Lemons, Lemonade, and the State’s New Job Numbers

Friday, December 16, 2011 at 1:56 AM by

Employment is down, but DWD argues the preliminary data has consistently short-changed Wisconsin

I suspect that part of the job description for the Department of Workforce Development (DWD) Secretary and his staff is to make lemonade when the latest batch of jobs and unemployment statistics deals the state the data equivalent of lemons. I don’t think that’s unique to the current Administration; I have little doubt that it has long been the case – in Wisconsin and elsewhere. With practice, labor agencies get very good at it.

The latest example comes from the DWD press release about today’s Wisconsin employment numbers. That release is a stark contrast to the Journal Sentinel article today, which states in the headline that Wisconsin lost an estimated 11,700 private-sector jobs in November. The article by John Schmid goes on to note that the October to November drop was “the deepest since April 2009 when the nation was in the throes of the recession.” 

Comparing the headline and first few paragraphs of that article with the DWD press release might lead one to surmise that they are reporting on entirely different sets of data; and that is somewhat true. Actually, they are both using the same information from the Bureau of Labor Statistics, but it comes from two different and somewhat inconsistent data sets, and DWD and some members of the press corps have made different judgments about which of those data sets to emphasize.

The Journal Sentinel article emphasizes the job numbers, which show that total employment in Wisconsin declined by 14,600 people in November (based on the preliminary, seasonally adjusted BLS data), and it has grown by only 4,500 jobs since November 2010 (or by 16,600 people if one looks only at private sector jobs).

Despite the bad news on the jobs front, making lemonade was relatively easy for DWD this month because the new BLS data provided DWD with ingredients to offset the bitter taste. First, the BLS findings indicate that the seasonally-adjusted unemployment rate dropped in Wisconsin last month to 7.3%, compared to 7.6% a year ago and 7.7% in October of this year. The unemployment rate is calculated from a different BLS data set – a small survey of people living in Wisconsin (though not necessarily working in WI), whereas the preliminary job numbers come from a small BLS survey of Wisconsin’s non-farm employers. Sometimes those two surveys (especially the preliminary findings) yield data that trends in opposite directions, as is the case this month.

According to the household survey, employment actually grew by 8,500 people last month, and only a small part of the state’s improved unemployment rate can be attributed to a modest decline in the Wisconsin workforce last month. Thus, it’s appropriate for DWD to draw attention to the reduced unemployment rate – though it’s also worth noting that Wisconsin’s rate has declined by 0.3 percentage points since last November, while the national rate dropped 1.2 percentage points.

DWD also used much of its press release to argue that the preliminary numbers from the employer survey have pretty consistently shortchanged Wisconsin jobs, until the preliminary figures are revised the following month. The department provided a table showing that the Wisconsin jobs numbers were revised upward for 9 of the last 11 months (relative to the preliminary figure). Their release makes much of the fact that the initial estimate of a loss 9,700 jobs in October was subsequently revised to a much smaller loss of 2,400 jobs that month.

DWD makes an interesting point, and I’m willing to agree that the preliminary job numbers are suspect. Let’s hope that holds true for November, and let’s assume for the sake of argument that the estimated loss of 14,600 private and public sector jobs last month is later cut in half, to 7,300. That would still leave Wisconsin with a net increase of just 11,800 jobs since November 2010 – a far cry from the pace the state needs to be on to create the 250,000 private sector jobs the Governor has frequently promised.

In short, today’s employment numbers are mixed, and it’s a mistake to try to read very much into a single month’s data (preliminary or otherwise).  However, if we take a longer view and account for the recent revisions that DWD emphasizes, the trends are still discouraging.  Although there’s plenty of room for competing spin regarding the November numbers, there’s no getting around the fact that Wisconsin has lost jobs for five straight months, and the net gain for the past 12 months is anemic, at best.

Jon Peacock

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