Wisconsin’s Department of Revenue has seen Wisconsin’s economic future, and it’s so bright we gotta wear shades.
Hardly.
The Department recently issued the quarterly Wisconsin Economic Outlook report. Overall, Wisconsin is projected to see 1.7% growth in employment in 2011 and 2.5% in 2012, but after another 0.7% decline in 2010. The DOR expects the state to reach overall pre-recession employment levels no sooner than 2013.
Yet, the Wisconsin Department of Revenue’s report trumpets the notion that the recovery of Wisconsin’s economy has begun, and manufacturing jobs are “leading the way.” Wisconsin has added 10,900 manufacturing jobs of the 25,400 jobs added since last December. By the end of 2010, Wisconsin will have 431.6 thousand people employed in manufacturing. The report predicts that number will climb to 451.7 thousand in 2011 after four years of decline.
The Wisconsin Economic Outlook report reminds readers why the manufacturing sector is so important to Wisconsin’s economy. Manufacturing accounts for 15.5% of Wisconsin’s employment compared to 8.9% nationally. Manufacturing is the second largest private employment sector in the Wisconsin economy behind Trade, Transportation and Utilities, but nationally manufacturing is sixth.
Because of its relative importance to Wisconsin’s economy, it’s understandable that the Department of Revenue would want to highlight manufacturing’s projected rebound. We are not quite there yet. While Wisconsin may have added 10,900 manufacturing jobs this year, Wisconsin is still projected to finish 2010 with a -0.9% loss year-over-year. Sadly, the Department’s projections do not show manufacturing reaching the recent employment peak of 2006 of 505.7 thousand, even by the end of 2013.
The legacy of Governor Jim Doyle is cemented with this fact: Government is the second largest employment segment of the Wisconsin economy, ahead of manufacturing. Government as a growth industry. Sigh.
While other sectors of the economy were struggling in 2010, government continued its increase in employment. In 2009, the government sector of employment grew 0.7%. While the report predicts a 0.3% decline in 2010 due to “The weak fiscal position of state and local governments,” that has not produced a decline in employment so far. When faced with “possible teacher layoffs,” the federal government “bailed out” the states with $10 billion more in education funding.
So, even as other job areas of Wisconsin’s economy are shrinking, the Department of Workforce Development’s report from July shows government has added 5,900 jobs over last year.
While government has held steady in this economy, Manufacturing and Trade, Transportation and Utilities combined accounted for more than 65% of the job loss between the first quarter of 2008 and the fourth quarter of 2009.
Even as manufacturing is projected to rebound, the sector of Trade, Transportation and Utilities is still projected to be the largest employer in the private sector. However, it will have shrunk to the employment levels of 1995 after another 2.6% decline in 2010.
A fifteen year decline in the largest employment sector.
The report predicts the recovery in this sector will start midway through 2011. Growth in employment will be 0.5% in 2011, 2.4% in 2012, and 2.2% in 2013. The sector will not reach its pre-recession employment levels during this period.
Other sectors of the economy are expected to finish 2010 even lower. The Leisure and Hospitality sector is expected to decline 0.2% in employment in 2010 and only grow 0.6% in 2011. Financial Activities will fall 2.1% in 2010 and fall further by 0.9% in 2011. Construction employment will continue to decline by another 5.0% in 2010 and 1.4% in 2011.
There are only two non-government sectors of the economy projected to show employment growth in 2010. Education and Health Services will have a 1.4% increase in 2010. The report predicts “an average strong growth of 2.1 between 2011 and 2013.” Professional and Business Services will ride a wave of temporary employment and see growth of 1.2% in 2010 and 6.9% in 2011.
Of course, while other sectors of the economy were struggling in 2010, government continued its growth in employment. In 2009, the government sector of employment grew 0.7%. While the report predicts a 0.3% decline in 2010 due to “The weak fiscal position of state and local governments,” that has not produced a decline in employment so far. When faced with “possible teacher layoffs,” the federal government “bailed out” the states with $10 billion more in education funding.
Government is the second largest employment segment of the Wisconsin economy, ahead of manufacturing. Even as other job areas of Wisconsin’s economy are shrinking, the Department of Workforce Development’s report from July shows government has added 5900 jobs over last year.
While government has held steady in this economy, Manufacturing and Trade, Transportation and Utilities combined accounted for more than 65% of the job loss between the first quarter of 2008 and the fourth quarter of 2009.
If we are to get Wisconsin working again and see growth numbers better than those projected, Wisconsin will need to adopt a pro-growth agenda. That means resisting calls for renewable energy mandates, repealing Wisconsin’s new combined reporting tax, and streamlining state regulations on business.
Perhaps then manufacturing can again pass the government as the state’s second largest employer…
By James Wigderson
Special Guest Perspective for the MacIver Institute