Wisconsin Employment: 108.6K below Trend Required to Hit Walker’s 250K Target

The Wisconsin Department of Workforce Development released without fanfare (well, there is no press release I see on the DWD media website as of 3pm CDT today) the last figures to be available before the election. They indicate September private nonfarm employment 108.6 thousands below the trend consistent with the Governor’s target (recommitted to a mere year ago) of 250 thousands net new jobs.

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Figure 1: Private nonfarm payroll employment seasonally adjusted (red), trend consistent with Walker’s promise (gray), and Wisconsin Economic Outlook forecast, interpolated (green). Source: Wisconsin Department of Workforce Development, Wisconsin Economic Outlook (March 2014), author’s calculations.

This tabulation means that Wisconsin must create 32.35 thousands per month for each of October, November, December and January in order to hit the Governor’s target. This is a 4 month growth rate (not annualized) of 1.32%. While this is mathematically possible, it has not occurred in the last 15 years. (It is also not consistent with the Governor’s own Department of Administration/Department of Revenue forecast, as shown by the green line.)

Not only is Wisconsin employment lagging the Governor’s commitment, it is also lagging the rest of the country. Figures 2 and 3 present private nonfarm payroll and nonfarm payroll employment, normalized to 2011M01, for the US and Wisconsin.

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Figure 2: Log private nonfarm payroll employment for Minnesota (blue), for Wisconsin (red), and the US (black), all seasonally adjusted, normalized to 2011M01=0. Source: WI DWD, MN DEED, US BLS, and author’s calculations.

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Figure 3: Log nonfarm payroll employment for Minnesota (blue), for Wisconsin (red), and the US (black), all seasonally adjusted, normalized to 2011M01=0. Source: WI DWD, MN DEED, US BLS, and author’s calculations.

Notice that Minnesota, which Governor Walker previously compared unfavorably to Wisconsin, has outpaced in terms of employment growth. In other words, Wisconsin’s lagging performance cannot easily be rationalized as merely a regional effect. Cumulative employment growth since 2011M01 is 2.1% lower in Wisconsin as compared to its neighbor. A comparison of total nonfarm payroll employment is even more depressing; while the cumulative lag thus far is also 2.1%, but Minnesota’s NFP is pulling away from Wisconsin’s at a faster pace, 2.9% annualized in the last month.

Note that (as far as I can tell), the establishment survey numbers are the ones that the Walker administration are currently favoring, having at some point in the past dispensed with the QCEW figures as “outdated”. In other words, I am citing the data series the Administration was against before they were in favor of.

For a discussion of the QCEW figures, see this post.

Update, 6:15PM Pacific: In order to further quantify the extent to which Wisconsin will undershoot Governor Walker’s target of 250 thousands net new jobs, I used an ARIMA(1,1,1) estimated over the 1990M03-2014M09 period to conduct a dynamic forecast. Even assuming an outcome at the upper plus two standard error band implies a shortfall of 3.6% (log terms). (The regression has an adjusted-R2 = 0.30, SER = 0.002.

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Figure 4: Log private nonfarm payroll employment seasonally adjusted (red), trend consistent with Walker’s promise (gray), and Wisconsin Economic Outlook forecast, interpolated (green), ARIMA(1,1,1) dynamic forecast (bold dark red), and +/- 2 standard error band (gray pink lines). Source: Wisconsin Department of Workforce Development, Wisconsin Economic Outlook (March 2014), author’s calculations.

Update, 11/21 9:45AM Pacific: DWD has a press release today.

Update, 6:20PM Pacific: RNC Co-chair states “I don’t want to say anything about your Wisconsin voters but, some of them might not be as sharp as a knife,” according to The Hill.

14 thoughts on “Wisconsin Employment: 108.6K below Trend Required to Hit Walker’s 250K Target

  1. ghostatthefeast

    Menzie,

    I believe Gov. Walker might be familiar with your blog. He recently said that, “while he promised a Super Bowl”, Wisconsin is at least “going to the playoffs”. I am unsure of how familiar you are with American football, but I can assure you, a 7-7 record doesn’t even get you a wild card berth.

