Sunday, January 22, 2023

Another strong 2022 for Wisconsin jobs. But 2023 has challenges, questions

As 2022 ended, it looked like Wisconsin had another good year in recovering jobs from all that was lost in the COVID pandemic.
Place of Residence Data: Wisconsin's labor force participation rate declined to 64.7% in December from 64.9% in November but was still 2.4 percentage points higher than the national rate of 62.3%. Wisconsin's unemployment rate in December was 3.2 percent, 0.3 percentage points below the national rate of 3.5%.

Place of Work Data: Over the year, Wisconsin added 60,000 nonfarm jobs and 52,600 total private sector jobs. Over the month for December 2022, Wisconsin nonfarm jobs increased by 900 and total private sector jobs increased by 1,500. Private service providing jobs saw the biggest gains – up 3,800 over the month and 48,200 over the year.
That 60,000 jobs comes after a 2021 when Wisconsin gained just under 58,000 jobs, and outside of a lull in late 2021, it's been a relatively steady climb over the last 2 years.

However, note how many of those jobs were in services, while hiring in goods levelled off in 2022. Goods-producing sectors made up nearly 21% of jobs in Wisconsin at the end of 2021, but only accounted for 7.3% of the state's job growth in 2022. And while construction maintained its growth in 2022 (+3,700 in 2022, +3,000 in 2021), manufacturing job growth nearly stopped after a big 2021.

Job growth, Manufacturing, Wisconsin
Dec 2020-Dec 2021 +13,300
Dec 2021-Dec 2022 +300

With higher interest rates and evidence of a manufacturing slowdown in the country as a whole, this seems like something to keep an eye on going forward.

The next Wisconsin jobs report won't come until March, and that'll include the annual benchmarking process to correspond the numbers to the "gold standard" Quarterly Census of Employment and Wages (QCEW), and also adjusts the unemployment rate to population to better match what Wisconsin's labor force looks like. This will likely fix the disparity that we've seen throughout 2022 where the number of people in Wisconsin's labor force and the number "employed" keeps declining, but the number of payroll jobs keep going up.

Those new benchmarks are going to come right in the middle of a budget season where Wisconsin has the resources to modify its tax system and make investments that could deal with the state's seemingly maxed-out demographics and future growth prospects. If we use those new benchmarks to ID where we stand, maybe we can use this once in-a-generation chance to expand our econoy and job prospects beyond where we are today.

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