Regarding the slowdown in employment growth in February, reader Neil asks:
To what extent could the weakness in February be a payback for the outsized growth in December and January. The three month average for nonfarm growth in Wisconsin looks solid. Also, do you have any thoughts on the average hourly earnings data? Looks like Wisconsin is seeing strong growth over the last year.
Well, I’m not impressed with the evolution of hourly earnings (I don’t have much to say on the idea of payback). Figure 1 shows CPI deflated average hourly earnings for production and nonsupervisory workers in Wisconsin as compared to the Nation.
Figure 1: Log average hourly earnings for production and nonsupervisory workers for US (blue), and for Wisconsin (red), both deflated by CPI-all, 2011M01=0. Source: BLS, and author’s calculations.
Wisconsin wages are only 0.4 percent higher (log terms) than they were in January 2011. In contrast, for the Nation as a whole, they were 2.7 percent higher (log terms.
Figure 2 shows the log ratio of Wisconsin to US average hourly earnings.
Figure 1: Log ratio of average hourly earnings for production and nonsupervisory workers for Wisconsin to US (dark red). Horizontal gray line at value for 2011M01. Source: BLS, and author’s calculations.
This has been one of my perpetual pet peeves that has grated on my nerves and mind for a long time. You have clueless Oklahoma officials (state and city level) on TV and radio saying “Oklahoma’s unemployment rate is lower than the national average.” Well as the old phrase goes “bully for you” pal. What in the F___ does it mean to have a “low unemployment rate” when everyone and his brother is working at Wal Mart, McDonald’s, Home Depot, and painting and shingling roofs (assuming the Mexican immigrants haven’t taken away that last category, or any of them for that matter). Well, let’s go have a dance party in the streets, 9 out of 10 Billy Bob Joe Hatfields have a job at helping Grandma find her Metamucil on isle 15 at the local Wal-Mart. Billy Bob has no worries about handling the monthly bill on his car loan, and getting that rental deposit back from the building manager of his former apartment where the sewage backed up 15 times is looking brighter than ever. Billy Bob stopped snatching the ketchup packets at the Carl’s Jr. a whole 3 weeks ago and he’s now living life in the fast lane. Yup, life is good for Billy Bob in Oklahoma “because Oklahoma’s unemployment rate is low”.:
https://www.youtube.com/watch?v=vzdIm-wRZ7A
Average hourly earnings for all private employees in Wisconsin ran $25.6 in February 2018: https://fred.stlouisfed.org/series/SMU55000000500000003SA That is up 6.2% against last year and taking out 2% inflation implies real hourly earnings growth of 4%.
Neil: Yes, that’s the series including supervisory and management employees. I’ve plotted the series that correspond to FRED series AHETPI at the national level.