September 20, 2013
Some Selected State and National Employment Indicators
The BLS released today estimates for August state employment. In Figure 1 below, I show US, Wisconsin, Minnesota and California private nonfarm payroll employment figures, normalized to January 2011, when the governors of the three states took office.
Figure 1: Log private nonfarm payroll employment, seasonally adjusted, normalized to 2011M01, for Wisconsin (blue), Minnesota (red), California (green) and the US (black). Vertical gray dashed line at 2011M01, when Governors Walker, Dayton and Brown took office. Source: BLS, and author’s calculations.
The August 2013 Wisconsin private employment level is 80,300 below the trendline consistent with achieving Governor Walker’s objective of an increase of 250,000 by January 2015, as shown in Figure 2.
Figure 2: Wisconsin private nonfarm payroll employment, seasonally adjusted (blue), and the linear trendline to achieve Governor Walker’s goal of increasing private employment by 250,000 (dark gray). Vertical gray dashed line at 2011M01, when Governor Walker took office. Source: BLS, and author’s calculations.
Posted by Menzie Chinn at September 20, 2013 11:30 AMdigg this | reddit
Slowly but surely the Wisconsin government union obstructionists are losing. U.S. District Judge William Conley threw out the union lawsuit to declare Act 10 unconstitutional stating:
"Under Act 10, general employees remain free to associate and represent employees and their unions remain free to speak; municipal employers are simply not allowed to listen."
In another loss Dane County Circuit Judge Juan Colás refused to issue an injunction based on his ruling last year that the law was unconstitutional. The next stop for this ruling will be the Wisconsin Supreme Court.
Hopefully soon the changes that will bring rapid Wisconsin recovery will be fully implemented without the obstructionists. The changes have already had a positive impact on the economic health of the state but this will become much more rapid when the laws can be fully enforced.
Posted by: Ricardo at September 20, 2013 01:11 PM
What happens if you go further back in the data? Do the states have different long-term trajectories?
Posted by: Joe at September 20, 2013 01:54 PM
Did you notice that Ricardo's comment sounds EXACTLY like those which came out of the USSR when every 5 Year Plan failed? It's freaky. Substitute "wreckers" for "obstructionists" and the guy could be spouting Pravda of the 1930's.
Posted by: jonathan at September 20, 2013 04:45 PM
Hey, Menzie, this looks like blatant politics to me. For example, if Wisconsin had much smaller employment losses during the recent Great Recession, one would expect them to have slower employment growth after, and perhaps still for the period post-2011. As for your second chart, a political promise was broken, quelle surprise! Finally, are you saying a governor can have any substantial effect on a state's economy? Leaves me with the impression that the good governor cut your pay and gave you an attitude.
Note I'm taking advantage of your tolerant censorship on this site, which I respect and greatly admire.
Posted by: don at September 20, 2013 05:37 PM
Joe: See this post for longer spans of economic activity indices, which are largely based on employment series.
don: The Governor has reiterated his promise as recently as a month ago. 
I do believe a governor and a legislature can affect macro outcomes. The impact of the plans implemented in the past years on government employment has been substantial. See this post.
Posted by: Menzie Chinn at September 20, 2013 07:04 PM
Yes for people who create their reality from data something like what Ricardo writes just floors you. Parallel universe doesn’t even begin to cover it. But for a substantially part of the population, the narrative trumphs data. If the data does not fit their narrative then the data is somehow wrong. They never question their narratives but always either question or completely ignore the data.
Posted by: Dedude at September 21, 2013 04:05 AM
Menzie I do believe a governor and a legislature can affect macro outcomes.
But I've always wondered if there isn't an underlying asymmetry here. During normal times at full employment a governor and legislature clearly have a strong and perhaps even dominant effect on a state's structural unemployment level. But during a recession it seems that a governor has a lot of ways to make things worse, but not a lot of tools to make things better. In other words, if during a cyclical downturn a governor does everything right, the best outcome will still be driven by the larger national or regional macro situation. But that doesn't preclude the possibility that a governor can do all of the wrong things and make things worse. Gov. Walker seems to be one of those guys who took a bad situation and managed to make it worse than it otherwise had to be.
Posted by: 2slugbaits at September 21, 2013 05:27 AM
This was all predictable. You can't take money away from people who spend it in the local economy and give it to folks who hide it in Switzerland and expect the local economy to grow.
Walker doesn't know a thing about economics but he does know politics and he depends upon small minded people like Ricardo and Don to blame public employees or unions. Walker's divide and conquer strategy is working. The book "Pedagogy of the Oppressed" states that the way the oppressor keeps the masses down is by encouraging them to fight among themselves (divide and conquer). Shame on you Ricardo and Don, you are being manipulated. Thank you Menzie, you are being honest.
Posted by: Keith at September 21, 2013 09:45 PM
Keith, I enjoyed reading your slanted taking points..
SEIU comes to mind...
Furthermore, what business is it of yours or anyone else what people do with their money?
Am I accountable to you? Do I need your permission to move my capital or do you want to tax it a second time for your socialist spending programs..
More and more productive Americans are renouncing their citizenship because of the ENDLESS abuse of governmental units - your dear friends...
BTW, Keith, how many bankruptcies have been caused by the government labor gangs or is it not being report by the Maoist MSM?
The people of Wisconsin voted to re-elect Gov. Walker despite your continued objections and distortions of the facts...
Posted by: Hans at September 22, 2013 09:12 AM
I'm curious how Utah would fare in this comparison. We seem to have a growing economy with a GOP and ALEC -dominated legislature.
There are other factors at work. Goldman and others have discovered an educated workforce with low expectations and thanks to Senator Hatch we continue to be tax takers.
Posted by: Utemike at September 22, 2013 04:09 PM
Menzie, as an independent reader of economics blogs, yours included, you come across as an ideolog and someone with a vendetta against Scott Walker. Just FYI
Posted by: Various at September 24, 2013 11:56 AM