Thursday, March 31, 2011

Doing the math on Governor Walker's 250,000 new jobs promise

Earlier I had discussed how to measure the Governor's promise to the people of Wisconsin to create 250,000 new jobs on his first four year watch.  There are labor economists who could better weigh in on the feasibility of the governor's promise, but it seems clear that unless the governor is going to significantly increase the work force in Wisconsin over the next four years, he has created a pretty tall order for himself.

Wisconsin's job numbers in September 2008, just before the Great Recession hit in October were:

Work Force         -            3,086,400
Employed             -            2,951,600
Unemployed         -               134,800

Unemployment rate     -             4.4%

The job numbers for January, 2011, when the new Walker Adminstration came to power in Wisconsin were:

Work Force         -            3,045,300
Employed             -            2,819,300
Unemployed         -               226,000

Unemployment rate     -             7.4%

The largest level of the Wisconsin work force I could find in DWD reports during the last five years was about 3,133,000 in June, 2008. If the current level of work force, 3,045,300 in January, expands to the level it was at in June 2008, the governor will need to have the unemployment rate in Wisconsin drop to less than 1% to meet his promise.  If he could pull that off, then he would deserve to be a national golden boy for the GOP.

But let's be more optimistic and assume that the governor's policies do encourage substantial growth in the work force, by encouraging those Illinois companies to relocate to Wisconsin.  If the 4.4% unemployment rate from September 2008 is a respectable rate of unemployment (much higher lower and we have inflation problems), how many workers will have to move to Wisconsin over the next four years (or rejoin the workforce) to get us to that rate of unemployment if the number of employed in Wisconsin at the current level of 2,819,300, rises by the 250,000 jobs promised?  The answer is over 180,000 workers, which seems like a massive influx of workers.  Get ready to reopen some of those schools shuttered due to education budget cuts!

The job number to watch change over time, to see if the governor is pulling his promise off, will be the work force number.  If it is rising steadily over time, he may get to his goal.


  1. 1% unemployment would not be good for business. Think of the supply and demand curve. More demand for workers will drive wages up.
    More influx of workers? The change in Workforce from 2008 to 2011 was -1.33%. According to these number, we need a 5.9% increase in workers over four years. That is quite a swing.

  2. One should factor in all the jobs which will be lost directly and indirectly by the state budget cuts. There will be fewer persons employed in the whole education sector (K-12, vocational colleges and UW campuses)and county and state government. Those jobs will be lost as retiring workers are not replaced, as well as possible layoffs. Then consider the dampening effect on the state retail economy, as public workers react to the compensation cuts by tightening their belts. Then consider that the health care providers, from clinics to hospitals to pharmacies will become less busy and reduce staffs or hours, due to potentially hundreds of thousands of current Badgercare/Medicaid families being tossed off the rolls. Many of the new jobs Walker is promising would have to replace the jobs lost due to his budget's negative effects on th estate econmy.

  3. Check this site out for business/manufacturing closings and layoffs...
    Over 2200 jobs losses did or are going to happen from January-March 21, 2011.

  4. @Mike: Thanks for your comments.

    My one percent comment as a possible result was made tongue thoroughly in cheek. But thanks for pointing that out to me. I corrected a statement I had made on the inflation effects of very low unemployment in the next paragraph.

  5. @ John: I suspect the governor is aware that he is going to be judged on NET jobs, and that is why he is trying to impose his will on local governments to force them to cut benefits rather than opt for lay-offs. But I agree that there will be net losses in the near term from the proposed budget and Act 10's policies.