(Updated at 5/17 12 noon Pacific: Wisconsin DWD reports April Loss of 5.9K NFP Jobs (6.2K Private); March NFP numbers revised up 7.3K, private payroll numbers revised up 0.7K. Total civilian employment rises by 6.8K according to household survey. Complete information at bottom of post).
Today, the Wisconsin DWD took the unusual — one might say unprecedented   — step of announcing their estimates of what they call “actual job numbers” (see press release here). These are based on the unemployment insurance covered employment. From the press release:
Wisconsin Department of Workforce Development (DWD) Secretary Reggie Newson today released 2011 Wisconsin actual jobs data based on reports from nearly 160,000 employers, which shows the state added over 23,300 jobs between December 2010 and December 2011.
These numbers are based on the actual Quarterly Census of Employment and Wages (QCEW) through September 2011, and numbers DWD submits to BLS for processing for October 2011-December 2011. I plot this series below (along with the official BLS WI nonfarm payroll (NFP) employment series from the March release, for comparison).
Figure 1: Log nonfarm payroll employment (blue), and log employment from QCEW (green) and preliminary numbers from DWD (red). Dashed line at last benchmark date (2011M06). Source: BLS March release, and QCEW data via BLS, and DWD, and author’s calculations.
The (changes in the) “actual job numbers” are read off the green and red lines.
Obviously, there are some (serious) seasonality issues. DWD addresses this by looking at 12 month changes, which of course would be adequate had the winter been of typical severity. We know it was not.
Based on my conversations with experts on the linkage between QCEW data and nonfarm payroll series, I have done my own benchmarking, taking at face value the October-December 2011 figures released by the DWD. My estimates, placed alongside the Department of Revenue’s (DoR’s) October 2011 Wisconsin Economic Outlook, and Governor Walker’s (unconditional) pledge of 250,000 additional private sector jobs are shown in Figure 2.
Figure 2: Nonfarm payroll employment from March release (blue), estimated employment (red), plus/minus two standard error band (gray), forecast from the DoR’s Wisconsin Economic Outlook, October 2011 (pink), and Walker’s path for nonfarm payroll employment implied by 250,000 target for private employment. Source: BLS, Wisconsin Economic Outlook, October 2011, author’s calculations (see text).
Procedure: I took the data on Wisconsin’s QCEW numbers, and updated to 2011M12 using “actual job numbers” reported in the DWD press release. I then ran a regression of log NFP (March release) on WI QCEW over the 2009M06-2011M06 period, seasonally adjusted over the entire sample using ARIMA X12 (arithmetic average on log series). Let nfp be log nonfarm payroll, and n be the seasonally adjusted log QCEW employment series.
nfpt = 1.99 + 0.752 × nt
R2 = 0.95; SER = 0.0011; DW = 1.51
Observations: of December 2011, implied NFP employment is 11.7 thousands above January 2011 levels. Taking into account sampling uncertainty, employment is as little as 5.2 thousand, and as much as 18.3 thousand above 2011M01 levels. The implied NFP employment is 35.4 thousand below Walker’s implied target for NFP growth, taking into account actual government employment and a smooth path for private employment growth.
One can place the revised series in a national context. Figure 3 presents a plot of the actual BLS NFP employment series, the QCEW-based series, and the US NFP employment series.
Figure 3: Wisconsin log nonfarm payroll employment from March release (blue), estimated employment (red), and US log nonfarm payroll employment from April release (black), normalized to zero at 2011M01. Vertical line at 2011M01. Source: BLS, BLS via FRED, author’s calculations (see text).
In other words, even with the numbers provided by Governor Walker’s Administration, historical correlations between the NFP series and the QCEW show a lackluster performance in the Wisconsin labor market, with employment essentially stagnant since April 2011.
By the way, other indicators suggest lackluster economic activity, so I do not understand the Administration’s assertions of growth through end-2011. The Philadelphia Fed’s coincident index indicates that economic activity was essentially flat going from 2011M01 to 2011M12. BEA also reports 2011Q4 Wisconsin total income growth placed it in 50th place out of 50 states.
Update, 12PM Pacific: Wisconsin DWD reports April Loss of 5.9K NFP Jobs (6.2K Private)
March NFP numbers revised up 7.3K, private payroll numbers revised up 0.7K. Total civilian employment rises by 6.8K according to household survey.
Note that these numbers are based on the establishment survey Governor Walker has eschewed referring to.
Figure 4: Nonfarm payroll employment from March release (blue), estimated employment (red), plus/minus two standard error band (gray), forecast from the DoR’s Wisconsin Economic Outlook, October 2011 (pink), and Walker’s path for nonfarm payroll employment implied by 250,000 target for private employment; and DWD release for April (dark blue triangles). Source: BLS, Wisconsin Economic Outlook, October 2011, DWD, author’s calculations (see text).