Walker creates jobs data, but not jobs

Wisconsin dead last in jobs

Wisconsin is the only state that had "statistically significant" job losses over the most recent 12-month period, according to the U.S. Bureau of Labor Statistics.

From March 2011 to March 2012, Wisconsin lost 23,900 jobs. That was the largest decrease in percentage terms in the country. Those job losses came from both the public and private sector, but the public sector job losses (17,800) were larger than the private-sector job losses (6,100).

Wisconsin Governor Scott Walker promised to create 250,000 private sector jobs when he campaigned for office. Once elected, he slashed corporate and investor taxes. The result-Wisconsin has lost jobs in seven of the last nine months, 4,300 in March, and is facing a deficit next year.

No evidence for Walker's claim that government regualtions impede job creation

The Walker administration's job creation strategy is based on two erroneous ideas. The first is that tax rates drive investment and business location decisions. There are no credible studies that support this position. Surveys of business executives indicate that tax rates are far less  important than demand for a firms' product or services, access to markets, including skilled labor, and the proximity to supplier chains. Tax breaks are not effective because they have little impact on the fundamental determinants of a firm's  demand and costs. I have written about this elsewhere so won't belabor the point. President George W. Bush's first Secretary of Commerce and former Alcoa CEO, Paul O'Neil, summed it up nicely when he told Congress:"As a businessman, I never made an investment decision based on the Tax Code. .. (I)f you are giving money away I will take it. If you want to give me  inducements for something I am going to do anyway, I will take it. But good business people do not do things because of inducements, they do it because they can see that they are going to be able to earn the cost of capital out of their own intelligence and organization of resources." Walker's second article of faith is that onerous government regulations impede economic growth. The Bureau of Labor Statistics (BLS) has examined this claim and its findings reject it. The BLS studied layoffs, job losses, and UI claims that employers report  are due to government regulations or interventions. They are miniscule— in only one case in the table below did they ever account for more than half of one percent. And in the most recent quarter, they were all about zero (technically, the number reported was too small to meet BLS sampling criteria). Source: BLS, Table 2 The problems facing Wisconsin and the nation are not due to high business or personal tax rates (effective rates in the U.S. are lower than those in virtually all advanced countries and Wisconsin's business taxes rank in the bottom half of all states) or "job killing regulations." The problem we face is inadequate demand, a byproduct of the nation's growing inequality.

Gov. Walker's victory dance misses the beat

Last week Governor Walker claimed that Wisconsin was responsible for half the nation’s monthly job growth.

Republican Party politicians and operatives have run with Walker’s numbers, arguing they prove that his program of corporate and investor tax cuts and reduced regulation is working.

Let’s put Walker’s jobs victory dance iin perspective.

Several states; Texas (+32,000), California (+28,800), Michigan (+18,000), Minnesota (+13,200) and Massachusetts (10,400) had more job growth than Wisconsin. 

Using the Bureau of Labor Statistics data Walker touted, Texas was responsible for almost 200% of net job growth in June, California 150%, Michigan 100%, Minnesota 65% and Massachusetts slightly more than 50% .Nor was Wisconsin’s monthly percentage increase among the nation’s largest. Alaska experienced the largest over-the-month percentage increase in employment (+1.7 percent), followed by North Dakota (+1.2 percent), Vermont (+0.9 percent), and South Dakota (+0.8 percent).

In fact, Wisconsin was one of only 9 states that reported statistically significant over-the-month unemployment rate increases in June.

South Carolina experienced the largest increase (+0.5 percentage point), followed by Alabama, Arkansas, and Illinois (+0.3 point each) and Maryland, Montana, North Carolina, Texas, and Wisconsin (+0.2 point each). The unemployment rate did not increase in 41 states.

 Wisconsin lost nearly 171,000 jobs during the Great recession. It has gained back 50,000 over the last year and a half, about 30%.

These numbers illustrate what a useless, misleading and politically motivated statistic Governor Walker and DWD used in claiming half the nation’s job growth.

It is useless, misleading and politically motivated because it creates a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program.

More importantly, there is ZERO evidence that Wisconsin’s June job growth has anything to do with anything that Governor Walker or the current legislature has done. Economists recognize that there are lags between the adoption of economic policy, its implementation and the policy’s impact. Given the reality of policy lags, there has simply not been enough time for Walker’s initiatives to have had the impact that the Walker administration claims.

The creation of 9,500 jobs is a positive development. But it hardly justifies the Governor’s jobs victory dance.