Dispatches (XIX): Wisconsin Employment Hemorrhaging Continues

Wisconsin’s Department of Workforce Development yesterday released preliminary employment figures for December, and revised figures for November. Both nonfarm payroll employment and private nonfarm payroll employment continue to decline (Figures 1 and 2). Total nonfarm payroll employment is now below levels recorded in January 2011, when Governor Walker took office. The divergence between the national employment trend and Wisconsin’s over the past six months is highlighted in Figure 3.


hemo1.gif

Figure 1: Wisconsin nonfarm payroll employment from BLS (blue), from DWD (green bold), and projections from October Wisconsin Economic Outlook (red), in 000’s. NBER defined recession dates shaded gray. Vertical line at 2011M01. Sources: BLS, WI DWD, Wisconsin Economic Outlook and NBER.

hemo2.gif

Figure 2: Wisconsin private nonfarm payroll employment from BLS (blue), from DWD (green bold), and projections from Wisconsin Economic Outlook (red), in 000’s. NBER defined recession dates shaded gray. Vertical line at 2011M01. Sources: BLS, WI DWD, October Wisconsin Economic Outlook and NBER.

Obviously, both series are further diverging from the October forecast in the Wisconsin Economic Outlook. A comparison to national trends is edifying.


hemo3.gif

Figure 3: US log nonfarm payroll employment from BLS (red), and Wisconsin nonfarm payroll employment from BLS November release and from DWD December release (blue), both normalized to 2011M01=0. NBER defined recession dates shaded gray. Vertical line at 2011M01. Sources: BLS, WI DWD and NBER.

Focusing on the (higher variance) household survey, DWD Secretary Newson observed in the press release:

“Our unemployment rate continues to decline and more Wisconsinites are working,” Secretary Reggie Newson said. “Challenges remain, but the latest data show we finished 2011 with more Wisconsinites working, record postings of over 151,500 on JobCenterofWisconsin.com, and higher state sales and withholding tax collections over the year, all of which point to economic growth for our state.”

Civilian employment, based on the household survey, is indeed 19,100 above January 2011 levels; Secretary Newson did not mention that it is also 5,800 below the post-trough peak in May 2011.


Update, 3:40PM Pacific: From Governor Walker’s newly unveiled website (today):

250,000 new jobs in four years — It’s an ambitious goal, but one that Wisconsin Gov. Scott Walker says is achievable.


In January, Gov. Walker unveiled the first phase of his “Wisconsin Working” plan. During a year-long focus on job creation and economic growth, the Administration’s Special Cabinet on Economic and Workforce Investment listened to job creators, job seekers and government officials. The Cabinet then recommended an initial phase of policy changes and agency collaboration to ensure job seekers connect with current job needs, while building the skills necessary for family-supporting jobs.

After documenting the measures implemented, the document ends:

In the three years prior to Governor Walker taking office, Wisconsin lost 150,000 jobs. During his first year in office, Wisconsin had a net gain of thousands of jobs.

Which is entirely correct, if one uses the establishment series for the first number and the household for the second…I leave it to the readers to determine whether this is an appropriate use of the figures.


Update, 4:45PM Pacific: Wisconsin’s Government Accountability Board webcam of the recall count, here.

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35 thoughts on “Dispatches (XIX): Wisconsin Employment Hemorrhaging Continues

  1. tj

    From today’s WSJ, p a12 -
    “In contrast to the Illinois downgrade, Moody’s has praised Mr. Walker’s budget as ‘credit positive for Wisconsin’, adding that the money-saving reforms bring ‘the state’s finances closer to a structural budgetary balance.’…Yet Mr. Walker, who balanced the budget without new taxes, is the governor facing a union-financed attempt to recall him from office this year.”

  2. Menzie Chinn

    tj: One could reasonably ask if there was a different way in which one could have reduced the structural deficit without implementing a maximally contractionary fiscal package, and giving tax breaks to corporations, while reducing health care spending for low-income. I will also note that this demonstrates that the short term objectives of creditors sometimes deviate from the broader objectives of increasing economic activity.

