The Economic Report notes that the US has added jobs at twice the rate that Wisconsin has in the last two years. And the DOR anticipates that lagging trend to continue for the next two years.
Wisconsin employment grew 0.7% in 2017 and 0.8% in 2018, compared with a growth rate of 1.6% in both years nationwide.The DOR report shows that Wisconsin income growth was behind the rest of the country last year, and is expected to stay that way for the next 2 years, much like it has throughout the 2010s.
Even though labor markets are near full employment with a record low unemployment rate, the employment-population ratio shows that there is still room to grow without the economy overheating. The forecast calls for two more years of modest growth in employment through 2019 and 2020 and a significant slowdown in 2021 and 2022, following national trends. The forecast expects an average annual growth of 0.8% year-over-year in 2019 and 2020. The U.S. will post growth of 1.6% in 2019 and 1.2% in 2020. In the medium term, employment growth will fall to a meager 0.2% and 0.3% growth in Wisconsin and in the U.S, respectively.
The U.S. Bureau of Economic Analysis (BEA) revised state annual income data in March 2019. The revised data shows that Wisconsin personal income in 2018 grew 4.0%, slightly above the 3.9% growth of the Great Lakes region, but below the 4.5% growth at the national level. Wisconsin's 2018 growth was driven by the relatively strong expansion of personal transfer receipts (5.4%), as well as solid growth in the two largest components: wages and salaries (3.9%) and property income (3.8%)…But one area of notable growth in Wisconsin’s economy over the last few years? Income from renting homes. However, the DOR points out that the combination of higher rents and mediocre wage growth means that more Wisconsinites are having the costs of shelter be a higher burden these days.
Taking the impact of inflation into account, real personal income in Wisconsin increased 1.5% in 2018 and is expected to show growth of 1.9% in 2019 and 2.4% in 2020. At the national level, real personal income grew 2.4% in 2018 and is expected to grow 2.3% in 2019 and 2.8% in 2020.
Rental income represents 4% of total personal income, but its share of total personal income has doubled in the last decade due to the fast-growing trend since the Great Recession. Between 2010 and 2017, Wisconsin rental income increased an annual average of 10%, three times faster than wages (3.3%). Wisconsin real wages grew an average of 1.8% during the same period, compared with a U.S. growth of 2.3%. It is worth noting that these trends represent an uneven burden for low income households, where housing costs consume a higher and growing share of their income, forcing families to reduce spending in other areas and making homeownership less likely.So a disproportionate amount of Wisconsin's already-subpar income growth is going to owners, not everyday workers through wage and income growth.
The homeownership rate peaked in 2004 at 73% in Wisconsin and 69% nationwide. It has been declining since, reaching a low of 67% in Wisconsin in 2015 and 63% in U.S. in 2016. The last three years show some improvement, but homeownership rate is still well below its peak.
A lot of these forecasts add up with the reality we’ve seen over the last few years. Wisconsin is at full employment in no small part because of stagnant population growth, and increasing age for those that are still here. That’s not going to lead to major job or income gains going forward.
The Wisconsin Economic Outlook and its data from recent years show that we need a change in direction. The current Evers budget stopped the bleeding that led to this lagging, but there needs to be much more in the future.