Thursday, July 28, 2011

Wisconsin Jobs and Governor Walker

Governor Walker needs new jobs more than most governors given the controversies over deficit reduction and public employees. The governor’s plan to create private sector jobs sounds like lots to expect from deficit reduction and business tax cuts, but the Bureau of Labor Statistics publishes enough about jobs to assess his chances for success.

Wisconsin reached a monthly average high of 2,884,400 establishment jobs in 2007, but it had 2,833,800 jobs in 2000. In 2010 the monthly average of statewide employment was down to 2,725,900, an average that is off by 107,900 jobs since 2000. The decline in jobs came as a net decrease of 128,500 private sector jobs and a 20,700 net increase in public sector jobs.

Like most states Wisconsin has a decline in manufacturing jobs. In 1990 it held fifth place for states with 22.8 percent of statewide jobs in manufacturing. It reached first place in 2009 even though manufacturing jobs dropped to 15.7 percent of Wisconsin establishment jobs. Now manufacturing jobs are down 165,300 from the high of 594,700 in the 1990’s.

Wisconsin has the best record of states in limiting manufacturing job losses, yet it still needs 165,300 new jobs to replace jobs lost in manufacturing. That will be difficult because some Wisconsin services have a decade long record of decline. Wholesale and retail trade, utilities, information services that include publishing, broadcasting, phone and Internet, real estate services, and repair-maintenance services show a modest but steady decline in jobs and declining percentage of Wisconsin jobs from 2000 to 2010.

Higher labor productivity limits manufacturing jobs but labor saving computer technologies have limited jobs in service industries like wholesale and retail trade. The use of computers for barcodes, inventory management and Internet sales raise sales per work hour and limits jobs. Digital technologies allow Craigslist to supply free classifieds with a few dozen out of state jobs, while netflix knocks out jobs at video stores. Higher quality for automobiles, appliances and machinery limits the need for repairs and the need for repair jobs.

Wisconsin job losses occurred in 11 industry sectors defined and reported by the Bureau of Labor Statistics. Combined these sectors dropped 8 percent of Wisconsin jobs from 2000 to 2010: 55 to 47 percent. While some jobs in construction or transportation should recover in a stronger economy, jobs already decimated from computer technologies and higher labor productivity and with a decade or more of decline will not recover their previous share of Wisconsin jobs.

Percents must total one hundred which guarantees an 8 percent loss equals an 8 percent gain for other industries. Expect new jobs to come from the limited number of services that had higher growth over the last decade. Health care picked up 73 thousand jobs, which were more new jobs than all other private sectors combined. Health care, government jobs including education combined with private education jobs many at colleges were the big gainers since 2000. These three accounted for over 70 percent of the 8 percentage gains over the last decade. The remainder of replacement jobs came from selected professional and financial services, accommodations, restaurants, personal services like salons and laundries and non-profit membership associations.

The governor’s plan eliminates government as a source of new jobs, but health care also needs government support, which the governor apparently opposes. Tax incentives to generate investment capital are risky for creating state jobs because the funds might leave Wisconsin for investment elsewhere.

People in Wisconsin should ask themselves, “Where will I work in the economy the governor wants to have?” I confess it might be in another state.


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