July 20, 2012
Wisconsin Employment Release for June: Payroll, Private, Civilian Employment Decline.
The BLS has released preliminary estimates for June employment in Wisconsin. Private payrolls declined 11.7 thousand while total nonfarm payroll declined 13.2 thousand (0.5% and 0.5% respectively, using log differences), at seasonally adjusted rates. Civilian employment decreased 7.9 thousand (0.3%). (At annualized rates, these would be 6%, 5.8% and 3.3%, respectively). It is interesting to observe that none of these figures are cited in the text of the Wisconsin Department of Workforce Development press release. Instead, it notes:
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) revised estimates for May and preliminary estimates for June, covering unemployment and employment statistics for the state of Wisconsin. In brief, the estimates showed:
- Place of work data: Upward revision to seasonally adjusted private-sector job number in May by 1,200; downward revision of government total by 1,400.
- Place of residence data: A preliminary seasonally adjusted unemployment rate of 7.0 percent in June, up 0.2 percent from 6.8 percent in May.
Here is a graph of the private payroll employment series for Wisconsin, as released by BLS.
Figure 1: BLS estimate of Wisconsin private nonfarm payroll employment from CES (blue), QCEW based estimate of WI NFP (see post) minus government employment (light blue), forecast from June Wisconsin Economic Outlook (red), and Walker path for additional 250 thousand jobs by 2016 (green). Source: BLS (June release), Wisconsin Economic Outlook (June 2012), author’s calculations.
The WI DWD press release provides QCEW-based data on employment. This is in line with the Administration’s argument that the BLS series will be revised upward significantly, with the new benchmark (more discussion here). I have posted my estimate of what the revised series will look like, based on data available through December 2011. However, since January 2012, BLS has estimated a negative gradient to the private employment series. I have plotted the forecast (in red) from the June 2012 Wisconsin Economic Outlook, published by the Department of Revenue. If the private employment series is revised upward in line with the QCEW series, then the forecast will not be too far off in June, assuming the January through June change represented by the BLS series applies.
Figure 1 also shows the implied path of employment (green) assuming constant numerical increase in employment to hit the January 2016 target of 250,000 additional employment recently reiterated by Governor Walker.
Update, 9/21 12:40pm Pacific: From EPI June 2012 "Jobwatch" email (h/t Tim Smeeding):
Wisconsin is still suffering in the wake of the Great Recession
When the recession began in December 2007, wisconsin had 2,881,800 jobs. Since then, wisconsin has experienced 33 months of job loss. wisconsin 's employment trough occurred in November, 2009 when wisconsin had 168,100 fewer jobs than it did before the recession started. Now in June, 2012, wisconsin has 158,900 fewer jobs.
Wisconsin's jobs deficit, or the difference between the number of jobs wisconsin has and the number it needs to regain its pre-recession employment rate, is 238,000. That number includes the 158,900 jobs wisconsin lost plus the 79,100 jobs it needs to keep up with the 2.7% growth in population that wisconsin has experienced in the 54 months since the recession began.
Wisconsin has not recovered from the Great Recession. As elected officials at both the state and federal level make policy choices to deal with budget shortfalls, they should avoid decisions that threaten to throw even this very tentative recovery into reverse. Putting workers back to work needs to be the primary goal for lawmakers.
Interactive website at EPI.
Posted by Menzie Chinn at July 20, 2012 12:15 PMdigg this | reddit
Someone, somewhere must care about Wisconsin employment trends? Or is the Prof just on a faculty lounge liberal rant?
Come on - you lost. Snivel a little about the unions and the workers and get over it. More fun things are going on. Spend a little time outside Madison.
Posted by: c thomson at July 20, 2012 02:00 PM
They may all be unemployed but by God, they didn't let some liberals get rid of a perfectly good crooked governor with a plan (still getting around to writing the suicide note for Wisconsin's economy). Long crooked voting machines.
Posted by: Binky Bear at July 20, 2012 03:32 PM
"Someone, somewhere must care about Wisconsin employment trends?"
Posted by: Rick Schaut at July 20, 2012 03:49 PM
c thomson: Sorry to irritate you with posts about Wisconsin. Your complaint spurs me to write yet more posts on the state's macroeconomic outlook. Complain again, and you'll get even more.
