Green Room

Wisconsin DOR chief economist explains the difference between CES, CPS/LAUS employment

posted at 5:27 pm on May 14, 2012 by

Some people, like Tim Nerenz, noticed a rather disturbing disparity between the two main measures of employment earlier this month. One measure, the Local Area Unemployment Statistics, based on the Current Population Survey, said that 21,570 (rounded up to 21,600) more Wisconsinites were working in March 2012 than in March 2011. The other measure, the Current Establishment Survey, said that there were 30,000 fewer jobs in March 2012 than in March 2011.

Department of Revenue chief economist John Koskinen addressed that disparity last Thursday at a meeting of the Association of Government Accountants….

To wit, Koskinen noted that the CES slide in employment was not supported by the all-establishment Quarterly Census of Employment and Wages (for the first quarter of disparity, the third quarter of 2011), tax revenues received by Wisconsin, per-capita income growth in 2011, or initial unemployment claims. For those of you interested in the PowerPoint portion of the presentation, Christian Schneider posted the slides that are included, in somewhat-pixelated form, on the video.

Before I continue, however, I do have to quote for the benefit of the lefties who might think Koskinen is a Walker stooge his short biography included in the DOR press release:

Prior to joining the Wisconsin Department of Revenue agency in 2007 as Chief Economist, John Koskinen served as a Staff Economist for the Wisconsin Department of Administration from 1979 to 2007. He started his professional career at the Wisconsin Legislative Fiscal Bureau. Koskinen has his B.A. and M.A. in Economics from Marquette University, as well as additional graduate studies in Economics at Northwestern University.

That’s right – Koskinen became DOR’s chief economist in the middle of Democrat Jim Doyle’s administration.

QCEW begins to break the tie

A quick explanation of what is covered by the three measures of employment is in order. The CPS/LAUS survey, covering 60,000 people on a national level and roughly 4% of Wisconsinites of working age, is the smallest of the three, though it covers every conceivable form of legal employment. The CES, covering 440,000 worksites on a national level and approximately 10% of Wisconsinites of working age, misses those who are self-employed and thus not covered by a form of unemployment insurance. The QCEW, covering every one of the approximately 9.7 million employers who pays unemployment taxes (thus missing the self-employed, railroad employees and religious institution employees), is a trailing indicator as it is released 6 months after the quarter that it covers.

For the first 6 months of 2011, the year-over-year changes in all three measures were on essentially the same slope. Starting in July, the year-over-year change in the CES started to separate from the year-over-year changes in the CPS/LAUS and QCEW. As Koskinen somehow used seasonally-adjusted data for the CPS/LAUS data while using unadjusted CES data and actual QCEW data, I redrew the chart to use the same measure for all three sets of data:


Click for the full-sized chart

The CES really diverged from both the climbing CPS/LAUS and QCEW in August. Against the QCEW, the disparity grew from an average of the QCEW year-over-year change being 5,000 higher than that of the CES for the first half of the year (and 5,700 higher in June) to the QCEW year-over-year change being 32,500 higher in September, the last month QCEW data is available. Against the CPS/LAUS, the disparity went from an average of the CES year-over-year change being 16,600 higher than that of the CPS/LAUS (and 21,200 in June) to the CPS/LAUS year-over-year change being larger than the CES year-over-year change starting in September, growing to a 49,400 disparity in December, and reaching a 51,570 disparity in March.

Koskinen blamed the fact that the second quarter was used as the yearly “benchmark” of the CES rather than the third quarter. I cannot properly evaluate that claim, but the DOR produced a chart supporting this allegation:


Click for the full-sized chart

Wages and tax collections support the CPS/LAUS numbers

The Bureau of Economic Analysis said that per-capita personal income in Wisconsin grew by 4.8% in between 2010 and 2011. That is not only significantly higher than the national average of 4.3% growth, but was the 11th-highest in the country.

In part because of that, and in part because the Republicans repealed the “millionaires’ tax” and combined reporting instituted by the Democrats when they had total control of state government in 2009, general-purpose revenue increased by an adjusted 4.3% for the first 10 months of FY2012 from FY2011 (that adjustment is downward from 6.0% due to more pay periods this time around). That includes an adjusted 4.5% increase (7.8% unadjusted) in individual income taxes, a 4.8% increase in sales taxes, and 5.4% in corporate taxes. Of note, FY2012 started in July 2011, when the CES measure of employment began to wildly diverge from the other two measures.

Initial unemployment claims for 2011 well below that of 2010, with the last 7 months at pre-recession levels

Perhaps the data that is most damning of the CES “job loss” is initial unemployment claims. The DOR produced a chart showing that those claims are the lowest in 5 years. Once again, I created my own chart, partly to remove the “clutter” of 2009 and 2010 from the DOR chart, partly to align the weeks to the week being reported instead of the week the report was issued, and partly to further demonstrate the point by choosing 2006 instead of 2007 (after all, the Great Recession supposedly started in December 2007).


