Economic indicators at the end of 2019

As usual, I am piggy-backing on the good work Jake is doing.

The economy of late

Over the past several weeks, Jake has been posting extensively about the economic reports being released.

• Store closings are up, manufacturing activity is on a downhill slide, and private construction spending is down considerably.
• Growth in personal spending is nearly flat of late, manufacturing orders are bouncing back somewhat, and defense spending is what is providing the big economic boost right now.
• A recent federal reserve report indicates that the economy of the mid-west is sputtering in general but that home sales and consumer confidence are climbing somewhat.

Gold standard job numbers

Reports on these numbers are a daily occurrence of late. As of Friday, Dec. 6th, the Department is touting Wisconsin as a national leader in job growth.

Yes, Jake notes, wages are up, but there are some holes to this news that means no one should be popping champagne corks just yet. Jake observes that these job numbers actually under-report the growth that was being reported in the monthly jobs reports. The recent rise in unemployment during the latter half of 2019, in addition, could either indicate a hotter, more competitive job market or a job market that is beginning to cool down.

Jake also points out some of the key takeaways from the Wisconsin’s Shifting Job Market report from the Wisconsin Policy Forum. This report provides an examination of the job growth (or lack of growth) in Wisconsin over a ten-year period, from 2008 to 2018. As Jake explains:

The Policy Forum goes on to note that the Madison area has done exceptionally well in this 10-year time period for overall job growth, and in particular in these high-paying, educated/skilled positions.

For example, the Madison metro area has experienced strong job growth in general since 2008, with employment growing by over 54,000 overall (16%) and in 17 of the 22 occupational groups. Perhaps most strikingly, employment in highly coveted computer and mathematical occupations—which include software and web developers and computer programmers—has led the way, growing faster than in any other group.

* * *

[Manufacturing jobs, on the other hand, have been stagnant or in decline, particularly in the Milwaukee area.] And that trend has not gotten any better in 2019, as the Bureau of Labor Statistics says that manufacturing employment in the Milwaukee metro area is at its lowest level in more than 8 years, with a decline of 2,000 manufacturing jobs over the last 12 months.

That being said, the Milwaukee metro as a whole has rebounded some in 2019, with health care being a huge reasons for its job growth. As have the 2 next largest metropolitan areas in the state, for that matter. While these numbers aren’t adjusted for seasonality (and therefore require a year-over-year comparison), the Madison, Milwaukee and Green Bay areas have done better for adding jobs than the rest of the state.

[One year] Job growth Oct 2018-Oct 2019
Milwaukee metro +11,800 (+1.3%)
Madison metro +4,700 (+1.2%)
Green Bay metro +2,400 (+1.3%)

The down side is that while the remainder of the state outside of those 3 metro areas accounts for just over 1/2 of the state’s employees, it’s actually lost 5,100 jobs (-0.3%) while the Bigger 3 have grown. And many of those [remaining] areas have also been stagnating in population growth with lower educational levels.

The full jobs data for the year from June 2018 to June 2019 also has some revealing information. According to Jake:

Remarkably, [Wisconsin’s] 0.40% rate of [job] growth and 39th-place rankng in the US put Wisconsin 3rd out of 7 Midwest states for private sector job growth, with only Minnesota (+0.61%) and Indiana (+0.70%) doing better than us. So unlike much of the 2010s, we’re not trailing much of our region, but our region is badly below the US rate of growth of 1.25%. Which sounds a whole lot like the 2000s before the Great Recession, which wasn’t good for the Midwest even before the economy caved in.

If you go into Wisconsin’s figures by county, this stat jumps out at you.

Private sector job change, June 2018- June 2019
Dane County +5,033
Rest of State +4,987

Total job change, June 2018 – June 2019
Dane County +6,595
Rest of State +2,745

That’s right, Dane County added more than half the private sector jobs in Wisconsin over that 12-month period, and over 70% of [total] jobs. And literally 1/2 of the 72 counties in Wisconsin LOST jobs between June 2018 and June 2019. Oh, but we’re the crazy hippie moonbats in Madison while the outstate GOPs are the ones in touch with how to grow business in 2019. Riiiight.

FoxConn

Jake has the latest on a Libertarian-leaning think tank pointing out that FoxConn truly is turning into a shadow theater of the absurd:

• The subsidies granted to FoxConn will depress economic activity in the state for a decade or more.
• The state is saddled with economic waste because of Wisconsin’s commitments to FoxConn that cannot now go to actual businesses that could use that money productively.
• A recent Fox-Conn announcement about developing its Green Bay facility contained just a fraction of what was originally announced for that facility (seems to be a pattern with FoxConn) and has been met with a ‘believe it when we see it response.’