  3. tj

    No doubt.
    The problem is that the cradle to grave mentality has taken over and creditors are forced into a short term focus. e.g. Greece – Eventually it becomes obvious that the trend growth rate in government spending exceeds the trend growth rate in tax revenue. Creditors won’t lend for 30 years because trend growth in the budget deficit indicates government will not be able to make all the interest/principal payments during the life of the bond. As a creditor, I am forced into a model of short term objectives/lending.
    Long term lending in the current environment is little more than a wager that the ruling parties will be able to reach a compromise on taxing and spending.
    It doesn’t matter what your political leanings are; effetive compromise is a long shot given the promises that governments make, in combinatin with their inability to collect taxes to pay for their promises.

  4. Bruce Hall

    I find it interesting that lack of employment recovery is blamed on the current GOP Governor of Wisconsin while, at the same time, lack of employment recovery in the nation is blamed on the former President of the U.S.
    I guess that Democrats are victims and Republicans are to blame… under all circumstances.

  5. jd

    I think its very interesting the 2 posters avoid the facts about the unemployment numbers,and instead insert their ideology. Its the same ole same ole ignore the facts as presented and repeat your themes. Outstanding

  6. 2slugbaits

    Bruce Hall Look at the three charts. Things had been on the upside since early 2010. In chart 3 it looks like Wisconsin was more or less on the same employment recovery track as the rest of the country. It was only after Gov. Walker’s policies began to kick into gear a few months after he took office that things started going south. Coincidence?

  7. Jeffrey J. Brown

    Crude oil prices also strongly rebounded in 2010 and 2011.
    The annual Brent crude oil price, which is a good indicator of US refined petroleum product prices and a good indicator of global crude oil prices, doubled from $55 in 2005 to $111 in 2011.
    US crude oil production to the rescue?
    After US crude oil production rebounded from the post-huuricane low that we hit in 2008, US crude oil production looks like it will show an increase of about 100,000 bpd per year from 2009 to 2011, to about 5.6 mbpd in 2011, versus the pre-hurricane production rate of 5.4 mbpd in 2004, and versus the 1970 peak rate of 9.6 mbpd (EIA, crude + condensate).
    And the US remains reliant on imports for about two out of every three barrels of oil that we process in US refineries.
    Of course, if we extrapolate recent data (2005 to 2010), China & India alone would consume 100% of Global Net Exports of oil (GNE) in about 20 years.
    The reality is that what the data show is that developed OECD oil importing countries like the US continue to be gradually shut out of the global market for exported oil, as developing countries take an increasing share of a declining volume of GNE.
    Discussing the outlook for the US economy without focusing on what our data suggest will be an accelerating rate of decline in the volume of GNE available to importers other than China & India is my opinion is analogous to passengers on the Titanic discussing dinner plans in New York, after the ship hit the iceberg.
    You may now return to discussing your dinner plans in New York.

  8. Menzie Chinn

    Bruce Hall: To restate 2slugbaits analysis, in 2008-09, US and Wisconsin employment trends were coincident, while they diverged in 2011. That suggests that economic activity in the two economies was subject to common shocks in the earlier period, and divergent shocks in the latter period. I believe a good candidate for the divergent shock is Wisconsin fiscal policy.

  9. CoRev

    In WI as in the country, Democrats find it difficult to accept that their own actions, near riot level demonstrations, and counter electoral recall efforts are unsettling to business growth. A full out assault by the unions bodes well for business decision making.
    Menzie, since you claim it is Walker’s policies, to which policies are you pointing?

  10. Bruce Hall

    https://docs.google.com/viewer?url=http://dwd.wisconsin.gov/dwd/newsreleases/2012/unemployment/120119_december_state.pdf&pli=1
    http://www.bls.gov/news.release/laus.nr0.htm
    A few thoughts:
    Wisconsin’s unemployment numbers were recently revised showing fewer unemployed than initial estimates.
    The largest over-the-month decrease in employment occurred in Wisconsin (-14,600), followed by Minnesota (-13,700). Minnesota has a population of 5.3 million while Wisconsin has 5.7 million. So, how did Gov. Walker’s actions affect Minnesota which is led by a Democratic Party governor?
    Wisconsin, even with the recent decline (which reversed in January) has an unemployment rate of 7.3% which is less than the national average of 8.6%.
    Midwest unemployment rates:
    Wisconsin 7.3%
    Minnesota 5.9%
    Illinois 10.0%
    Michigan 9.8%
    So, what do all these statistics tell you?
    Come on, make your case for mismanagement. Start with Obama who has been in office longer.

  11. benamery21

    Bruce:As you likely know, the recent decline in Minnesota employment is directly related to budgetary actions of the Republican legislature.

