. Both total labor force and employment in Wisconsin remained at all-time highs in June. Wisconsin's seasonally adjusted employment change of 76,500 year-over-year is the largest increase since July 1995.

Place of work data: Based on preliminary data, the state added a significant 38,400 total non-farm jobs and a significant 35,700 private-sector jobs from June 2016 to June 2017. Wisconsin also gained 3,600 private sector jobs over the month from May 2017 to June 2017. Other significant year-over-year changes include the addition of 6,800 jobs in Health Care and Social Assistance.
These numbers sound really good, but what the Walker DWD doesn't mention is that jobs for May were revised down by 900 private sector jobs and 600 jobs overall. And they don't mention that total jobs dropped by 1,300 in June, which is the 3rd loss of total jobs in Wisconsin over the last 4 months.

This means that the Walker jobs gap is still around 110,000 for both private sector and total jobs, which is not really any different than it was at the start of the year.

“But Jake, Governor Walker keeps telling us things are great at 3.1% unemployment, with a drop of 1% in 2017 alone. That’s much better than Minnesota’s unemployment rate of 3.7%, a rate that’s barely changed at all since the start of 2015. What gives?”

As I've mentioned previously, the payroll “jobs” number is a different measure than the household survey-based “employment/unemployment” number. They usually converge over time, but Wisconsin’s household figures don’t add up at all compared to the payroll numbers, and they are not the only ones.

Labor force and employment, Dec 2016 - Jun 2017
Ohio +88,600 Employed, +95,700 Labor Force
Wis. +75,900 Employed, +46,800 Labor Force
Mich +61,900 Employed, +2,500 Labor Force
Ind. +56,800 Employed, +24,250 Labor Force
Minn +43,800 Employed, +34,100 Labor Force
Ill. +32,900 Employed, -37,550 Labor Force
Iowa -1,500 Employed, -6,900 Labor Force

Now compare that to the total payroll jobs reported in the same time period.

Change in total payroll jobs, Dec 2016 - June 2017
Ill. +27,800
Minn +25,800
Ohio +25,100
Wis. +20,900
Iowa +20,000
Mich +14,100
Ind. +13,000

The only states who are even close to matching "employed vs jobs" figures are Illinois and Minnesota. Meanwhile states such as Indiana, Michigan, Ohio and Wisconsin have differences of between 43,800 and 63,500 across the two figures. That does not make any sense and cannot logically stand for much longer.

In addition, if you expand the state-by-state figures out to the last 12 months, you will see Wisconsin back in a familiar spot in the Midwest- in the bottom half of job growth. And look who is the far-and-away leader in our region.

Private sector job growth, June 2016- June 2017
Minn +2.42%
Iowa +1.91%
Ind. +1.73%
Mich +1.57%
Wis. +1.42%
Ohio +1.17%
Ill. +1.08%

Hmm, maybe we should look at that Minnesota place and see what they’re doing, eh?

So to me it is the same old story with the June Wisconsin jobs report. There continues to be a disparity between the strong household figures and mediocre (and declining) payroll figures. You know there are serious revisions coming in the next few months, and logic indicates that it'll be in that too-low-to-be-believed 3.1% unemployment.


  1. I'd love Jake's input on this recent article from a conservative group in MN:
    They have been having a hard time finding something to complain about economically, so this and their other articles are an attempt to complain about MN, but how accurate are they and what numbers are they really using? Any thoughts on the article Jake?
    One thought I had on the lower unemployment figures in Wisconsin during the warmer months may be that more of the economy is based on hospitality type jobs like at the Dells, at all the lakes in the northern and eastern areas and along the rivers that are more temporary and pay less. Another figure that would be interesting to dig into in Wisconsin is the hourly wage growth/declind and how much it has been changing. In the past, many industries in WI seemed to pay higher per hour than MN. One challenge in both states is the price wars at grocery stores, the trade issues with Canada on dairy and how the farm economy effect in both state measures up. WI is much heavier in Diary, and has more small farms, where MN has much less diary and more large corporate farms and how those differences might affect the local private sector economy when food prices are low and sales are down.

  2. Same BS I referenced above. They're looking at employed/unemployed vs payroll jobs.

    Of course, that "employment/labor force" figure doesn't jibe with Minnesota adding 2-3 times more people than Wisconsin in the same time period.

    UW's Menzie Chinn has more on this, and how Minnesota has dominated us over the last 6 years in the more accurate payrolls number.