Strong Rebound in WI Wages in First Quarter (after a Long Drop-off)

Friday, July 6, 2012 at 10:53 PM by

DWD Reports 6.7 Percent Wage Growth, Compared to First Quarter of 2011

There was a bit of good economic news in our state Friday.  The Department of Workforce Development (DWD) issued a press release noting that, “Wisconsin wage earners received record 1st quarter wages of $27.6 billion, up 6.7 percent or $1.75 billion from the first quarter in 2011.”  The new figures come from the state’s very comprehensive Unemployment Insurance system database. 

I think the recent Wisconsin wage growth is cause for a little celebration, but before you pop the cork on the good champagne I’d urge you to consider a couple of factors. First, keep in mind that Wisconsin’s job and wage numbers have been so depressed for the past few years that a bit of progress in regaining lost ground (compared to the U.S. average) is a big jump from where we’ve been.  That seems to help explain the new wage numbers. 

In a report issued a week ago, the Center on Wisconsin Strategy (COWS) analyzed the wage and job numbers for all states in 2011, and they found that average weekly wages in our state fell 2.4 percent from the fourth quarter of 2010 to the fourth quarter of 2011. As the bar graph in the COWS analysis illustrates, only 8 other states had larger declines in wages over that time period. That said, it’s good news that the new first quarter numbers are finally above the first quarter of 2008 (by 4.0%), although by my quick calculations the “record” wage total for the first 3 months of the year trails the 2008 level by 2.5% when one adjusts for inflation.

Another factor to contemplate is that the amazingly warm weather in 2012 (which many of us are cursing now) was a blessing early in the year and kick-started economic activity in many parts of the country.  However, we won’t get comparable wage data from other states for a few months, so it’s hard to tell now whether the strong Wisconsin numbers in the early part of 2012 are part of a widespread pattern. If so, that could support the theory that the unseasonably warm winter weather had a role in making this year’s first quarter look very good compared to a year ago.

As we get more data from other states, I hope we find that the factors I noted had only a minor role in making the first quarter numbers look good – or, better yet, no role at all.  I hope that more comprehensive data will show that Wisconsin is catching up to other states in the Midwest and across the nation whose economies have been rebounding more quickly.  In the meantime, I’ll keep the champagne on ice and will toast the new DWD report with a Leinies.

Jon Peacock

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