by Erik Gunn, Wisconsin Examiner
December 23, 2023
Wisconsin’s economy continues to run strong according to new data from the state labor department. At the same time, however, forecasts are beginning to point to cooler times ahead.
The projected number of jobs in the state reached a new record high in November, and the number of people who report they are currently working remains at close to a record, the Wisconsin Department of Workforce Development (DWD) reported Thursday.
“Students [who are] right now graduating have a great job market,” DWD economist Scott Hodek said at a briefing Thursday on Wisconsin’s November job and unemployment numbers. “We really do need more people. And because of that, if you’re a job seeker, this is a fantastic time. If you’re trying to hire, it’s a little tougher.”
Based on a federal survey of employers, DWD reported that there were more than 3.02 million jobs in Wisconsin in November, “which is actually a new high,” Hodek said. Those include nearly 2.62 million private sector jobs.
The federal Bureau of Labor Statistics (BLS) and DWD have projected that more than 3.04 million people are employed in the state. That number is 1,800 more than in October and 66,500 more than November 2022.
The employment numbers come from a separate federal survey of households that asks whether people are working or actively seeking work. They are distinct from the jobs numbers that count people based on where they are working.
The state’s unemployment rate inched up to 3.3% as the number of unemployed people — defined as people who report they are actively seeking work — crept up to 104,200 in November. That was an increase of about 2,200 from October and 11,000 from November 2022, DWD reported.
The change also reflects the fact that more people are interested in working.
“We actually have seen a fair number of folks joining the labor force,” Hodek said, including first-time workers as well as people re-entering the job market.
The combined number of people working or looking for work reached nearly 3.15 million in November, according to DWD. That is an increase of 78,000 from a year ago, and raised the state’s labor force participation rate to 65.9% of the population 16 or older — more than 3 percentage points higher than the U.S. rate.
Based on the employer survey, BLS and DWD project that Wisconsin manufacturing jobs fell by 6,100 over the last year, while construction jobs increased by 3,300. Hodek said construction “is often a bellwether of the economy.” National data show housing starts up 18% from November 2022, which he said was another indication of the construction sector’s strength.
“What I’m also hearing anecdotally is that we’re not really seeing a drop in business investment,” Hodek said. While there’s a backlog of work and a continued shortage of labor “we’re still seeing construction going strong, and we’re still seeing it add jobs right now.”
While consumer spending has been slowing down, “it’s still an upward trend,” Hodek said.
DWD reported that retail jobs have increased by 1,800 in November from a year ago. Combined with a national Census Bureau report that retail sales were up 4.1% nationally in November from a year ago, “it does seem like a pretty positive holiday season for retail.”
University of Wisconsin economist Menzie Chinn told the Wisconsin Examiner on Thursday that Wisconsin’s unemployment rate has been below typical full employment levels. “We’re heading toward normalization as the economy cools,” he said.
Chinn posted his assessment of Wisconsin’s outlook on his blog earlier this week.
A November Wisconsin Department of Revenue forecast, drawing on national analyses, suggests little or no job growth in the first quarter of 2024 and slower economic growth overall, including slowly rising unemployment, starting in mid-2024, Chinn said.
The federal government releases data four times a year looking back at job openings, hiring and turnover. The labor market has been “unprecedentedly tight,” Chinn said, with more vacancies than there are people looking for jobs.
At Thursday’s DWD briefing, Hodek observed that the most recent of those federal reports indicated more than two openings for every available worker.
Although DWD isn’t speculating independently on future trends, “No recession that I’ve ever seen has had that kind of two-to-one job opening situation,” Hodak said. Based on the current job and unemployment numbers, “it’s hard to imagine a recession being incredibly deep with that kind of demand for labor still existing.”
Nevertheless, those conditions are unusual and won’t go on forever, according to Chinn.
“When the economy is operating normally the number of vacancies to job seekers is closer to one-to-one,” he said, which was the situation in 2019, before the COVID-19 pandemic. Now the economy appears to be returning to those more typical conditions.
“More people will come into the labor force, as they’re continuing to do now,” Chinn said. “As more firms are not hiring as fast, or letting people go, unemployment rates are going to tend to gravitate higher.”
Whatever the short-term fluctuations, the long-term forecasts have been largely unchanged: an increasing mismatch between the number of people available for work and the number of people employers want to hire.
“Everything boils down to demographics, and this is our underlying labor market challenge,” Hodak said. “As the baby boomers age out, we find that we need more and more workers.” That challenge will “influence the workforce and the economy into the next decade.”
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