Update (10 Jan. 2019): Changed spelling of Fox-Conn to FoxConn.

Unemployment hearing offices in Wisconsin are closing

The Department of Workforce Development has yet to make any formal announcements, but three of four unemployment hearing offices in the state are moving or closing.

As of November 11th, the Madison hearing office has already re-located from the Wisconsin Public Broadcasting building just off of the Beltline to the downtown DWD headquarters in GEF-1.

As a result, no more in-person hearings are being scheduled in Madison, as there currently is no ability or procedure in place for having unemployment, in-person hearings at GEF-1. Neither can parties in Madison unemployment hearings review their case files prior to their hearings and examine documents available to the administrative law judge but kept from the parties (like adjudicator’s preliminary claimant reports).

Staff have been told that in-person hearings may eventually return to Madison in several months. That seems like wishful thinking, however. There simply is no ability or hearing room space in GEF-1 to run the hundreds if not thousand-plus hearings that normally occur.

In 2018, 16,691 unemployment appeal tribunal decisions were issued. If Madison issued a quarter of these, that is 4,173 appeal tribunal decisions for Madison (a conservative estimate, as Madison is probably responsible for at least two-fifths of all decisions in the state). If only 10% of these decisions are done via in-person hearings (an extremely small number, and one likely to be higher given how job growth in the state has been centered on Dane County), that is 417 hearings for which rooms in GEF-1 will be needed (or around eight hearings a week).

And, this number is just for employee benefit decisions. In 2018, unemployment tax decisions involving employers issued by administrative law judges numbered 223, and at least half of these were probably decided in Madison. So, add at least another 100 cases to the Madison docket that now need to be scheduled at GEF-1.

For comparison, in 2018 there were 219 equal rights decisions by administrative law judges. These cases are almost all heard in either Madison (in GEF-1) or Milwaukee. I understand from the equal rights division that scheduling of hearings at GEF-1 in Madison, where the Madison cases are heard, is tight. So, if less than 219 cases are causing scheduling problems at present at GEF-1, the addition of more than 500 cases to that schedule is simply impossible.

In other words, Madison will only be doing phone hearings for unemployment issues for the foreseeable future. If that should change, expect discrimination hearings to be delayed by months or years (as unemployment hearings need to occur within so many days under federal guidelines and so will have scheduling precedence).

But, the re-location of Madison is only part of the news involving hearing offices in Wisconsin. The even bigger news is that BOTH hearing offices north of Madison — Appleton/Fox Valley and Eau Claire — are being closed permanently. Sometime during the first quarter of 2020, these offices will be shut down. Staff who do not on their own initiative and resources relocate to Madison will be laid off.

The Department has yet to disclose this last piece of news publicly. Understandably, the folks north of Madison are not happy with this news. While phone hearings are common in these offices given the vast territory covered by the offices, many employers and a few claimants took advantage of the opportunity to review case files and attend their hearings in-person even if the other side still testified by phone.

Now, the option to attend their hearings in-person is completely foreclosed to everyone outside of the City of Milwaukee.

And, the reason cited for these drastic changes: declining funds for covering the administrative costs for managing the unemployment system in light of declining claims. Yes, claims have been on the decline for some time. But, the number of hearings has not declined in similar fashion, as the issues for which hearings are needed have increased even as claims have declined.

NOTE: While there were 16,691 unemployment benefit decisions by appeal tribunals in 2018, in 2016 these cases numbered 18,532. In 2014, these cases numbered 21,354. So, the number of decisions have obviously declined. Benefit claims, on the other hand, have plummeted to levels not seen since the 1990s, when the working population in Wisconsin was around a million less than it is now. Back then, Wisconsin still managed to fund more than two hearing offices.

NOTE: While the Department is claiming it is short on funds, as of October 2019, it had $13,122,000 available in its program integrity fund (and after pulling nearly $2.5 million from this fund that month). I know of no restrictions on how program integrity funds can be spent.

Closing of the offices north of Madison and the relocation of the Madison hearing office to GEF-1 for phone-only hearings is a tough pill to swallow for Wisconsinites. Rather than making the unemployment system easier to use, these steps only increase the complexity of the hearing process and make it nearly impossible simply to talk to someone directly about what happened with an unemployment claim.

NOTE: Because phone hearings take considerable planning and are difficult to manage, everyone should review the helpful advice about phone hearings in the Workers’ Guide to Unemployment Law.