WisBusiness.com: Explaining Wisconsin's lagging jobless rate
MADISON -- After two decades of beating the national unemployment rate, the Badger State recently has run a different streak -- a year of having a worse seasonally adjusted jobless rate.
Wisconsin’s adjusted unemployment rate has been higher than the national figure since August of 2006, according to the federal Bureau of Labor Statistics (BLS). September was no different, with the Badger State – at 4.6 percent – topping the national rate of 4.5 percent.
Wisconsin’s labor force is around 3 million, so in human terms that means roughly 109,000 people were unsuccessful in finding work last month.
Prior to that, Wisconsin had – for 20 years - a lower jobless jobless rate than the national average, according to a review of BLS records. In fact, in April of 1999, the Badger state unemployment figure was only 2.9 percent, much better than the national figure of 4.3 percent.
What has changed?
“Relative to other parts of the United States, we have a lot more jobs in agriculture and manufacturing,” said Dennis Winters, director of the Office of Economic Advisors at the state Department of Workforce Development.
And those jobs have been declining.
Technological advances mean manufacturers and farmers can do more with less, he said. And it is no secret that many low-skilled factory jobs have been outsourced to countries in Latin America and Asia.
The state has lost 4,900 manufacturing positions in the past year and is well below the peak in 1999 of 605,000 jobs. Then recession hit and the state lost more than 70,000 positions in manufacturing from 2001 to 2003. It has now leveled off around at around 500,000, he said.
Still, notes Winters, Wisconsin is better off than neighboring states such as Michigan, which continues to hemorrhage jobs because of declines in the auto industry. But other states, particularly in the West, have had faster growing economies.
Idaho, Utah and Montana all have jobless rates of less than 3 percent, while Florida, Tennessee and Arizona weigh in at less than 4 percent.
Jim Pugh, a spokesman for Wisconsin Manufacturers & Commerce, said the state’s business community is concerned about unemployment.
“We want to have policies in this state that will encourage companies to locate, grow and expand here,” he said. “To do that, we need regulatory reform, civil justice reform and lower taxes on both businesses and individuals.”
Those changes, he said, would make Wisconsin a more attractive place for commerce.
“It’s basic free-market economics,” he said.
“Let me also say that we love Wisconsin,” he added. “By saying that we can do better doesn’t mean we dislike this state.
“We are suggesting ways to improve Wisconsin because sometimes you need ‘tough love.’ After all, we have the eighth highest tax burden in the nation and Milwaukee ranks only behind Detroit for unemployment."
Wisconsin’s state’s unemployment rate is based on household surveys and measure the inability of active job seekers to find work. While it appears to be worsening, the state continues to add jobs. So far this year, Wisconsin has gain more than 26,000 positions, said Winters, who calls the state’s economy “relatively strong.”
Some of those new jobs are coming at manufacturing companies that export technical and expensive equipment to expanding economies around the globe.
Manitowoc Crane, for example, recently announced it's adding 70 jobs and building a 57,000 square-foot addition to its crane manufacturing plant. The company has 1,000 employees in Wisconsin, and the project is part of a $25.7 million expansion of the company’s Badger State facilities.
“Our manufacturing jobs are actually fairly stable at the moment,” said Winters.
“So while we have lost manufacturing jobs since the peak – over the past few years it has pretty much stabilized under the half a million mark,” he said.
The country as a whole is going through slower growth, said Winters. But he didn't forecast a recession, as some economists have warned
Winters predicted the national economy will grow faster than Wisconsin’s in part because of this state’s “exposure” to the automotive and house building industries.
“We have a couple of strikes against us,” he said, with timber and wood products industries also suffering because of the slowdown in the housing market.
Winters said Wisconsin will continue to gain jobs in the services sectors, particularly health care.
“Part of it is baby boomers, who are getting older every hour,” he said. “It’s just the way the body works.”