With Wisconsin suffering the worst job loss numbers in the nation for the calendar year 2011, Governor Scott Walker promised yesterday that he will reveal newly revised numbers this week that will, effectively, change water into wine on the Wisconsin job front.
And he's done it just in time for the June 5th recall election.
So, just how is Walker about to turn Wisconsin’s dismal job numbers from lemons to lemonade? (Note: See Update at the end of this article discussing the Governor's revisions out today, May 16th)
The Governor has simply decided to ignore the system used by the Department of Labor —and every other state in the nation —to measure job growth (or loss) and elected instead to go with a different set of numbers that makes things in Wisconsin look better.
Who knew it could be so easy to solve a jobs crisis?
With Wisconsin’s lagging job growth now driving voter sentiment as the state heads towards the June 5th election, Walker’s Wisconsin Department of Revenue's Chief Economist, John Koskinen, offered a presentation last week to Walker staff members and state economic officials accountants from the Association of Government Accountants wherein he made the case for an alternate system of measuring job creation—one that would be 'unique' to the Badger State.
The presentation is available for viewing on YouTube, under the title “Challenging The Spot Of The Ball”. For those of you who are not football fans, 'challenging the spot of the ball' refers to a football coach’s complaint to the referee when the coach doesn’t think the referee has been fair about where he places the ball on the field after a play.
Koskinen’s essential pitch is that the Establishment Payroll Survey—the Department of Labor (DOL) survey conducted each month to produce the jobs numbers—is an unfair way to go about counting jobs in Wisconsin. Why? Because the numbers look worse for Wisconsin under this method of counting than they would when the state relies upon on a different survey done each month by the DOL entitled the “Current Population Survey.”
The problem is, whether convenient to Wisconsin or not, the Establishment Payroll Survey is the metric used by the DOL —and the system relied upon by every other state in the nation— to measure job growth.
Here’s the difference between the two approaches-
The Establishment Payroll Survey involves the DOL calling workplaces-both private and government- and asking how many people are employed. The results of this survey, on a national basis, is the jobs number reported every month for non-farm employment.
The Current Population Survey, favored by Governor Walker, involves calling households to ask people if they are working. This is the survey that gives us our monthly unemployment number—the number that is consistently attacked by Obama foes because it is impacted by factors such as how many people have dropped out of the hunt for a job, expiration of unemployment benefits and other events that skew the numbers. In other words, when people give up looking for work, it actually has a positive impact on the unemployment rate because these people are removed from the counting base, allowing for a better ratio of people who are working to those who are not. This produces a more favorable, but far less accurate, measurement of how many people are unemployed.
The Current Population Survey (household survey) is particularly tricky when applied to determining the job numbers for a state because of the many people who live on the ‘edges’ of a state who are employed across the border in a different state. By way of example, someone living in Racine, Wisconsin may be able to answer in the affirmative when asked if she has a job. However, what is not asked is whether the respondent is employed in Wisconsin or driving across the border into Illinois to go to work. This makes such an individual’s response useful in determining how many people are working on a national basis but perverts the numbers when attempting to determine how many people are actually working in Wisconsin.
For these reasons, the Establishment Survey has long been the primary tool for measuring how many jobs exist in a given state rather than the household survey.
Yet, when Scott Walker delivers his ‘good news’ this week using his version of the ‘real’ numbers of job growth in 2011, he will not be using this traditional standard. And should we insist that the Walker Administration stay within the same metrics everyone else uses so as to get a true measure of where Wisconsin ranks vis-a-vis other states?
No worries —The Governor is ready for that one.
In the presentation noted above, Mr. Koskinen argues that were the DOL to use the old benchmarking readjustment standards (the Labor Department uses up-to-date data each year to go back and make adjustments to earlier estimates), involving making corrections to the 2nd quarter job numbers of the previous year rather than the current standards of readjusting the 3rd quarter of the previous year—it would also look better for Wisconsin. Accordingly, Walker is choosing to use the old standards because…well, I think the reason is sufficiently obvious.
Still, every single other state in the union uses the current standards of readjusting 3rd quarter benchmarks and it is that number which is used to compare relative success or failure among the 50 states.
