If Not For

While the election season heats up, among endless platitudes about 'getting the economy going' and 'job creation,' let's all take a moment to reflect (sadly) on Scott Walker's return of $810 million in federal aid.

Nationally, even though we've seen 23 consecutive months of private sector job growth, Republican politicians and pundits are claiming the economy is performing poorly. In Wisconsin, where we rank poorly in comparison to the other states in job growth during the recovery, Scott Walker is claiming 'job creation' success based on a slightly declining unemployment rate.

Where would Wisconsin be right now had it taken advantage of $810 million in stimulus? Where would the unemployment rate be? Where would the employment population ratio be? What long-term effects would be incubating and growing due to the massive investment in our public transportation? How many businesses, jobs, and residents will Wisconsin miss out on due to this lack of needed investment during a crucial economic time?

An opportunity cost is "the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action."

Had Wisconsin taken the alternative action of not electing Scott Walker, Wisconsin would have seen a billion more dollars worth of investment during our country's second worst economic downturn. In the current economic climate, this billion-dollar disappearing-act should eliminate any thoughts of Mr. Walker's ability to govern effectively.

Just one [more] alarmingly significant reason for Wisconsinites to vote against Walker whenever the recall occurs.

Walker's Job Creation & