Wisconsin nonfarm payroll (NFP) employment is 63.2 thousand below what historical correlations with national employment would imply.
I use the observed relationship between US and Wisconsin nonfarm payroll employment over the 1994M01-2009M06 (NBER recession trough) period to construct a counterfactual for the 2009M07-2016M06 period, where ex post realizations of US NFP employment are incorporated (see this post for discussion). This leads to Figure 1.
Figure 1: Wisconsin nonfarm payroll employment (blue), and forecasted (red), and 90% prediction interval (gray lines). Light green shaded area denotes in-sample data. Log scale on vertical axis. Source: BLS, and author’s calculations.
The Department of Workforce Development press release trumpets the 10,900 addition in private NFP in June. Tables indicate that May employment was revised down 6,300, which kinda takes off the gloss.
And if anybody was keeping track, we are over 47,000 jobs below the promised level of 250,000 new jobs by January 2015.
Are you really serious or just kidding? Please practice rigorous reasoning.
bee: I would be much obliged if you would specify which aspect of the regression, forecasting, or mathematical calculation you find lacking in rigor. Details of the error correction model, data, are reported in the links provided in the post. Links to the DWD release is also included. The underlying data are available from St. Louis Fed FRED system, or directly from BLS.
Dear Dr. Chinn,
Thank you for tracking this social experiment. As U.S. Supreme Court Justice Louis Brandeis said the states are “laboratories of democracy.” Here in Wisconsin, the GOP-controlled state government has tried an experiment in cutting state government, state services, and funding for roads and education. As you illustrate, this has resulted in below average state employment.
It has also resulted in decreased tax revenues, so the state services that could help grow employment – infrastructure, roads, education – are now set in an ever-decreasing downward spiral. It will be important to watch the next budget report from the non-partisan Legislative Fiscal Bureau (https://legis.wisconsin.gov/lfb) to see the state revenue figures. Already, roads, road repair, and road funding in the state are a perilous condition. (Looming crisis: Stagnant state transportation funding leaves municipal roads in trouble – http://lacrossetribune.com/news/local/looming-crisis-stagnant-state-transportation-funding-leaves-municipal-roads-in/article_7aa3d6e8-84cd-5f87-9183-6226f9f29815.html)
I’ve noted that many GOP legislators “retired” this election cycle. Their GOP replacements are running on touting their success because the “State unemployment rate holds at a 15-year low of 4.2% and is 0.7 percentage points below US rate.”
Unfortunately, as the state prepares for its next budget cycle, the effects of this social experiment “may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country” but not without risk to Wisconsin citizens.
Brandeis’ quote from https://en.wikipedia.org/wiki/Laboratories_of_democracy
Thank you Dr. Chinn for your work.
It is no surprise to see under Walker the actual job growth trails the forecasted largely because of the state budget priority focus on tax cuts believing that it will create “explosive” growth as the main supply side economic theory holds. The reality that it makes economy go down due to less spending in necessary infrastructure and education. Walker’s previous budget proposal provided cuts to the university system just to pay the Buck’s owner money to stay in Milwaukee.
I see this all the time, a new generation of politicians swears by the gospel of the supply side economic despite the fact it has been debunked many times before. Even if it did not pan out, they tend to find culprit in others to shift the blame away. You can see Art Laffer and Stephen Moore still believes in it despite the evidence to the contrary.