A Response to Levine

 

Noah Williams, UW-Madison, nmwilliams@wisc.edu

 

Marc Levine (http://www.jsonline.com/news/opinion/here-are-the-facts-on-wisconsins-economy-b99498072z1-303345311.html )  has responded to my piece on the state of the Wisconsin economy (http://www.jsonline.com/news/opinion/wisconsin-economy-outpacing-other-states-b99493700z1-302688511.html ) by mischaracterizing my analysis, accusing me of “factual errors” and “spin”.  He presented data from different sources, from different time periods, with different indexing, and when he found different answers, he accused me of “outright misstatements.” My piece objectively reported facts, and on my website I had posted a longer background article (http://www.ssc.wisc.edu/~nwilliam/wisconsin-economy.htm ) with all of the relevant data cited and plotted, all of which supports my statements. If Professor Levine had contacted me, looked at my piece, or delved into the data, he would have avoided his mistakes and mischaracterizations. But apparently Professor Levine was more concerned with countering imagined “radical right wing economic policies” than engaging in discussion. For someone who grandstands about the facts, he seems to show little regard for them.

On the substance of his critique, Professor Levine relies on employment data from the establishment survey for employees on nonfarm payrolls.  By contrast, I used the household survey measure of employment. The data do give different results for the past few years: growth in nonfarm payrolls has been lower in Wisconsin than in the nation as a whole, while household employment has roughly kept pace with the national average.  Some of the discrepancy is due to the fact that the household survey counts the self-employed, but avoids double counting due to the same person holding multiple jobs, which the payroll data does.  But much of the difference is driven by the fact the nonfarm payrolls by definition exclude much of the agricultural sector, a crucial source of employment in Wisconsin.

But perhaps most importantly, the household survey is the source of the unemployment rate data, which shows a strong and improving labor market. Over the past several years the unemployment rate in the state has fallen, while the labor force has grown, and participation has remained stable.  All of this suggests a very healthy labor market.  Moreover, as an article in Forbes (http://www.forbes.com/sites/jonhartley/2015/04/23/as-the-fed-prepares-to-tighten-which-states-have-already-reached-full-employment/ ) emphasizes, for an economy like Wisconsin which is near full employment, the unemployment rate is a better indicator of labor market health than job growth.  Once all willing workers have found jobs, further job growth will only come through population growth, but the unemployment rate will remain low and the labor market will be healthy.

For household incomes, Professor Levine also chose to use a different data set, and by presenting a different time span he finds a different answer, which causes him to call my analysis “factually incorrect.”  The data I used is a publicly available (and easily obtained) measure of real median household income provided by the Census Bureau.  The data are annual and gathered over the year, so my results were based on the growth of 2013 (the most recent available) over the end of 2010 (pre-Walker). Professor Levine quotes a different measure, but starts at the end of 2011.  Using Levine’s preferred data source but considering the same time span I did changes the details but preserves my conclusion: median incomes in Wisconsin have outpaced the national average.

In addition, the household income data is consistent with per capita personal income, another broad measure of income, which has grown faster in Wisconsin than the national average.  Again taking the end of 2010 as the base, through 2014 real per capita personal income (deflated with the PCE deflator) grew by 6.9% nationally and 7.1% in Wisconsin.  Importantly, real disposable (after-tax) per capita personal income grew even faster relatively in the state, at 4.8% vs 4.3% nationally.

Thus overall, the message from my piece remains unchanged.  Professor Levine did not confront the data I presented, which are easy to obtain from usual sources, and which I had made available. Instead he levelled unfounded charges of “misstatements” and “factual errors”.  I leave it to readers to judge who is engaging in “spin” to characterize the performance of the state as “Walker’s disastrous economic record.” Looking at broad labor market indicators and broad measures of income shows that Wisconsin has done well and in many dimensions has outperformed the national economy.