Click for the full-sized chart

Throughout 2011, initial unemployment claims were below 2010 levels. Indeed, by the 40th week, it was virtually indistinguishable from 2006 levels, and that trend continued through this year.

That is a measure more of a 1-month change than a 12-month change. So, how do the years compare? Allow me to give you one more chart, this time directly from the BLS:

Something just doesn’t add up, and it’s rather clear it’s the CES numbers everybody has been taking as the last word on jobs.

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I found this yesterday – it makes the data match what I’m actually seeing… people finding jobs, job boards filled with new listings and the mall parking lots are no longer empty.

Barrett announced yesterday that Walker would try to “massage” the jobs numbers.

Daisy_WI on May 15, 2012 at 6:44 AM

Just for fun, you should see how the partisans are playing this at the Milwaukee Journal Sentinel. http://www.jsonline.com/news/statepolitics/walker-barrett-trade-job-jabs-vg5dpcm-151470545.html

Of course, the JS couldn’t pass up the chance to throw in the “John Doe” investigation, as if it has anything to do with employment numbers.

Daisy_WI on May 15, 2012 at 7:19 AM

Daisy_WI on May 15, 2012 at 7:19 AM

I’m trying to keep my blood pressure down :-)

Seriously, I fully expect Milwaukee County Democrat DA John Chisholm to issue at least one felony charge against Governor Scott Walker (and if the polls don’t show unionista head Mahlon Mitchell ahead of Lieutenant Governor Rebecca Kleefisch, her as well) at 6:15 pm June 4. After all, it’s no longer “by any means necessary”, but “by every means possible”.

Steve Eggleston on May 15, 2012 at 9:08 AM

Seriously, I fully expect Milwaukee County Democrat DA John Chisholm to issue at least one felony charge against Governor Scott Walker (and if the polls don’t show unionista head Mahlon Mitchell ahead of Lieutenant Governor Rebecca Kleefisch, her as well) at 6:15 pm June 4. After all, it’s no longer “by any means necessary”, but “by every means possible”.

Steve Eggleston on May 15, 2012 at 9:08 AM

Well Walker has some cash for defense, but a felony would not be something they would throw out there lightly would they?

wi farmgirl on May 15, 2012 at 9:38 AM

Have either of you heard any polls on Kleefisch? I saw a debate on the Wisconsin show this past weekend, and Mahlon Mitchell was quite rude to her.

wi farmgirl on May 15, 2012 at 9:39 AM

Given how many of the staff in Chisholm’s office signed recall petitions, I wouldn’t be surprised if you were correct. The JS is absolutely pounding this story – and burying Barrett’s wife sending political emails from her (school district) computer.

I haven’t seen any Kleefisch polls. Her recall isn’t getting as much publicity as Walkers, possibly because she will go the way of Walker.

Daisy_WI on May 15, 2012 at 10:35 AM

Well Walker has some cash for defense, but a felony would not be something they would throw out there lightly would they?

wi farmgirl on May 15, 2012 at 9:38 AM

Are you kidding? If the recall fails, the only way for the unionistas to get Walker tossed is through a felony conviction. Do remember that district attorneys are partisan offices, and Chisholm is a partisan hack.

Steve Eggleston on May 15, 2012 at 10:39 AM

Here’s one link to the famous boycott letter (signed by Mahlon MItchell, head of the Milwaukee firefighter’s union, encouraging people to boycott certain Wisconsin businesses. (Fun fact – sales went up at Kwik Trip after this letter was made public – I had never been to one before this letter make me aware of them).
https://www.facebook.com/notes/boycott-scott-walker-contributors/the-police-firefighters-and-teachers-write-to-kwiktrip/110106215737070 Part of it is below:

In the event that you cannot support this effort to save collective bargaining, please be advised that the undersigned will publicly and formally boycott the
goods and services provided by your company. However, if you join us, we will do everything in our power to publicly celebrate your partnership in the fight to preserve the right of public employees to be heard at the bargaining table.

Also be advised that we are concerned about your company’s participation in Wisconsin Manufacturers and Commerce and its continued effort to support candidates who oppose collective bargaining. It makes no difference to us how
much or little money you put into that effort. Your participation in that organization provides you an opportunity to halt this practice. We would also request that Kwik Trip disclose whether it makes contributions to any other organizations, such as Americans for Prosperity or the Club for Growth or the U.S. Chamber of Commerce.

We recognize your right to form political associations but we also believe the

public has a right to know what kind of contributions or payments you make that

impact the political process. As labor organizations we and our members do not

care to provide profits to companies that are working directly or indirectly to

threaten the livelihood of our members.

