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WI economy showing signs of strong turnaround

By   /   October 1, 2013  /   No Comments

By M.D. Kittle | Wisconsin Reporter

MADISON — It’s a simple adage, but it’s true: The best way to know where you’re going is to figure out where you’ve been.

That certainly applies to Wisconsin’s economy, particularly after the barrage of politicking on the subject of late.

And as Gov. Scott Walker passes 1,000 days in office, now is as good a time as any as to take a look back.

Last week, Assembly Minority Leader Peter Barca, D-Kenosha, pounced on the U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages statistics, seemingly salivating over data showing Wisconsin added 24,305 private-sector jobs from March 2012 to March 2013. The Badger State, as Barca pointed out in his release, posted a 1.1 percent increase in the rate of job growth, ranking the Wisconsin 34th among the 50 states during the period.

Barca, talked about as a potential Democratic candidate for governor next year, per usual, pointed his finger at Walker, the governor liberals love to hate.

“Wisconsin lags much of the nation in job growth because Gov. Walker and legislative Republicans have spent the past two and a half years undermining workers, public schools and people who need health care instead of focusing on jobs and improving economic prospects for middle-class families,” the lawmaker said last week in a statement.

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BIG JOB: Gov. Scott Walker says Wisconsin is creating a pro-growth environment, and the work of changing the state’s image over the past couple of years is just beginning to pay dividends for the Badger State economy.

Media’s mainstream players seemed nearly as quick in jumping on Walker’s 2010 campaign promises that the state would create 250,000 jobs by the end of his first term in office.

As of the end last year, the private sector had added 63,672 jobs, at this point about a quarter of the way home with 15 months to go in Walker’s first term.

While many of the news stories spotlighted Walker’s jobs campaign pledge, they brushed past the governor’s other big economic development goal — that the state would do all in its power, including getting out of the way, to help the private sector add 10,000 new businesses in the Badger State.

Walker recently announced Wisconsin has eclipsed the goal, with 11,590 new businesses created in the state since he took the oath of office, according to statistics from the state Department of Financial Institutions.

“By every measure, our economy is growing and workers throughout the state are finding jobs,” the governor said in a statement following the announcement.  “We have created a pro-growth climate, and individuals are taking the chance to build the business they always dreamed of.”

Improving signs

Building a pro-development climate takes time, Walker, the state Department of Workforce Development and business leaders have long said.

And while the most recent quarterly data, BLS’ most definitive numbers, show Wisconsin’s job growth rate lagging much of the nation, the signs of more robust job creation ahead are everywhere, administration officials insist.

The state’s private sector, according to BLS preliminary data, added 28,100 private-sector jobs between April and July, the best total since records began in 1990, according to Workforce Development. In August, the private sector added another 7,300 jobs. Based on those estimates, Wisconsin ranked in the Top 10 for private-sector job growth.

Unemployment dropped to 6.7 percent last month, down a percentage point from when Walker began his term, and down from 9.1 percent in August 2009, according to BLS.

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NOW HIRING: While the data is preliminary, Wisconsin workforce development has had a strong upward run over the past several months.

BLS’ monthly data, it must be noted, are preliminary and subject to wide-ranging revisions, as Walker’s critics haven’t always pointed out when the preliminary jobs data showed significant contraction only later to be revised upward. The monthly figures are based on a limited survey size of 3 percent to 5 percent of employers, compared to the significantly larger universe — about 96 percent — of employers in the quarterly stats.

But workforce experts say several months of significant employment increases in the preliminary estimates point to a positive trend.

The Federal Reserve Bank of Philadelphia’s coincident index recently ranked Wisconsin No. 2 in the nation for job growth during the most recent three-month period — the best ranking in the index’s history.

In another example of politics seemingly coloring every number in Wisconsin, the mainstream press headlines late last week screamed a Fed warning that Walker and his allies were pitching misleading information on the latest index. Of course, those kinds of concerns didn’t stop the Milwaukee Journal Sentinel earlier this year from declaring the Federal Reserve Bank of Philadelphia’s index “the latest economic indicator that casts Wisconsin in a negative light.” The June Index, as the newspaper reported, ranked Wisconsin 49th in the nation.

