Wisconsin and Its Neighbors

Still not the leader of the pack.

Reader Bruce Hall asks for comparisons of Wisconsin against regional comparators.


Figure 1: Log nonfarm payroll employment for Minnesota (bold blue), Wisconsin (bold red), Illinois (green), Iowa (gray), Indiana (chartreuse), Michigan (teal), and Ohio (purple), all normalized 2011M01=0. Source: BLS January 2018 release via FRED, and author’s calculations.

Oftentimes, Illinois is pointed out as the “sick man” of the Midwest particularly by conservative commentators. However, Wisconsin barely keeps pace with Illinois.

Somehow, I am doubtful this will convince true believers that Wisconsin is lagging, given the a priori beliefs of some that union busting, spending cuts, and tax cuts must result in rapid growth.

34 thoughts on “Wisconsin and Its Neighbors

  1. Ed Hanson

    Log graphs are useful, but actual numbers can bring perspective.

    Unemployment % BLS FEB. 2018 (P)
    —————————————————————————————
    Minnesota 3.2
    Wisconsin 2.9
    Illinois 4.7
    Iowa 2.9
    Indiana 3.2
    Michigan 4.8
    Ohio 4.5

    As you can see, the perspective changes. Note, of the most populous states Indiana blossoms. Of the other three, Minnesota after performing reasonably well has begun to fade, for reasons previously explained. And Illinois is a basket case.

    Ed

    1. pgl

      Wait – the issue was employment growth over a period of time. You changed the metric to unemployment rates? Hello?

      1. Bruce Hall

        Well, actually, pgl, the comment I made which lead to me being the featured dunce in this post was in response to Ed’s comment: http://econbrowser.com/archives/2018/03/wisconsin-february-employment-wrapup-growth-at-standstill-private-nfp-still-18800-below-gov-walkers-250000-new-jobs-promise#comment-207005

        The issue that Menzie has focused on is the change in non-farm payroll without the context of such factors as starting unemployment rate and labor participation rate. It the old comparison about how much more water you can add to a glass that is 90% full versus one that is 70% full.

        By any reasonable measure, Wisconsin has far outclassed its neighbor to the south and is doing well in comparison with Michigan, it’s twin, that has benefitted from a massive rebound in the automotive market.

        But let’s focus on why Wisconsin can’t add more water to the glass as fast as say, Illinois.

        1. 2slugbaits

          Bruce Hall The issue that Menzie has focused on is the change in non-farm payroll without the context of such factors as starting unemployment rate

          There are some problems with this. Most of Menzie’s comparisons have been between Wisconsin and Minnesota. One big problem is that Minnesota actually started 2011 with a much lower unemployment rate than Wisconsin, so the argument about there being much less employment space for Wisconsin really doesn’t hold water, so to speak. To the extent that your 90% glass full analogy holds, you have to ask yourself why it does not appear to have been a constraining factor for Minnesota, which started 2011 with a lower unemployment rate. Another problem is that it moves the goalposts. Remember, Gov. Walker didn’t promise that he would lower the unemployment rate; he promised a specific number of jobs. Now if it turns out that it isn’t possible to create that many jobs because all of the low hanging employment fruit has been picked, then it’s fair to ask why he didn’t take that into account before making his jobs creation pledge. I realize he’s not the brightest bulb around and doesn’t have much of an education, but surely he could have asked some of his staff to review his pledge before going public. The most obvious reason why Walker made that pledge is because he was just bullshitting his way through an election and he knew that the GOPs base isn’t all that smart. He told them the lie that they wanted to hear.

          A lot of Midwestern Republican governors and state legislatures are finding themselves on the horns of a dilemma. In order to survive politically they have to appeal to their base, which tends to be older, white, rural and not especially well educated. This means they have to support policies that are good for their base, but tend to hurt future growth over the long run. Policies that protect farms and agriculture at the expense of other more dynamic sectors of a state’s economy is a loser strategy. Don’t be surprised when young people flee the state. The Census Bureau has demographic data by county for each state. I urge you to look at some of the counties in GOP dominated states such as Wisconsin or Iowa or Kansas. It’s not uncommon to find GOP dominated rural counties in which over a quarter of the county’s population is age 65 or older. But the dynamic counties that are growing typically have a senior citizen population that is less than half that. The problem is that those also tend to be Democratic leaning counties. It’s the same old story…blue states subsidizing red states and blue counties subsidizing red counties. Sooner or later something’s got to give. Either the GOP is going to have to pay more attention to the younger, more dynamic counties or those red states are going to wither on the vine. They will turn into large retirement homes. That’s the future for states that follow the ALEC death plan.

        2. pgl

          You are assuming all glasses are the same. As part of my dissertation which compared policy responses across the G-10, I had to look at labor market indicators across nations so trust me on this one. Cross national comparisons of unemployment rates can be very misleading. So why do you put so much faith in comparing unemployment rates across states. Heck – no one with a brain would even compare the U.S. unemployment rate today to the unemployment rate back when I wrote my dissertation.

