Outlook for the Wisconsin Economy Noah Williams University of - PowerPoint PPT Presentation

Outlook for the Wisconsin Economy Noah Williams University of Wisconsin-Madison Center for Research On the Wisconsin Economy (CROWE) https://crowe.wisc.edu Williams Outlook for the Wisconsin Economy

The State of the Wisconsin Economy Tight labor market: low unemployment, high employment-population ratio Long and continued expansion: growth in incomes, recovery across state Labor force challenges: low population growth, aging workforce, net outmigration Comparisons with other states: Minnesota, Illinois Economic policy impacts: Manufacturing and Agriculture Credit, minimum wage Forecasts for 2019: slowing growth in US and state Williams Outlook for the Wisconsin Economy

CROWE: Brief Introduction Center for Research on the Wisconsin Economy (CROWE) established in Fall 2017 in Department of Economics, UW-Madison Primary mission: support and disseminate economic policy research, with particular focus on Wisconsin economy and state-level economic policy issues. Provide economic research opportunities for UW-Madison students, outreach from UW to business and policy Staff: Director, economists, fellows in Dept. of Economics, administrator Researchers: Undergraduate, masters, and Ph.D. students helping with research Williams Outlook for the Wisconsin Economy

Selected CROWE Research The Impact of the Manufacturing and Agriculture Credit in Wisconsin The Economic Impact of the Foxconn Proposal Economic Performance in Wisconsin Since the Great Recession: A County-Level Analysis The Effects of Minnesota’s Minimum Wage Increases The Impacts of State Tax Structure: A Panel Analysis UW-Madison and the State of Wisconsin More to come: capital and productivity, tax reform, business dynamics, migration Williams Outlook for the Wisconsin Economy

The Wisconsin Labor Market Remains Tight Unemployment: 3.0%, participation: 68% ⇒ Employment-population 66% (#8, US 60.6) Unemployment Rate Employment−Population Ratio 68 US 10 WI 67 9 66 65 8 64 7 63 6 62 5 61 60 4 59 3 58 2008 2010 2012 2014 2016 2018 2008 2010 2012 2014 2016 2018 Williams Outlook for the Wisconsin Economy

Employment and Labor Force Job growth steady but lower, driven by slow workforce growth Nonfarm Employment (2010=100) Labor Force (2010=100) 118 108 US WI 116 107 114 106 112 105 110 104 108 103 106 102 104 101 102 100 100 99 98 98 2008 2010 2012 2014 2016 2018 2008 2010 2012 2014 2016 2018 Williams Outlook for the Wisconsin Economy

Labor Market Peaking? Some signs of labor market stagnation in late 2018: wages flat, household survey employment down Average Hourly Earnings WI 6 HH Survey Employment WI x 10 3.1 26 3.05 25 3 24 2.95 23 2.9 22 2.85 21 2.8 20 2008 2010 2012 2014 2016 2018 2008 2010 2012 2014 2016 2018 Williams Outlook for the Wisconsin Economy

Differences in Sector Shares and Growth Real GDP by State by Industry United States Wisconsin 2016 2011-16 2016 2011-16 Industry Share Growth Share Growth All industry total (billion) $ 16,259 10.5 $ 273 7.4 Private industries 88.0 12.3 89.1 8.9 Construction 4.0 19.7 3.9 21.8 Manufacturing 11.7 5.3 18.6 4.3 Wholesale & Retail trade 12.1 13.2 12.0 12.1 Information 5.5 23.2 3.8 24.5 Finance and insurance 6.3 4.3 7.0 11.0 Real estate and rental and leasing 13.5 11.2 12.5 2.9 Professional, scientific services 7.4 17.6 4.3 13.6 Health care and social assistance 7.5 14.5 8.8 8.4 Government 12.0 -0.7 10.9 -3.2 Williams Outlook for the Wisconsin Economy

Aging of the Population Williams Outlook for the Wisconsin Economy

Net Domestic Outmigration Persistent issue over past decade, but not as severe as IL Declined in recent Census data: -11,439 in 2016 to -1,011 in 2018 Williams Outlook for the Wisconsin Economy

Net Migration: Wisconsin and Illinois 4 Net Migration: Wisconsin 4 Net Migration: Illinois x 10 x 10 1 0 Domestic Domestic Total Total 0.5 −2 0 −4 −0.5 −6 −1 −8 −1.5 −10 −2 −12 2010 2012 2014 2016 2018 2010 2012 2014 2016 2018 Williams Outlook for the Wisconsin Economy

Income Distribution As Wisconsin incomes have grown since 2010, any decline in the middle class has been due to movement up to higher incomes. Williams Outlook for the Wisconsin Economy

Family Incomes Since 2010, families of four in Wisconsin had real income growth of 13.1% (2.4 pp faster than US) and property and income tax burden fall. The 14.3% growth in after-(state)-tax income is a gain of roughly $11,200. Williams Outlook for the Wisconsin Economy

Comparisons with Other States Common in the press to compare Wisconsin economy with Minnesota (especially) and Illinois. Minnesota: similar size and rough demographics, differences in policy but also structure Illinois: whole state very different (Chicago, downstate IL), North IL and South WI more comparable Popular discussions too quick to infer policy impact. More below. Williams Outlook for the Wisconsin Economy