  12. Bruce Hall

    Bruce: It is actually a fact that Minnesota shut down during the summer for 20 days, over the refusal to raise any taxes at all:
    http://www.huffingtonpost.com/2011/07/20/minnesota-goverment-shutdown-special-session_n_904257.html
    that kind of stuff actually DOES have a real effect on the economy.

    No, Minnesota did not shut down; government paused. A blip 6 months ago. Have to do better than that. Businesses and industry did not shut down or leave because of that.
    The point is that both Wisconsin and Minnesota are doing better than their neighbors. Illinois is pathetic and Michigan, despite some resurgence in the automotive industry, is not any better.
    Employment numbers fluctuate for a variety of reasons and a few positive or negative months are relatively meaningless… and constantly revised. The U.S. numbers, supposedly President Obama’s responsibility, remain unsatisfactory and have improved mostly because the BLS is not including discouraged workers in its calculations.
    So let’s, after three years, blame Bush… and maybe throw in Walker for fun.

  13. beezer

    Contractionary is contractionary. Why do so many people believe it isn’t?
    States and municipalities are struggling to maintain revenue in a tough recession. Of course there’s going to be fights over public expenses and raising taxes.
    Without signficantly more help from Congress, the regional governments are pretty much stuck. And Congress isn’t in any mood to step up.
    As long as the public is led to believe it collectively cannot afford to pay more taxes, cuts are the only option left.

  14. benamery21

    Bruce: Laying off ~1% of the total non-farm labor force is not usually described as a ‘blip.’

  15. 2slugbaits

    CoRev Menzie, since you claim it is Walker’s policies, to which policies are you pointing?
    Try scrolling up to Menzie’s reply to tj where he links to his earlier post on “maximally contractionary fiscal package.” BTW, if you’ll go to the link you will see that your name is in the comments section, so presumably we’re covering old ground here.
    Bruce Hall The point is that both Wisconsin and Minnesota are doing better than their neighbors. Illinois is pathetic and Michigan, despite some resurgence in the automotive industry, is not any better.
    If you’re going to comment on an economics blog you might want to learn the difference between levels and rates of change. Notice that Menzie usually refers to log differences. With that in mind, let me suggest that you go back and look at the Fed’s log coincident index for seven midwest states:
    http://www.econbrowser.com/archives/2011/12/dispatches_xvi.html
    As you can see, Wisconsin is the outlier here.
    As to the US job numbers, everyone agrees that things are unsatisfactory. And there is some kernel of truth to the charge that for some months the improvement in the unemployment rate is due to the discouraged worker effect. But the fact is that the economy is at least adding jobs at well over 100K per month. That’s a far cry from losing jobs at a rate of 750K per month, which is where we were three years ago.
    So let’s, after three years, blame Bush… and maybe throw in Walker for fun.
    It’s fair to blame Walker if his fiscal policies were contractionary, which they were. And it’s fair to blame Bush for creating the recession, but no one is blaming him for the slow recovery. That honor rightly goes to Sen. Mitch “the most important thing is to make Barack Obama a one-term President” McConnell.

  16. Anonymous

    That honor rightly goes to Sen. Mitch “the most important thing is to make Barack Obama a one-term President” McConnell.
    Yes, the congressional Democratic majority from 2009-2011 was blocked from helping President Obama by Sen. McConnell. Perhaps the reason for wanting to limit Obama to one term is that he is ineffectual and contractionary.

  17. 2slugbaits

    Anonymous,
    Since when is “majority rule” relevant under Senate rules?
    Obama may have been ineffectual in his early dealings with McConnell, but I think a better choice of words would be “naive.” Obama was naive enough to believe that McConnell was actually a concerned legislator with the best interests of the country in mind. I think Obama now knows that McConnell is just a corrupt hack. How corrupt? Corrupt enough that he bragged about being willing to prolong the recession if it helped make Obama a one-term president.

  18. Bruce Hall

    If you’re going to comment on an economics blog you might want to learn the difference between levels and rates of change. Notice that Menzie usually refers to log differences. With that in mind, let me suggest that you go back and look at the Fed’s log coincident index for seven midwest states:
    http://www.econbrowser.com/archives/2011/12/dispatches_xvi.html
    As you can see, Wisconsin is the outlier here.