  2. Joseph

    DWD announces that Wisconsin job growth exceeds Ohio, Indiana and Michigan job growth.

    In other words, they are taking solace in the fact that Walker’s failed policy of expansionary austerity isn’t quite as bad as the failed expansionary austerity policies of Walker’s fellow Republican governors.

    1. Menzie Chinn Post author

      spencer: I checked — Kansas and Wisconsin are doing essentially the same (relative to 2011M01) along the private employment dimension: lagging.

  3. Bruce Hall

    2009 State of the Union speech: “Over the next two years,” Obama said, “this plan will save or create 3.5 million jobs.”

    Hmmmm. He had the full resources of the Federal Government… including giving away hundreds of billions of dollars. 3.5 million didn’t happen. Where are the snarky posts?

    1. Menzie Chinn Post author

      Bruce Hall: As I mentioned before, the Romer-Bernstein analysis reported a difference relative to a counterfactual. Governor Walker made an unconditional forecast: 250K net new jobs. Since you read the post and commented, are you just being difficult, or is your memory fading?

      Also, where’s the snark? Is it snide to bring up a promise made by the Governor, and recount the actual statistics? Or does tabulating statistics now count as snide? As far as I can tell, the only snide remark is the RNC Co-chair’s remark about Wisconsin voters. I look forward to your response.

      On a substantive point, is there anything technically wrong with what I have written? If you could elucidate such a point, that would constitute a useful addition to the discussion.

      1. Bruce Hall

        Menzie,

        Of course, there is nothing technically wrong with your post. But constant repetition of the same (albeit updated) data with the express intention of insinuating that Walker was a liar at worst and disingenuous at a minimum while ignoring the elephant (or donkey) in the room that Obama’s projections (promises) were simply misunderstood hardly seems reasonable.

        http://abcnews.go.com/blogs/politics/2010/01/farewell-saved-or-created-obama-administration-changes-the-counting-of-stimulus-jobs/

        The fact is that few projections of jobs have been on the mark. Call it lying, call it over-promising, call it hyperbole, or call it politics as usual. Those who hang their futures and fortunes on such promises are naive at a minimum or outright foolish and stupid. Outside of economists, few people or party faithful remember promises of years past… especially with so many distractions of the present.

        1. baffling

          bruce,
          the running commentary has been that walker has underperformed relative to the country as a whole, based on obama’s record. you can argue against obama, but you must then acknowledge the approach taken by walker has resulted in even poorer performance over the same time period. of course, i don’t recall you trying to give obama any slack on his obamacare number predicitons-even though they fared well in the end.

        2. Menzie Chinn Post author

          Bruce Hall: That’s pretty pathetic to link to a politics reporter on the issue. Why not link to some real economists, like those at CBO? Oh, that’s right, they’re not on the same page as you, so you conveniently ignore. Well, take a look at the CBO estimates (Feb 2014), and tell me what’s wrong with their numbers.

  4. Bruce Hall

    I think that in order to judge Wisconsin’s employment performance, it should be compared with the Midwest Census Region performance.

    Wisconsin: http://data.bls.gov/timeseries/LASST550000000000005?data_tool=XGtable

    Midwest Region: http://data.bls.gov/timeseries/LASRD920000000000004?data_tool=XGtable

    This provides a nice view of one state with a much maligned governor compared to a larger group of surrounding states with a variety of state situations all being impacted by the larger national policies. Wisconsin appears to be somewhat better than average in terms of resistance to the economic downturn and current employment versus previous peak.

    1. Jake formerly of the LP

      No Bruce, not even close. That’s why I continually point out that Wisconsin’s job growth is dead last in the Midwest since the end of 2010- which is in stark contrast to the 3 years that involved the Recession in its aftermath (Wisconsin did well in comparison to its neighbors from 2007-2010). There is a clear decoupling in relation to Walker taking office and having his “reforms” put in place.

      These are the numbers, and you do not get to make em up. On a related note, see that Kansas had yet another budget shortfall, going nearly 10% below expectations? Funny how those things things happen outside of bubble-world.

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