Defending the Judeo-Christian Ethic, Limited Government, & the American Constitution
Sunday December 14th 2014

An Inconvenient Wisconsin Truth

JAMES SHERK, HERITAGE FOUNDATION

A funny thing happened on the way to the recall. Government unions organized Wisconsin Governor Scott Walker’s (R) recall in retaliation for limiting their collective bargaining powers. But the Democratic candidate, Milwaukee mayor Tom Barrett, barely mentions the collective bargaining law on the campaign trail. That is probably because—now that they have seen its benefits—most Wisconsin voters want to keep it. By a 53 percent to 38 percent margin, independent voters favor the limits on collective bargaining in government. It turns out that closing a $3.6 billion deficit without raising taxes or laying off teachers is popular after all.

So Governor Walker’s opponents have instead attacked his handling of the Wisconsin economy. The Bureau of Labor Statistics (BLS) conducts two surveys of the job market. One surveys households and measures unemployment; the other surveys employers and reports jobs losses and gains. Over the past year, these surveys have painted very different pictures of the Badger State’s economy.

The household survey has shown a steadily improving Wisconsin economy. Since Walker took office, the state unemployment rate has fallen from 7.7 percent to 6.8 percent— well below the national average of 8.1 percent. The establishment survey has been much more pessimistic. It showed Wisconsin lost almost 34,000 jobs last year, more than any other state. Walker’s critics have used this statistic to argue that his reforms have failed.

It turns out they were wrong. The Walker administration just released more accurate information from the Quarterly Census of Employment and Wages (QCEW). While the establishment survey samples 3 percent to 4 percent of employers in Wisconsin, the QCEW collects information on unemployment insurance (UI) taxes from almost every employer in the state. The Quarterly Census know exactly how many employees each business has, because they have to pay taxes on them.

The QCEW is much more accurate than the initial establishment survey estimates. The BLS actually uses the QCEW to correct its initial establishment survey estimates. However, it takes about six months to compile the UI records for millions of employees, so everyone relies on the initial estimates until the revisions come out.

Normally, the QCEW figures wouldn’t come out until June 28. The Walker administration released them early (as it is allowed to do). The revisions show that Wisconsin employers actually created 23,000 jobs last year. The Wisconsin economy is growing.

Opponents of the collective bargaining reforms are howling that these numbers are cooked. They will have a tough time finding economists to back them up. As Brian Jacobsen, an economist with Wells Fargo Funds management, put it, “The quarterly (census) data is much more reliable. If that one’s showing job gains, that’s going to be tough to argue with.” And the civil servants producing these numbers are not exactly Walker fans. Dennis Winters, chief of the Office of Economic Advisors at the Wisconsin Department of Economic Development, signed the recall petition.

Wisconsin’s economy has turned a corner. Both the household survey and employer surveys now agree: Wisconsin employment grew last year. The Badger State (and America) still has a long way to go. But opponents of limiting collective bargaining in government can no longer argue that these reforms are unsuccessful.


James Sherk is Senior Policy Analyst in Labor Economics in the Center for Data Analysis at The Heritage Foundation.


This article was originally published at Heritage.org

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