Job Creation, Myth and Reality

Wisconsin Republican Governor Scott Walker deflects criticism of his job creation record with a menagerie of excuses. Typically, he blames his predecessor, Democrat Jim Doyle. The truth of the matter is, if Walker equalled Doyle’s record of matching the US private job creation rate, Wisconsin would have created 48,483 more jobs during Walker’s term.

Walker fails to mention Doyle was governor during the Bush Recession and he is serving during the Obama Recovery. Comparing the two administrations based on raw job creation numbers is a distortion. To sort the reality out from the spin, comparing the two governors to how they compared against national job creation data offers a far more accurate measure.

Looking at the data

Democrat Jim Doyle became governor in 2003 and served through 2010. Walker became governor in 2011 and continues through December 2013. Figure 1 job data during Doyle’s term is blue and Walker’s is red.

Looking at each year of Scott Walker and Jim Doyle’s respective terms, we compare the annual percentage increase in Wisconsin job creation numbers with national numbers. This eliminates bias caused by economic cycles. After averaging the numbers from Doyle’s eight year term and Walker’s three years, we have a sound comparison of their job creation compared to the rest of the country and to each other. These numbers are in the far right column of Figure 1. A value over 100% means Wisconsin’s job growth exceeded the US’s that year.

Figure 1

Jobcreation

 

Source: Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages, Wisconsin and US 2001-2013; Private employment, Total all industries, all establishment types.
Annual calculations are based on December to December comparisons.
What the data tells us

Over Doyle’s term as governor, Wisconsin created net private sector jobs at 101% of the national rate of job creation.  During Walker’s term to date, Wisconsin has never beaten the national job creation rate. In fact, we’ve never come close . Over his term, Wisconsin’s job creation has averaged 62% of the national average.

Using a single tailed t-test, Doyle’s 95% value for being close to the national job creation rate is significantly higher than Walker’s value of 62% (p<0.05). This tells us the differences in job creation rates during the two administrations are due to something other than chance.

This is important since other researchers find governors have little or no impact on job creation. This makes sense with a governor like Doyle whose state averaged 95% of the national rate.  Wisconsin basically followed the nation’s ups and downs in employment.

However, when a state only averages 62% of the national job creation rate, that governor is having a statistically significant impact on job creation. Unfortunately in Wisconsin, that impact is negative.

Walker touts the 100,000 private sector jobs created during his administration (actually the real number is 91,813). To put this  in perspective, if Walker matched the US rate of growth in job creation in Wisconsin, 147,090 jobs would have been created during his three years in office. If he had even managed to match Jim Doyle’s record of job creation relative to the national average, 140,296 jobs would have been created.

Republican reasoning

Defying all logic, Republicans criticize President Barack Obama and blame him for the slow pace of economic recovery in the US, yet at the same time, make Scott Walker out as a hero. If one wants to call Obama a failure, Walker is clearly an even bigger failure.

What has happened in Wisconsin is Walker has ridden the shirt tails of Obama’s economic recovery. Unfortunately, he managed to bungle that with his big government, ultra-liberal policies and cost Wisconsin tens of thousands of jobs in the process.

While Jim Doyle had to deal with cutbacks in tax revenue because of the Bush Recession, Walker merrily goes along taking credit for tax cuts because “Wisconsin is back”.  In reality, if he had been able to keep up with the national rate of job creation, we could afford his tax cuts and wouldn’t have to increase state debt.

To add insult to injury, Wisconsin has slipped from 26th in 2010 to 27th in per capita income in 2013. This indicates the jobs Wisconsin is generating under Walker aren’t the economy builders Wisconsin needs.

Who poor Mary Burke is running against when Wisconsin's economic resurgence comes up.
Who poor Mary Burke is REALLY running against when Scott Walker takes credit for Wisconsin’s economic resurgence and increase in jobs.
Summing up

We are not able to say which Scott Walker’s policies are responsible for Wisconsin’s declining job creation. All the data allows us to say is if our hypothesis is Walker improved Wisconsin private job creation compared to Jim Doyle, then that hypothesis is false. Something changed dramatically in Wisconsin in 2011 insofar as our ability to mirror national job creation rates.

On another level, it is ridiculous for Walker to take credit for the economic turnaround in Wisconsin while the state’s job creation and economic growth lag the rest of the nation. He should leave that for governors in states beating the national job creation rate. President Obama deserves credit for the gains we’ve made. Walker deserves the blame for Wisconsin not keeping up with Obama and the rest of the country.

 


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