By the way, in the past two months, I've probably spent more time in more states than you have (and a couple weeks outside of the country as well).
In addition, the previous three posts were on China, US inflation, and London interbank offer rate. Isn't that sufficiently peripatetic enough for you?
Posted by: Menzie Chinn at July 20, 2012 03:50 PM
I glanced through the Economic Outlook. It's not that well done; it's written neatly but doesn't present enough material in a clear format without political commentary. I rely much more on the Fed's regional report for NE. I know you'd have to look at both the Chicago and Minneapolis regions to cover WI but it would be worth it.
What I see is an anemic recovery. Income is mostly up because rents are up, meaning housing is tightening - though construction employment is still pathetic. Job growth is small. The bad news really seems - if you can get through the political stuff in the report - that people laid off are back but that many jobs are just plain gone. Like 3/4 of all manufacturing jobs lost are really lost. You can see that if you compare service employment recovery, though I am extrapolating from past experience looking at other regions.
In terms of policy, as I remember - correct me if I'm wrong - but Wisconsin made its money as the public/private partnership state. That is gone. If the idea is that WI will compete as a low cost provider, that is a loser's game because personal income in low cost states is much lower. I can't see why business would come to WI without the old model.
Posted by: jonathan at July 20, 2012 07:15 PM
Seeing as how there is a lot of attention on how changes in government pay and jobs affect private employment, certainly Wisconsin would be a worthwhile study here in the US. To make a flat assumption that cutting government will somehow improve employment or increase GDP is something that gives plenty to rant about. Increasing GDP and employment, including public employment, could very well start to bring down public debt as well. It certainly did in the past, and it is not ranting to say that.
Posted by: David at July 20, 2012 09:07 PM
Would businesses and more jobs have come to Wisconsin without reforms? Like, if say, funding pensions for Wisconsin's 20 largest municipalities were to cost the equivalent of California's (i.e., $5.1 billion a year)? Would they have come if three (and counting) of Wisconsin's cities were to have declared bankruptcy, as was the case in California? Would they have come if correctional officers made $78k and change...on average, like California (that's stimulus)? Or for the dynamical increase in employment, i.e., about double that of...Ohio's (it's not a sunny state on the Pacific ocean with Google and the .01%ers)? Maybe, a high speed rail line "public/private" to nowhere would help. Unlike for the federal government (Obama, Bush, whatever) or California's park system, states and cities need to balance the budget, or else. Even Barrett the mayor used the reforms to balance Milwaukee's budget. Go Tom!
Posted by: Hairy at July 20, 2012 09:49 PM
It says right there on the masthead:
"Menzie Chinn is Professor of Public Affairs and Economics at the University of Wisconsin, Madison."
I would think that would be sufficient notice to anyone who doesn't care to read about the Wisconsin economy that they might have come to the wrong blog.
As for the 250,000 new job goal, that was obviously pretty ambitious. But I won't fault politicians though for ambitious goals. If Wisconsin manages to create even 150,000 jobs during Walker's term, I might consider that a success.
Unfortunately, at the moment I might bet against even 100,000, which is about what it seems you would get if the QECW trend in place from the start of 2010 continued uninterrupted.
Posted by: acerimusdux at July 21, 2012 01:15 PM
The most recent employment statistics from the BLS for the Midwest region are generally anemic. It doesn't seem to matter what party color you are wearing as the state boss, the national malaise is a giant anchor... and, of course, after 3-1/2 years, it is STILL BUSH'S FAULT!
Posted by: Bruce Hall at July 21, 2012 07:33 PM
Bruce Hall: If by what you mean all numbers (CPS) in the Midwest are anemic, yes, +0.1% over past three months, while Wisconsin fell 0.5%. Hmmm.
Posted by: Menzie Chinn at July 22, 2012 08:34 AM
Three months is definitely a signficant period and so is the difference between +0.1% and -0.5%.
Impeach the bastards! Dig Up Fighting Bob! Snivel Rules, OK!
Posted by: c thomson at July 22, 2012 10:05 AM
Wisconsin is a good example of what a disaster results from following the "Tea Party" idea of economics. Certainly cutting jobs, even government ones, does not create a growing economy.