Real Output Growth: Level and Per Capita Real GDP, 2010:4=100 Per Capita Real GDP, 2010:4=100 IL 112 112 MN WI 110 110 108 108 106 106 104 104 102 102 100 100 98 98 96 96 94 94 2010 2012 2014 2016 2018 2010 2012 2014 2016 2018 Williams Outlook for the Wisconsin Economy

Urban Concentration: Wisconsin vs Minnesota Share of WI Emp in MKE Share of MN Emp in MSP 0.31 0.68 0.305 0.675 0.3 0.67 0.295 0.665 0.29 0.66 2000 2005 2010 2015 2000 2005 2010 2015 Employment, 2010=100 115 Milwaukee Minneapolis−St. Paul 110 105 100 2006 2008 2010 2012 2014 2016 Williams Outlook for the Wisconsin Economy

Economic Performance by County The discussion so far has been based on state-level data, but not all parts of the state have done equally well economically. While there has been talk about areas left behind, I find strong evidence of convergence in living standards . Counties that had the highest unemployment rates, poverty rates, lowest incomes before the recession have seen the largest improvements in the following decade. Counties which suffered the most during the recession have had the largest improvements during recovery But divergence in overall size : counties that had larger employment, labor force, or population before the recession experienced faster average growth in those measures Williams Outlook for the Wisconsin Economy

Unemployment by County Wisconsin County Unemployment Rates December 2018 < 2.9% 3.0% - 3.4 3.5% - 3.9 4.0% - 4.4 4.5% - 4.9 5.0% - 5.4 5.5% - 5.9 Not-Seasonally Seasonally 6.0% - 6.4 Adjusted Adjusted 6.5% - 6.9 US 3.7% 3.9% 7.0% > WI 2.6 3.0 Not-Seasonally Adjusted Unemployment Rates for Wisconsin Counties Dane 1.9% Jefferson 2.4% Pierce 2.9% Langlade 3.5% Sauk 2.4 Kenosha 3.0 Washburn 3.5 Lafayette 2.0 Outagamie 2.5 Milwaukee 3.0 Pepin 3.6 Calumet 2.1 Green 2.1 Richland 2.5 Trempealeau 3.0 Marquette 3.7 Walworth 2.5 Green Lake 3.1 Ashland 3.8 Ozaukee 2.1 Kewaunee 2.6 Oconto 3.1 Florence 3.8 Sheboygan 2.1 Fond du Lac 2.2 Portage 2.6 Racine 3.1 Door 3.9 Lincoln 2.7 Wood 3.1 Oneida 3.9 Marathon 2.2 Monroe 2.7 Jackson 3.3 Polk 3.9 Washington 2.2 Brown 2.3 Shawano 2.7 Barron 3.4 Rusk 4.0 Vernon 2.7 Buffalo 3.4 Menominee 4.3 Columbia 2.3 Waupaca 2.7 Crawford 3.4 Sawyer 4.3 Dodge 2.3 Iowa 2.3 Clark 2.8 Marinette 3.4 Vilas 4.3 Rock 2.8 Price 3.4 Forest 4.5 La Crosse 2.3 St. Croix 2.8 Taylor 3.4 Burnett 4.8 Waukesha 2.3 Dunn 2.9 Waushara 3.4 Adams 5.2 Winnebago 2.3 Juneau 2.9 Chippewa 3.5 Iron 5.2 Eau Claire 2.4 Manitowoc 2.9 Douglas 3.5 Bayfield 5.4 Grant 2.4 DETI-17241-P (R. 1/2019) WI Dept. of Workforce Development, Labor Market Information 1/23/2019 Williams Outlook for the Wisconsin Economy

Unemployment by County Williams Outlook for the Wisconsin Economy

Unemployment by County Unemployment Changes in Wisconsin by County Unemployment Changes in Wisconsin by County −3 −0.5 Change in Unemployment Rate: 2010−2017 Change in Unemployment Rate 2007−2017 −1 −4 −1.5 −5 −2 −6 −2.5 −7 −3 −8 −3.5 −9 −4 −4.5 −10 −5 −11 −5.5 1 2 3 4 5 6 7 4 6 8 10 Change in Unemployment Rate: 2007−2010 Unemployment Rate in December 2007 Williams Outlook for the Wisconsin Economy

Labor Force by County Labor Force Changes in Wisconsin by County Labor Force Changes in Wisconsin by County 15 Growth Rate of Labor Force 2010−2017 Growth Rate of Labor Force 2007−2017 10 10 5 5 0 0 −5 −5 −10 −10 −15 −20 −15 −10 −5 0 5 10 8 10 12 Growth Rate of Labor Force 2007−2010 Log Labor Force in 2007 Williams Outlook for the Wisconsin Economy

Impact of the Manufacturing and Agriculture Credit The MAC took effect in 2013, provides credits which largely offset the taxes faced by businesses in those sectors in the state. In 2017 I analyzed how much of manufacturing employment growth since 2013 was due to the policy by analyzing counties on either side of the Wisconsin border. Estimated that for 2013-2016 MAC accounted for total gain of over 20,000 manufacturing jobs (a 4.6% increase) and over 42,000 total jobs (a 1.8% increase) in Wisconsin. Even more since then! Williams Outlook for the Wisconsin Economy