Wigderson: State’s Economy Improves

By James Wigderson
Special Guest Perspective for the MacIver Institute

As we are entering the season of recalls of four state senators, Governor Scott Walker and Lt. Governor Rebecca Kleefisch, the tendency to live and die by the monthly employment numbers will only intensify. In large part because the governor’s spending reforms have moved the state beyond the structural deficits of the Doyle years, Walker will now be largely judged on the state’s economic performance, especially jobs.

There was more positive news for Wisconsin’s workforce with the latest job numbers from the Bureau of Labor statistics. Wisconsin added another 4000 private sector jobs in February according to preliminary seasonally adjusted numbers. That marks the second straight month of growth of private sector jobs, possibly starting an upward positive trend.

Wisconsin has added 17,800 private sector jobs this year when comparing the preliminary February numbers to the final December 2011 numbers.

The unemployment rate remained unchanged from January to February at 6.9 percent, well below the national average of 8.3 percent. In contrast, the Illinois unemployment rate was 9.4 percent in February.

As was explained last month, as the state’s economy improves and more workers re-enter the workforce, the unemployment rate may not change or even show a slight increase at times. That is because workers that have effectively dropped out of the workforce no longer count in unemployment figures.

In the case of Wisconsin, the unchanged unemployment rate from January to February is a sign of a positive economic turn as 4900 workers entered the civilian labor force. That’s a change from the previous month when, using the final numbers for December and January, Wisconsin showed a loss of 180 workers from the civilian workforce, or basically no change from December to January. The civilian labor force is still down 11,500 workers from February 2011.

One number that should be watched for a future trend is the number of state employees who grew by 4,300 from January to February. Federal and local government were largely unchanged.

Another area of concern for future trends is the category of leisure & hospitality. Last month this sector lost 800 jobs according to the preliminary numbers and is 6000 jobs down from last year. As gasoline and energy costs continue to climb as a result of national energy policies, this sector of Wisconsin’s economy could be vulnerable as discretionary income declines even as employment goes up. Such a trend could have an impact on youth unemployment, entry-level job skills and unskilled labor participation.

The Department of Workforce Development also announced that unemployment claims are significantly down from last year. Comparing the first 11 weeks of last year to the first 11 weeks of this year and found they dropped by 12 percent. It’s a drop of 29 percent from the same period in 2010, the last year of Governor Jim Doyle’s administration.

There was more good news for the long-term trend in employment for Wisconsin with the news that the Philadelphia Federal Reserve Bank released a new economic growth forecast for Wisconsin. The state is expected to grow 1.95 percent over the next six months.  According to the Walker administration, it is the best economic forecast for the Wisconsin since 2003.

Unfortunately, the legislative session ended in Madison without taking on the high corporate tax burden in Wisconsin. Ensuring long-term growth in Wisconsin by reducing the overall tax burden will do more to continue the positive trend in employment in Wisconsin than any short-term stimulus or government incentives.

According to the Tax Foundation, Wisconsin’s Business Tax Index ranking was a dismal 43, well behind Illinois. Despite dramatically raising taxes, causing it to drop twelve places, Illinois was still ranked at 28. Wisconsin is behind every one of its neighbors except for Minnesota. Wisconsin’s fiscal house may be in better shape, but the government is still taking more than its share and that will affect future growth.

And if Wisconsin needed another reminder of how far we still have to go in fixing the business climate, included in the most recent numbers was the change in employment for mining. There was no change over last year and a loss of 100 jobs in the last month. Yet despite a mining company ready to invest in a new iron mine, adding thousands of jobs to the economy, the legislature could not overcome the opposition of Democrats, environmentalists and one GOP senator to pass a mining reform bill.

Wigderson is an award-winning columnist from Waukesha.