Posted by: Samuel at July 23, 2012 05:28 AM
Yes, on average, the Midwest region is basically flat, while Wisconsin is down. Hmmm. State-by-state the picture shows odd variability... odd because it is hard to explain how Gov. Walker caused declines outside of Wisconsin.
Mean Annual Temperature in Madison, Wi. 46.1°F. Must seem awfully cool there in July.
Posted by: Bruce Hall at July 23, 2012 07:49 AM
Private payrolls declined 11.7 thousand while total nonfarm payroll declined 13.2 thousand (0.5% and 0.5% respectively, using log differences), at seasonally adjusted rates. Civilian employment decreased 7.9 thousand (0.3%). (At annualized rates, these would be 6%, 5.8% and 3.3%, respectively). It is interesting to observe that none of these figures are cited in the text of the Wisconsin Department of Workforce Development press release.
Thanks for keeping us up on what is happening in Wisconsin. I think there would be much less interest if you had not just gone through such a wrenching recall, but what happens in Wisconsin is an indication of which policies are working.
I am not really sure why you are concerned that these numbers are not mentioned in the text of the press release. Sources are given for anyone who would like to look them up.
But there is a much more important number that is mentioned. New businesses are up 8.8% ytd.
Gov. Walker's first year in office, when he was constrained by previous work rules, new businesses were only up 2.3%. Once Walker's policies were implemented there was a surge in new businesses.
It is easy to understand that employment follows new business creation and so if Wisconsin continues its more business friendly government employment will natrually follow.
Let's not get the cart before the horse. Right now we are seeing the government work force decline as the private work force picks up the slack. Let's see what employment does in the coming months as these new businesses expand and hire employees.
Posted by: Ricardo at July 23, 2012 12:13 PM
There is a certain hubris in looking for a certain number of "jobs". The government encouraged a job bubble and now we are returning to trend (in the 50s employment ratios). A lot of activities do not necessarily belong in the financial economy: childcare, eldercare.
This may be particularly true of the more fascist or authoritarian economy,large corporations and government. We should adjust to reality rather than looking for a specific employment percentage.
Posted by: Bogwood at July 24, 2012 07:40 AM
Let me rant a little here at the end of comments in blog limbo.
In addition to employment there are other resource dependent concepts coming to an end. One is retirement. Intergenerational transfer of assets is very close to time travel. It might be possible but takes extreme effort. The population as a whole cannot retire and needs to begin planning on that basis. Thomas Kinkade is gone. So everyone stays in the workforce forever just not in the corporate work force.
Arranging for the inevitable declining abilities with age will have to be done in the family or in the tribe,locally without state or fed. The work each does can contribute but will not show in GDP.
Supporting the water bottle economy just for the sake of jobs is a dead end. Plastic water bottles , like SUVs and tract mansions are still egregiously stupid even if they provide jobs. Only cheap energy and low interest rates allow the water bottle economy to exist. Phase it out. Walker's motives may not be pure but he is going in the right direction.
Posted by: bogwood at July 25, 2012 04:47 AM
Such things as childcare and eldercare should be in the financial economy. The problem is that resources must be market driven so they are optimally allocated. The problem with central planning is that it allocates resources based no the agenda of the elite while claiming to represent good of society. The good of society must be determined by society not some bureaucrat and that means the market.
If we are serious about providing such things as childcare and eldercare we have to have a thriving economy. Central planning actually reduces the resources and production that makes childcare and eldercare possible.
Only a free market capitalist system can create the prosperity sufficient to support the best social programs. Anyone who is serious about the best for the poor must embrace free market economics and the mass production of products to make them available to the mass of the population rather than just the political rent seakers.
Posted by: Ricardo at July 25, 2012 06:08 AM
This surprises anyone how? This is the same economics that have failed time and again! The facts and data have shown it forever. You can't hide, it is failing for a reason. The GOP plan. Keep trying failed policies because a few get rich. At some point it has to work for all, right? While the country continues to recover in many states (including Illinois!) Wisconsin holds it back by being one of the worst.
Posted by: Fred at July 27, 2012 02:17 PM