Earlier this year, Chief Executive magazine ranked Wisconsin as the nation’s 17th best state for business. Wisconsin placed 20th last year, up 23 spots from its 43rd showing in 2009. The gauge is based on CEO perceptions, and the view from business appears to be improving, despite growing concerns about federal policy.

A Wisconsin Manufacturers & Commerce report found some 94 percent of business executives surveyed by WMC in May believed Wisconsin was headed in the right direction, and 84 percent said state government is pro-business. At the time, 47 percent of the respondents said they were increasing employment, 47 percent said they were not adding workers, and 6 percent were cutting jobs.

The WMC Economic Outlook Survey counted responses from 364 CEOs whose companies are members of WMC, which has been a very vocal supporter of Walker.

Taken collectively, Walker predicts the improving numbers and business perceptions will pay big dividends for Wisconsin’s economy.

From what was

What is sometimes lost in the shuffle of jobs reports and politics is where Wisconsin has come from.

The state shed nearly 150,000 jobs between 2008 and 2010, during the second term of Walker’s predecessor, Gov. Jim Doyle, a Democrat.

True, Doyle presided over a state, like the rest of the country, mired in the throes of one of the worst recessions in decades.

But the Democrat, many of his fellow governors and President Barack Obama to a certain degree received a pass from the press, if not always the public, during the economy’s most difficult times and since. Doyle arguably was gone before the real heavy lifting of recovery began. Walker faced a $3.6 billion budget shortfall to begin his term.

Even during the much more robust economic days of Doyle’s early tenure, between 2004 and 2007, job growth moved between 33,800 jobs annually at peak growth in 2005 and 16,800 jobs in pre-recession 2007, before Wisconsin’s workforce began to plummet, according to the Bureau of Labor Statistics.

A July 2009 report by the Wisconsin Policy Research Institute pointed to the state’s failure creating  jobs while it descended to “Alabama-level wages” during Doyle’s two terms in office.

“Since 2005, Wisconsin’s average wage has dropped by nearly 4 percentage points to 85.6 (percent) of the national average — roughly equal to wages in Alabama,” the WPRI report stated.

“Wisconsin’s drop in relative wages and drop in job growth is troubling. Generally, states with below-average wages see job growth as businesses move to areas with low operating costs. The demand for new employees then drives up local wages. Similarly, areas with high wages tend to see slowing job growth. Yet, Wisconsin has managed to slide to below-average wages and below-average job growth.

“In short, we have the worst of both worlds.”

Personal income rose 2.7 percent in 2012, trailing the national average of 3.6 percent. In 2011, however, personal income climbed 4.5 percent, and is projected to rise by 4.6 percent next year, according to the state Department of Revenue.

While Democrats chide Walker for Wisconsin’s poor showings in national business rankings, like finishing 41st on Forbes magazine’s 2013 “Best States for Business,” the Badger State came in 43rd on the same ranking in 2008, while the conservative Laffer State Economic Competitiveness Index placed Wisconsin 41st. That’s where the state finished again this year, but it placed 15th in the study’s Economic Outlook rank.

Tax burden and business costs have long been the big knocks on Wisconsin by business and company site locators. The latest Forbes’ Best States list ranks Wisconsin 35th in business costs; 29th in regulatory environment; and 30th in economic climate. Those rankings are improving, but regulatory and tax reform experts say it will take time to create a truly pro-business environment.

Maybe the clearest sign of the turnaround is taking shape near Wisconsin’s southeast border with Illinois. Lighting company Kenall Manufacturing, announced last month its intention to move its headquarters and factory from Gurnee, Ill., to a 350,000-square-foot facility in Kenosha. The deal is contingent on state incentives, but it is expected to add 400 jobs to Wisconsin’s workforce.

“This shows how serious and successful Wisconsin is in helping businesses expand their operations and create new jobs,” Walker said in a statement announcing the relocation.

Contact M.D. Kittle at mkittle@wisconsinreporter.com

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M.D. Kittle is national First Amendment reporter at Watchdog.org. Contact him at mkittle@watchdog.org.

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