Over the past few years, the Milwaukee Journal Sentinel and others have repeatedly sought to explain the supposedly slow pace of job creation under Gov. Scott Walker. Indeed, the governor invited this analysis after famously promising to create 250,000 new private sector jobs in first term as governor — a mathematically impossible target for a state that counted fewer than 250,000 unemployed job-seekers when he took office.
Overzealous political promises notwithstanding, Wisconsin’s job growth over the past six years has been extraordinarily strong. In fact, job growth has slowed recently only because Wisconsin essentially has run out people who are unemployed due to broad economic factors.
In other words, one cannot reduce a jobs deficit that no longer exists.
As background, economists consider an unemployment rate of around 4% to be “full employment.” Even when jobs are plentiful, roughly 4% of the workforce is temporarily transitioning between jobs at any given moment. Economists typically set aside this base level of unemployment, and look for additional joblessness that would reflect economic weakness or labor market deficiencies.
And yet Wisconsin’s current unemployment rate — 3.2% — is even better than full employment. It is America’s 11th lowest unemployment rate, and Wisconsin’s second-lowest unemployment rate since the 1970s.
The recent slowdown in job growth is no mystery. It is the predictable result of a state successfully eliminating the jobs gap created by the Great Recession.
After all, the number of new jobs that can be created is limited by the number of unemployed people seeking jobs. Wisconsin’s total labor force has grown by just 2% over the past decade due to retiring baby boomers and modest population out-migration. This leaves virtually all net job creation to come from reducing the ranks of the unemployed.
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