          There is a reason my blog posts looks at employment to population ratios. I trust you have followed that reasoning but maybe not.

          1. PeakTrader

            Employment to population doesn’t measure prosperity. You need the unemployment rate and labor force participation rate, which excludes people under 16, retired folks, those in school (since, perhaps, they can’t find a decent job), and everyone else outside the labor force. You won’t get much employment growth with a low unemployment rate and high labor force participation rate. Wisconsin has a more prosperous base, given it’s closer to full employment than many other states.

      1. pgl

        Aren’t you confusing labor force participation rate with the employment to population ratio here? Of course maybe you have solved the problem of estimating potential gross state output – something no one else has ever managed to measure. Let us all know when your research is published in the American Economic Review!

    2. 2slugbaits

      Note that you are reporting U3 unemployment rates while Menzie is reporting total non-farm employment. I could be wrong, but I don’t recall Gov. Walker promising a 2.9 percent unemployment rate. I seem to recall him promising a certain number of jobs within a certain timeframe. In any event, it’s also important to look at wages according to BLS data.

      State……………Weekly_Wage…………..National_Rank
      Minnesota…..$1,037…………………………..12
      Wisconsin……. $876……………………………31
      Illinois…………$1,062…………………………….9
      Iowa………………$853……………………………39
      Indiana………….$859……………………………37
      Michigan……….$969……………………………19
      Ohio……………..$912……………………………25
      Bonus:
      Kansas…………$849…………………………….40

      Looks to me like the ALEC states are near the bottom…unless you think weekly wages don’t matter.

      1. PeakTrader

        2slugbaits, high skilled people are attracted to the big cities. Higher incomes reflect that, along with the higher cost of living. The Milwaukee metro area has to compete with, and is between, the Chicago and St Paul-Minneapolis metro areas, which are much bigger.

        1. pgl

          People want to live in Chicago? Oh dear – you have just undermined the political garbage coming from your bosses in the Trump White House.

      2. PeakTrader

        Paul Krugman on his Nobel Prize paper: “Today, 60 million people live along a narrow stretch of the East Coast. Those 60 million people aren’t there because of the scenery; each of them is there because the other 60 million people are also there.”

        1. pgl

          The post was on the Midwest. Get a map PeakIgnorance – the I-95 corridor runs from Boston to DC. A long way away from Chicago.

      3. pgl

        Who was it that criticized Menzie for not having an official measure of potential gross state output by state? Of course no one does. Oh wait – PeakIgnorance thinks he has such a measure. I cannot wait to see his paper published in the American Economic Review!

        1. pgl

          Did you read past this paragraph?

          “Why did this happen? I don’t have the complete answer to this question, but I will offer several explanations that are part of the answer. I have organized these explanations under four headings.”

          Likely not as your own source offers up explanations that run counter to your usual right wing garbage. Minnesota’s edge comes from more progressive policies – according to your own link. Read it!

          1. PeakTrader

            The article provides economic explanations Pgl. That’s why I posted it. For example, there’s a positive correlation between income and education. Also, there’s something called progress, e.g. shifting from older industries into newer ones.

          2. PeakTrader

            And, not all what you call “progressive policies” are positive. Some are very destructive. Don’t be so ignorant.

          3. pgl

            More money for health care and education is not progressive? It is part of your right wing agenda? Excuse me PeakStupiidity so mansplain to us why the Republican Party wants to cut both?

      4. Bruce Hall

        https://datausa.io/profile/geo/illinois/

        https://datausa.io/profile/geo/wisconsin/

        Okay, then. I’ll grant you the Illinois does benefit from the Chicago financial district and the big market comeback from 2009. But when you look at the larger picture, the concentration of wealth in Illinois belies the rest of the state’s situation. https://www.cbpp.org/sites/default/files/atoms/files/Illinois.pdf . By the way, look at where California sits on the list.

        But if you are arguing that is a good thing….

      5. Trump will never be President

        Can we get weekly wages adjusted for SALT taxes/cost of living, unless you don’t think those matter

  2. Moses Herzog

    @ Menzie
    Menzie, I wager you are a prolific reader, and read voluminous amounts of reading materials, even inside small periods of, say, 2 weeks. It’s obviously a job requirement for you and you also strike me as the type of cat you would read huge amounts whether required for your job or not. [ I’m making my way to a point here ] and that is, just like if you live long enough, you’re apt to see some “shocking” and “outside the norm” type things, “bizarre”. Some things you don’t care to recall in your own mind–or tell to others as you wouldn’t even believe it yourself had you not seen it with your own eyes. And so it is with mathematics and economic numbers—Yes?? If you read large amounts of material you’re apt to see some peculiar numbers and situations that are in fact reality. So Menzie, I invite you to read some of the numbers quoted in the following article from a small media outlet in Oklahoma “The Gazette”–and tell me if you find the numbers “borderline shocking”?? “SoonerCare” I should explain is the dumb-*ss name they give Medicaid in Oklahoma (Maybe as it gives them a cover from admitting it’s a federal program??)