    If you look at the unemployment rate for Wisconsin versus the nation, you will see that the rate for the state follows the pattern for the nation reasonably closely.
    http://www.deptofnumbers.com/unemployment/wisconsin/
    The Wisconsin downturn isn’t unique. Therefore, it is hard to attribute the policies of a short-term governor having more impact than a longer-term president… unless you want to say that Wisconsin is driving the national pattern.

  19. Menzie Chinn

    Bruce Hall: I’m not sure I understand your point. Figure 4 in the hyperlink you provide clearly indicates WI and IN are the outliers, both trending downward. In fact, WI is pretty unique — see the map in this post.

  20. eh

    All the jobless in WI should invest as much of their unemployment compensation as possible in the stock market, which is back to going up nearly every day. Preferably using margin. See the more recent post about getting rich.

  21. Bruce Hall

    Dr. Chinn, I was quoting the Econbrowser link from someone else’s comment as a contrast with the second link: http://www.deptofnumbers.com/unemployment/wisconsin/
    which shows Wisconsin following the national pattern [sometimes a somewhat better rate, sometimes a little worse] for at least the past decade. The short-term divergence is an expectation of any two series over a long period regardless how closely the correlate over the long term. The point is the both the national and Wisconsin unemployment rates worsened in the past two years… both bouncing around in 2011.
    As to the Wisconsin government employee levels decreasing, so did the national government employee levels. It’s not technically a recession, but it is a government revenue recession and adjustments have to be made.
    Kenneth: of course the President didn’t force Wisconsin to lay off government workers, but after three years of policies that have done little to improve employment and tax revenues to states, states have to adjust… they can’t run deficits the way the federal government can. Three years of failure at the national level is being reflected at state levels.
    ………..
    Wisconsin still has an unemployment rate below the national average and most nearby states. Addressing bloated government employment when state revenues are low is a way to adjust to the reality. You may disagree with the approach, but it makes sense unless you want to start raising taxes which, at the state level, will be counterproductive in the long run.

  22. JLR

    Why is an economics blog so keen on paqrtisan politics? I am not in either party. (In full disclosure I was elected as a Republican in MI before I went to school in Madison). But, politics is not about efficiency. It is not about achieving the greatest good for the greatest number. Politics is about power. Both parties manipulate economic data to support their own power bases. The role of the government in the economy is an important battle ground for both parties. If you look at history, each has espoused views on that issue that they now oppose. If they believe that it will grant them more power, they will change their views on that issue again.
    History, from the first writings, teaches the lesson noted above. Rulers change religions to consolidate power. Conquerors create false reports to consolidate power. Those in power hire philosophers to justify their actions. The Republicans once espoused a storng central government with power over the national economy. Democrats opposed this. Democrats now espouse a strong central government with power over the national economy. Republicans oppose this.
    I suggest that for future reference we eschew the party labels. Perhaps we could use Keynesians and Monetarists, or Marxists and neo-Liberals,or McConnell and Reid (since I do not believe that either actually speaks for his party)
    Then perhaps we could flush out some really interesting economic issues that may influence the political issues, such as: What is economically wrong with income inequality? How much inequality is good and how much is bad? Is economic mobility actually slowing in the US? (One study says yes) If so, what are the actual causes of this. If not (two studies say no), what ramifications does that have on economic policies in the US?

  23. Menzie Chinn

    JLR: I make no mention of Republicans versus Democrats. All I noted was (1) employment trends, (2) questionable citation of employment data. If that makes one partisan, we are in a heap of trouble.

    I grant you that politicians of all stripes use numbers to their best advantage. However, I am not a politician; I’m a social scientist, so I feel it is incumbent upon me to note when numbers are being misinterpreted. Is that not a legitimate objective for an economics weblog?

  24. JLR

    Professor:
    My issue about partisan politics was not directed at you. If you read the comments that your observations elicited, you cannot help but wonder whether the commentors forgot this is an economics blog and not a political hack convention.

  25. Bruce Hall

    From the post: Update, 4:45PM Pacific: Wisconsin’s Government Accountability Board webcam of the recall count, here.
    From JLR: If you read the comments that your observations elicited, you cannot help but wonder whether the commentors forgot this is an economics blog and not a political hack convention.
    Oh, really?
    It’s not always what you say….
    “A big problem with seeking right answers is that the ideologies intervene. The answers appear to be right because they satisfy our prejudices, inclinations, even our heart, and only secondarily our mind. Seeking right questions, on the other hand, can provide a clarity of direction and consequences. So how do you teach people to ask the right questions?”
    - Shannon Skousgaard, Ph.D.; Professor Emerita, Associate Professor of Philosopy, George Mason University
    Ideologies are intervening in the interpretation of the data … and even the data that is selected.

