What’s Up with Wisconsin Employment?

Civilian employment in Wisconsin is less than it was when Governor Walker took office in January 2011. In contrast, US employment is almost 3% higher.

Figure 1: Log civilian employment in Wisconsin (blue), and in US (red), seasonally adjusted, 2011M01=0. Source: BLS (October release).I do not usually focus on the household series, but since there has been some debate over the accuracy of the BLS state level establishment series [1] [2], I have decided to rely upon the household series to document Wisconsin’s poor relative performance. For purposes of comparison, the establishment series is depicted below.

Figure 2: Nonfarm payroll employment in Wisconsin according to BLS (blue), implied by relationship with Quarterly Census of Employment and Wages (QCEW) (see this post) (red), and path of nonfarm payroll employment promised by Governor Walker (private employment plus actual government employment) (green). Source: BLS (October release), DWD, and author’s calculations.Note that even taking the QCEW numbers, nonfarm payroll employment is only 1.1% above 2011M01 levels, instead of 0.8% below (log terms). If the BLS trend through 2012M10 is correct, then even taking the QCEW numbers means that October employment is less than 1% above 2011M01 levels. In contrast, US nonfarm payroll employment is 2.5% higher.

In one sense, the divergence in trends is not surprising. Cutting government spending when the exchange rate is fixed usually leads to contraction relative to trend. [3] See also [4]

This piece is cross-posted from Econbrowser with permission.