Workforce statistics in Wisconsin, Minnesota, and Colorado

Jake again has another excellent report on employment and unemployment numbers.

A recent report comparing Minnesota and Wisconsin leads Jake to point out how Minnesota job growth has outpaced Wisconsin, and that Wisconsin has trailed and even slowed when compared to both national averages and Minnesota’s employment growth. Yet, the mystery is that Wisconsin and Minnesota have similar if not identical unemployment rates. The North Star report concludes about Wisconsin:

To a significant extent, Wisconsin’s low unemployment rate is driven by a weak job market that discourages workers from entering or staying in the labor force.

I disagree with this conclusion. Folks in Wisconsin that remain here are staying in the workforce. They just are not collecting unemployment benefits. Rather, as I previously described, they are skipping unemployment completely and using low-wage, service work as a substitute for unemployment benefits. Hence, the unemployment rate is low in this state because it either forces workers to find new jobs immediately whatever the pay being offered or it discourages workers from staying in Wisconsin when one job ends and they have options for other jobs in other states.

In this regard, the population statistics Jake presents about Minnesota, Wisconsin, and Colorado are eye-popping.

At the start of 2011, when Walker and Dem Governors Mark Dayton (Minnesota) and John Hickenlooper (Colorado) took over their respective states, Wisconsin had more people living and working in their state – and a lot more when compared to Colorado (whose unemployment rate was higher than Wisconsin’s at the time, at 8.8%).

Household employment, Jan 2011
Wis. 2,831,200
Minn 2,737,400
Col. 2,486,600

Population, 2011
Wis. 5,705,812
Minn 5,345,967
Col. 5,116,411

Move ahead to today, and that gap has closed. To the point that Colorado may pass Wisconsin by 2020 in both stats if the trend continues.

Household employment, Aug 2018
Wis. 3,083,200 (+252,000)
Minn 3,015,360 (+277,960)
Col. 3,000,250 (+515,650)

Population 2017
Wis. 5,795,483 (+89,671)
Minn 5,576,606 (+230,639)
Col. 5,607,154 (+490,743)

And the growth in the Labor Force over the same period also reflects these trends.

Change in Labor Force Jan 2011- Aug 2018
Wis. +99,540
Minn +163,715
Col. +364,600

These numbers show that household employment in Wisconsin was nearly 3X population growth, whereas similar ratios for Minnesota and Colorado are approximately 1:1. The story in Wisconsin, then, is that folks are not staying around (the anemic population growth), and those that do are forced to take whatever work is available to them rather than trying to find the right job after collecting unemployment benefits for a few weeks (the low unemployment rate).

Minnesota and Colorado are creating modern economies that attempt to improve the lives of all. Hence, folks are flocking to those states, and job growth is matching their fast-paced population growth. Wisconsin, on the other hand, is well on its way to creating a backwater economy. Forward?

 

Unemployment benefits going down the same path as workers compensation

In light of the recent news about states dismantling their workers compensation programs, Rick McHugh from NELP describes how unemployment provides a similarly vital safety net and how states have been reducing unemployment benefits as well. McHugh offers a persuasive explanation for why the recovery from the recession has been so flat and why wages continue to be stagnant.

Nicole Woo of CEPR posted earlier this morning to EARN about a recent series by Michael Grabell of ProPublica and Howard Berkes of National Public Radio. Her post inspired me to follow up and include both workers’ comp (WC) and unemployment insurance (UI) in my observations. Both are central social insurance programs and both are under attack.

The ProPublica/NPR series exposed a combination of political pressure from employers and insurance companies and stern administration that has left many injured and disabled workers without adequate income support and rehabilitation. This demolition process took decades and was propelled by claims that cutting workers comp (WC) would create a better business climate. The achievement of their dismantling goal by opponents of strong WC programs is marked by the fact that the annual legislative fights of the last 3 decades over workers compensation (usually in conjunction with UI issues) no longer take place in most states. In short, the WC program is practically dead in many states and fails to protect injured and disabled workers as the data posted with the series documents.

Why should UI advocates and EARN researchers care about this WC story? As noted by Nicole, Columbia Journalism Review has a piece by Trudy Lieberman encouraging local follow-up reporting to the WC series. Lieberman quotes John Burton, a rare academic focused on workers’ comp, “I think we’re in a pretty vicious period right now of racing to the bottom.”

Racing to the bottom should be a familiar concept to UI advocates. Many of the same forces that dismantled WC are combined to attack UI programs with considerable success in recent years. And, some state programs have already been reduced to levels where the term “dismantled” fairly describes their situations. Reviewing the most recent federal data for the 12 months ending 9/30/14, regular state programs overall paid UI benefits to only 27 out of 100 jobless workers. (Using a recipiency rate calculated as the insured unemployed divided by total unemployed and reported in the UI Data Summary.) In comparison, the overall UI recipiency rate for CY 2007 was 37, representing a 27 percent reduction taking place over the Great Recession and our lingering labor market recovery. The UI race to the bottom continues in 2015. Just last week, a bi-partisan majority of state legislators in the lower house in Arkansas passed a bill cutting the maximum duration of UI benefits from 25 to 20 weeks and reducing weekly benefits an average of $72.

I have studied UI recipiency for many years, and in the past a recipiency rate below 25 placed a state at or near the bottom. Now, 14 states have recipiency rates of 20 or below (AZ, DC, FL, GA, IN, KY, LA, NC, OK, PR, SC, SD, TN, and VA). Some formerly average states, like Texas, Ohio, and Michigan, have 2014 recipiency rates below 25, as do perennial bottom feeders like AL and MO. And, the ability of states with better UI programs to resist the race to the bottom is threatened as a significant minority of states abandon any pretense of protecting their jobless workers under our federal-state UI arrangements.

UI and WC are both minor factors in total labor costs in 2014, with workers comp amounting to 44 cents per hour in the March 11 CPS report and UI coming in at only 22 cents an hour. How can our opposition make a convincing business climate argument in light of these figures?

Despite their low costs, UI and WC programs nonetheless serve as part of the picture in supporting wages, especially for those out of work or out of work due to work-related injuries. As these programs recede, they become another piece that explains the downsizing of the middle class and the absence of growth in wages. This is part of the story we need to tell as UI and WC cannot return as relevant social insurance programs if only their relatively disenfranchised participants care about these programs.