  26. Menzie Chinn

    JLR: Apologies for the misinterpretation.

    Bruce Hall: OK, I give. The fact that employment is declining in Wisconsin is a good thing!

    And Oceania has always been at war with Eastasia!

  27. Bruce Hall

    The fact that employment is declining in Wisconsin is a good thing!
    My BLS data shows unemployment is declining.
    NOVEMBER REPORT:
    The number of people unemployed in Wisconsin peaked in June 2009 at 285,095. There are now 61,262 fewer people unemployed in the state. Wisconsin job growth data is also available.
    Unemployed November 2011 Mo/Mo Yr/Yr
    Wisconsin 223,833 -10,253 -7,319
    DECEMBER REPORT:
    Unemployed December 2011 Mo/Mo Yr/Yr
    Wisconsin 215,767 -8,147 -11,917
    I’ll give you the link again:
    http://www.deptofnumbers.com/unemployment/wisconsin/

  28. Menzie Chinn

    Bruce Hall: There are a variety of reasons why economists treat the unemployment series as a problematic indicator; it is the ratio of unemployed to labor force, and hence can move as a result of either variable. You will note that I typically rely on employment series. There is a reason.

    The fact the employment series diverge while unemployment series do not suggests a divergence in the participation rates, and not in a way that is favorable to Wisconsin vis a vis the US.

  29. JLR

    Bruce: Idealogies do intervene in our perceptions. Economics is first and foremost a philosophical examination. If we view economics as a set of postulates, rules, and theorems, then one “school of thought” tends to sway the questions, the data sought, and the interpretation therof. This also leads to a competition among the schools of thought for which is best. However, in the course of trying to establish the superiority of one view over the other, it seems that economists feel the need to reject the insights of those that preceded them. Contrary to many, I do not think Adam Smith was wrong or niave. I do not think that Malthus was wrong or cynical. Marx proved to be right about a great many things even though I think his vision was quite flawed. Keynes was right about a great many things even though I believe applying his theories is often impractical. Von Mises and the Austrians are fascinating even if the math is convoluted. I believe that economics has enough scope to display the views of many different thinkers. We should take those thoughts and use them to build new insights.
    This does not mean we should accept observations uncritically. If a professor of a school of thought provides an analysis that is dependent upon the existance of an assumed fact, then the assumption or the lack of proof of the assumption should be drawn to the attention of the professor and those receiving the analysis. This can be done without labels such as left wing, right wing,or other labels which attack the analysis on something other than its merits. And, the person that brings the apparent flaw to the attention of the audience ought not be attacked on the basis of anything other than the merits of the point (as you were).
    Perhaps, if we eschew denigrating the republicans and the democrats, but focus on the particular policies espoused by a person, entity, or administration, then we could find a better approximation of the “truth.”

  30. Steve

    The citizens of WI got to the ballot box just in time in 2010. The two previous Gov.’s one a Rep. and one a Dem. had sold off the tobacco annuity, sold out to the casinos, robbed the road infrastructure trust and replaced the gold with paper notes and continued to send 360 million dollars every bi-annual budget to the Public Unions. Walker is no moving ahead in polls and he beats any opponent in a possible recall. This is not a Dem./Rep. issue and Walker is not evil. Those who have this irrational hatred built up toward the Governor need a little more self examination and a bit more education. Bottomline, Wisconsin is staging for the best economic growth in a long, long time. The sooner the Citizens get to the polls in 2012 to complete and consolidate People’s control, the faster those same Citizens can get back to living life, liberty and the pursuit if happiness (property)!

  31. Jake formerly of the LP

    Laughable to see you out-of-staters say that Wisconsin is in any way better off under Walker. The Walker-supporting Senate Majority Leader got caught yesterday saying “You think this budget is bad, wait till the next one” in 2013, and basically admitted that all that Walker did was kick the can down the road.
    Heck, his own Administration admitted the state’s GAAP budget is around $3.0 billion for both this year as well as the next fiscal year. But he still claims it’s a “balanced budget” to rubes and out-of-staters who are still dumb enough to fall for it.
    And oh yeah, the 35,600 job losses in the last 6 months is the worst in America…and not by a little. It ain’t working.

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