By James Wigderson
Special Guest Perspective for the MacIver Institute
Die by the monthly job numbers, live by the monthly job numbers. Last week new monthly job numbers were out for January and the results looked better than they have for months for Wisconsin workers. According to the latest numbers, Wisconsin employed in the private sector an estimated 15,700 people more than it had the previous month. Unemployment has dropped to 6.9 percent, the lowest since December 2008.
The numbers come at a good time, too, for Governor Scott Walker as he faces a probable recall election. As Walker’s Act 10 budget and public employee benefit reforms appear to be working, jobs will likely be a key issue for Democrats heading into the recall elections.
Walker ran for governor with the pledge to help the private sector create 250,000 new jobs by the end of his first term. In the last six months, that promise looked like a bridge too far as report after report showed job losses even as unemployment in Wisconsin declined.
Recent revisions to the numbers show that Wisconsin did not lose as many jobs as was feared in the latter six months. The revised numbers also show that job growth for the entire year was stagnant, resulting in only 900 net new private sector jobs. The revised numbers also lend some perspective to the current good news that the numbers are still preliminary, subject to later revision.
The good news from the 2010 numbers is that it’s still a positive change in direction for Wisconsin from the previous three years of job losses. In 2009 alone, Wisconsin lost 90,000 jobs.
And next time you hear the talking point that Wisconsin lost jobs in each of the months after the enactment of the State Budget, know this: That’s not true. The revised figures provided by the Feds indicate job gains in many of those months.
The .1 percent drop in the unemployment rate since December is significant as it continues a long-term positive trend. Since January 2011, unemployment is lower by 1 full percentage point from 8.5% to 7.5%, putting Wisconsin ahead of Illinois, Michigan, Indiana and Ohio.
Part (but certainly not all) of the lower unemployment rate is the number of people who have left the workforce in Wisconsin. The 15,000 people that have given up looking for work in Wisconsin in the last year do not count against unemployment. Just as the national unemployment rate was unchanged by an estimated addition of 227,000 jobs in February, as more people re-enter the workforce they will again count against the unemployment number. While there may be a long-term downward trend, there may be short periods where the unemployment rate appears to be holding steady.
Adding to the positive economic trend in Wisconsin is the sense among the state’s employers that Wisconsin is moving on the right track. According to a Wisconsin Manufacturers and Commerce (WMC) survey released at the beginning of the year, 44 percent of the employers in the survey reported that they planned on adding jobs in the next six months. Just seven percent plan to cut payroll. An overwhelming 94 percent said Wisconsin is moving in the right direction.
The survey also took place before the recent defeat of efforts to reform the state’s mining approval process. This failure caused plans for a proposed iron mine near Hurley to be withdrawn by the company seeking the mining law changes. Thousands of potential new jobs will not be created as a result.
Wisconsin now has a relatively balanced state budget that does not rely upon federal fiscal “stimulus” funds for ongoing operating costs. Under the previous governor, the state relied upon $3.4 billion in federal funds to stabilize the state budget, meaning that Wisconsin had to replace that money from somewhere or else risk large numbers of layoffs of state employees. Now that the budget is stabilized, that threat has been greatly reduced.
But it’s the private sector where employment growth truly matters. As the WMC survey points out, when asked what is the one thing Wisconsin could do to improve the business climate, 25 percent of those surveyed said lower taxes. Wisconsin could do a lot to improve it’s ranking in that regard to encourage long-term growth in jobs and prosperity.