    “It’s hard for those in health care serving SoonerCare patients, explained Cassidy Heit, a public policy and communications associate at Oklahoma Primary Care Association, an organization representing community health centers serving more than 200,000 patients, one-third of whom are on SoonerCare. The association opposes Brecheen’s bill. If the bill were to become law and receive approval by the federal government, a family of three qualifies for Medicaid with an income of $4,084 a year. The state would also lose $118 million in matching Medicaid federal dollars.”

    and the article goes on after a bit…….

    “It’s a Catch-22 scenario where you have to work a certain number of hours per week but are restricted in the income you can make,” Heit said. “It works out to be well below the minimum wage. If both go forward, it could be virtually impossible for adults in Oklahoma to retain coverage through Medicaid.”
    https://www.okgazette.com/oklahoma/deep-cut/Content?oid=2999573
    (Article written by Laura Eastes)

    Again I earnestly ask Menzie, would you describe those numbers as at least “mildly shocking” and have you ever heard of other states handling things in such a way—especially in a state where a good portion of the residents are “lucky to have a pot to p*ss in”??

    1. Moses Herzog

      I guess I’ll take that response as a “too far off topic” or a “Boooooooooooring!!!!”

    2. Menzie Chinn Post author

      Moses Herzog: I’m afraid you over-estimate the time I have after teaching/research to read anything outside of my area. Sorry to not have an opinion on this one…

  3. pgl

    Wisconsin is doing better than Iowa! I guess that means Walker is the best governor ever! NOT!

  4. Ed Hanson

    Illinois is a basket case. It is well known and avoided on this blog. But not elsewhere.

    “Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending.”

    https://www.bloomberg.com/news/articles/2017-06-01/illinois-bonds-cut-to-one-step-above-junk-by-s-p-over-stalemate

    And it is not just the budget, but public pension horrific shortfall. Plus problems to numerous to mention, keep it short.

    Ed

    1. Menzie Chinn Post author

      Ed Hanson: Let’s take your predicate. What does it mean that Wisconsin is doing just about as well as Illinois? That was my point if you didn’t get it.

      1. Ed Hanson

        Menzie

        Its just a guess, but it is not protection of the taxpayers from extreme and imminent tax changes due to protection of the public union pension from years and years of underfunding. And its not unemployment rate. And its not jailed governors. And while I am glad it is subsiding somewhat, it not Chicago murders.

        You tell me, perhaps the corn and soybean planting is being well prepared in Illinois, can’t be cheese production, Wisconsin is the best, no comparison. U of W has much better sport teams than U of I.

  5. DeDude

    Exactly – in way to many cases on the right (and a few on the left) the narrative Trumps the facts. If facts are inconvenient they will be challenged to the n’th degree, if they can be interpreted to support the narrative, they will be promoted without even asking basic questions. The right wing think tanks has made an art out of the “science” of beginning with the answer and then conning up support for it – and yes there are a few examples of leftist having adopted the same approach, but they are neither the inventors nor the masters of that approach.

  6. Samuel

    Dear Dr. Chinn,

    Thank you for tracking this.

    I find it curious that the voters don’t seem to mind Gov. Walker’s below average performance on jobs. I guess the attitude is any job is better than no job. And spending $2-3 billion of the Wisconsin taxpayers’ money on a dubious scheme to a single private company in the Southeast section of the state to shore up his support seems haphazard.

    So far the policies brought forward by the this administration and the GOP-controlled legislature have not done much for taxpayers. Two issues that the state can help with, roads and schools in most areas of the state are struggling.

    Indeed, they seem to be trying to segregate higher education into the haves/have-nots https://www.washingtonpost.com/opinions/wisconsin-is-trying-to-segregate-higher-education-into-the-haves-and-have-nots/2018/03/21/8cd67ac0-2886-11e8-b79d-f3d931db7f68_story.html?utm_term=.7c3a9fd3c2a7

    And what little money is left for roads seem to be going to Foxconn: https://www.jsonline.com/story/news/politics/2018/02/28/wisconsin-shifting-up-90-million-local-road-funding-foxconn-related-projects/380750002/

    Meanwhile will voters in rural communities remember their roads are in bad shape when they go to vote? http://www.nbc15.com/content/news/How-Wisconsins-State-Highways-impact-farming-industry-422675264.html

    Best regards and your efforts to inform the voters of the economic performance of this administration are appreciated.

    Samuel

  7. Ed Hanson

    Samuel

    We have lots of voters from different states and would like very much to hear if the same political issues are showing up in this election year. Roads and bridges and rural areas come up every election time here in Colorado and after the election lots of bonding and some new taxes but then the money is diverted through the general revenue to other purposes. Ready made election issue again. I have learned through the years to segregate issues that the political types really care about and those they only care about the noise. Makes little difference which party has power or even if it is divided. The out party makes the noise and if put in power reverts to norm. Good luck.

    Ed

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