According to Laura Dresser, a labor economist at The Center On Wisconsin Strategy at The University Of Wisconsin, Walker’s new numbers are little more than an incredibly transparent effort to create a false reality just in time to mislead Wisconsin voters who will cast their ballot in a few short weeks. Pointing out just one of the flaws in the 'new and improved' Walker method of measuring job growth, Dresser says, “It seems that they’re attributing employment growth in other states to Wisconsin.”
Dresser further points out that even if we were to go along with Walker’s preferred metrics, despite their being completely out of synch with the remainder of the country, we simply end up "dancing around zero." While the Establishment Survey puts the numbers of jobs lost slightly below zero, the alternative survey preferred by the Walker people puts them just above zero. At the end of the day, we’re talking about zero job growth—even under Walker’s favored, if completely unorthodox, approach.
The numeric wizardry has not gone unnoticed by Governor Walker's opponent in the coming election, Milwaukee Mayor Tom Barrett who said,""They brought in a fiction writer. They don't like their numbers. They're going to make up their own numbers."
There is always a way to spin bad news and we can always count on politicians-of all stripes-to do their best in this regard. However, when one considers that Governor Walker, for the first 15 months of his term, was content to utilize the same system of measuring job growth accepted by the remaining 49 states and the federal government, it seems stunningly disingenuous to toss the metric aside now that he faces recall.
The question that remains is whether those who support the Governor, and the few remaining Wisconsinites still on the fence, will be willing to forgive so blatant a diversion or will respond to the Administration's attempt to insult the voters by 'changing the spot of the ball.'
Should the voters of Wisconsin throw their own red flag on Walker's ploy and demand a review of the play, it's a good bet that the people are not going to like Scott Walker's call on this one.
UPDATE 1: May 16th 11:00am CST
Governor Walker has released the revised numbers, indicating that Wisconsin produced 23,300 jobs in the fourth quarter of 2011 rather than the reported loss of approximately 33,000. To arrive at this number, the Wisconsin Department of Workforce Development used a third option—the numbers from the Quarterly Census of Employment and Wages. The good news is that these numbers include a much wider 'count' in that they are derived from various reporting requirements from businesses into the state. Thus, the base is expanded from the much smaller sampling used in the monthly DOL jobs report to a much larger group including approximately 95% of the state's businesses.
Unfortunately, there is some bad news.
The first is the inability to reconfigure the comparison between states that has led to the discussion in the first place. What the Walker Administration has been seeking to overcome as they head into the election is the poor DOL job report indicating that Wisconsin came in dead last in job creation in 2011 when measured again the remaining 49 states in the nation. To make such a comparison, there must be a "constant" metric. That metric has long been the DOL Establishment Survey. By introducing a third survey-and one that has not yet been subjected to DOL scrutiny and not even due to be released until the June 28th report is released (three weeks after the recall vote), there is no constant metric to use in doing a comparison. Because it is so completely unusual for a state to release these numbers before the DOL puts it out, we have no way of knowing how Wisconsin will fare when everyone else gets their number. They may still be last in the nation - or they may have moved up a few slots. Thus, while the data may be marginally helpful in the political sense (it certainly looks better to say you created 23,300 jobs than lost 33,000), there is absolutely no way of knowing if, say, California's numbers will similarly improve when they have their results or where an apples to apples comparison would place Wisconsin.
Then there is the far larger and more significant problem.
Certainly, if there was, indeed, 23,300 new jobs created in 2011 rather than the loss that was reported, this is a good thing. However, Scott Walker ran on a very specific promise that he would create 250,000 new jobs during his term. Even by his own, more rosy numbers put out today—using a metric that is unusual, to say the least—he is very much "behind" on this promise. Coupled with the fact that he took this highly unusual path to this 'good news' (I certainly cannot recall anyone, anywhere and at anytime, jumping the gun on this report by reporting data a month and a half before the numbers are actually put out by DOL), it pretty much glows with an intent to divert people's thoughts as the election comes closer.
The question remains, if you are an unemployed individual in Wisconsin, do you really feel like your governor has succeeded in moving towards meeting his quarter million jobs goal by producing 23,000 jobs in his first year, when doing so is dramatically less than what was promised and still lagging the rest of the nation in getting people back to work?
While more jobs is certainly a lot better than fewer jobs, it is difficult to view today's numbers as much more than a diversion when viewed through the lens of measuring a Governor's performance record against the promises.
There will be further updates as the economists I am working with go through today's reported numbers. Stay tuned!
contact Rick at thepolicypage@gmail.com
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