Thursday, September 17, 2020

Like America, Wisconsin kept gaining jobs in August, and is still in a major hole

Much like the rest of the US, Wisconsin continued to regain some of the jobs in August that it had lost in March and April, and the unemployment rate continued to fall. But also like the rest of America, Wisconsin is still far behind where we were in February. First, the numbers.
Place of Residence Data: Wisconsin's unemployment rate in August was 6.2 percent, 0.9 percent lower than July's revised rate of 7.1 percent. The U.S. unemployment rate in August was 8.4 percent.

Place of Work Data: Wisconsin added 34,700 total non-farm jobs and 16,700 private-sector jobs in August.
The drop in unemployment was for the “good reason” – the labor force increased by 21,900 in Wisconsin, and the number of people employed went up by 47,700. But it’s worth mentioning that the labor force number still is significantly down from where we were at the start of the year, which keeps the rate lower than it would have been with the same proportion of people working in prior years.
As you can see, the number of Wisconsinites identified as "employed" in the household survey is down more than 142,000 since the start of 2020. If the same number of people had been in the labor force since January, our unemployment rate would be 8.1% instead of the 6.2% reported for August.

On the payrolls side, you may have noticed more than half of the jobs added in Wisconsin was in government. Almost 30% of that came from the Feds (5,300), likely through the Census, which added 247,000 jobs last month nationwide. There also was a sizable increase in Local government jobs (+10,600), but I wonder if that’s simply an odd timing thing related to when people started working for K-12 public schools this year. I’ll have to wait until September’s report to see if this is a long-term recovery or just a trick of the calendar.

Looking at the private sector, Wisconsin continued to slog back from the large jobs deficit it was put into in March and April. Construction and manufacturing accounted for 4,700 of those regained jobs, and a few beaten-up service sectors had a bounce-back in August.

Job change, Wisconsin, August 2020

Retail trade +6,300

Arts, Entertainment + Rec +2,600

Accomodation/Food Services +2,500

That being said, those last two sectors reflect lower-than-normal seasonal layoffs in August, and that likely reflects the fact that tens of thousands of Wisconsinites in those sectors were laid off well before August.
When looking at total jobs, like the rest of the country, Wisconsin still has yet to gain back half the jobs they lost in March and April, as illustrated by UW-Madison professor Menzie Chinn in Econbrowser today.
And like a lot of things in our economy, I think August is going to mark the end of the "rapid restoration" part of the recovery, and I think it’ll be worthwhile to think of August’s numbers as part of a new baseline to figure out if things are going in the right direction.

As it stands today, we still have more than 200,000 jobs that need to be brought back in the state (and more than 11.5 million in the country), and there's no underlying economic drive to do so. So the challenge is now going to involve figuring out how we accomplish the hard work of getting those last jobs back and continuing to reduce the still-huge unemployment rolls and output gaps, and given what we're (not) seeing in DC, I'm not seeing what does that.

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