Wisconsin’s public employee unions serve to protect and promote equality and

fairness in the workplace. We hope you will stand with us and publicly share that

ideal.

Daisy_WI on May 15, 2012 at 10:49 AM

Mr. Mitchell also failed to do his homework. He claims that Walker never told anyone that he was going after collective bargaining, but in fact WEAC’s union newletter had a whole article on it in August 2010 – 4 months before the election.

Daisy_WI on May 15, 2012 at 10:51 AM

Steve Eggleston on May 15, 2012 at 9:08 AM

Steve-If he pulls that stunt on the eve of the election, I almost wonder if Walker might get more votes…it will be seen as purely political and I get the sense most people here are getting wise to that (and are tired of it). But just in case, I wonder how Walker can start addressing it now. And while I applaud his campaign to-date being pretty clean, (e.g. no mention of the “teacher flu” last year, no mention of the WEAC benefit trust that had to have been siphoning money somehow if competitive bids have shown the significant savings we are seeing), perhaps he needs to take the gloves off on this issue…the DA being a Democrat from Milwaukee undoubtedly has a closet full of skeletons of his own.

And finally, is there something unique to Wisconsin law that prohibits campaign activities by an office holder? Obama has been running for re-election (on our dime) since January 2009.

teejk on May 15, 2012 at 11:52 AM

Jerry Bader just hammered the Mitchell letter, told everyone to like his facebook post about it. That letter basically threatened businesses that supported Walker. And yes I remember WEAC coming out against Walker, saying he was going after the collective bargaining. BEFORE the election. Which was why he won the election. We were tired of the unions buying the election and better contracts and benefits. A circle of favors year after year. Duh?! I just don’t think anyone believed he could get it done, which was why the dems fled to IL.

wi farmgirl on May 15, 2012 at 12:21 PM

Perhaps there should be a freedom of information act for all emails from Chisholm’s office and staff. Maybe there would be someone else not very bright like Barrett’s wife that would leak some sort of vendetta for Walker. It was very interesting to see how many of them signed the recall petitions. But how many were forced to sign due to pressure not to. Maybe someone could become a John or Jane Doe in the DA’s office eventually. Not everyone is a lib in city government.

wi farmgirl on May 15, 2012 at 12:25 PM

Ah, here it is – http://www.publicschoolspending.com/spending-analyses/wea-trust-report/

It’s long, but it’s worth the read. It outlines exactly how WEA Trust has been fleecing districts for years.

BTW, after Act 10 took effect, WEA Trust significantly lowered its premiums. Anyone want to FOIA the Insurance Commissioner on how those policies were filed? In Illinois, all premiums have to be filed & approved through the state with actuarial tables attached. I’m sure there’s something smelly there.

Daisy_WI on May 15, 2012 at 1:36 PM

Funny comment on JS today (regarding Walker signs are being burned and slashed)

“We (conservatives) don’t (deface) Barrett signs. It’s in our best interest to know where the idiots are.”

Daisy_WI on May 15, 2012 at 1:37 PM

Funny comment on JS today (regarding Walker signs are being burned and slashed) “We (conservatives) don’t (deface) Barrett signs. It’s in our best interest to know where the idiots are.”
Daisy_WI on May 15, 2012 at 1:37 PM

I think around here they prefer to shoot the Walker signs from the road (appears that 12ga full choke is the weapon of choice…given more time I’d help set up shields to reflect the shot back to the 1994 buick that mom needs to get to work).

But that “…know where the idiots are” is priceless! long story but yard-signs had a big part in my political views.

teejk on May 15, 2012 at 2:09 PM

Related – judging from Gov. Walker’s Twitter feed (@GovWalker), the Department of Workforce Development is going to be releasing Wisconsin’s portion of the 4th quarter 2011 QCEW tomorrow. The full QCEW is typically released by the Bureau of Labor Statistics 6 months (or if you prefer, 2 quarters) after the quarter being reported on, but it is comprised entirely of numbers first reported to each state’s agency responsible for managing that state’s unemployment insurance program.

Tom Barrett is about to be the hardest hit, even more so than his illegally-campaigning wife.

Steve Eggleston on May 15, 2012 at 3:50 PM

Related – judging from Gov. Walker’s Twitter feed (@GovWalker), the Department of Workforce Development is going to be releasing Wisconsin’s portion of the 4th quarter 2011 QCEW tomorrow.

Can’t wait, I have noticed better jobs being posted this last week. I bet there will be an explosion of hiring. Everyone was afraid.

wi farmgirl on May 15, 2012 at 7:32 PM

I’ve noticed better jobs posted too, Farmgirl. I agree that the June 6 listings will be huge.

Daisy_WI on May 16, 2012 at 7:44 AM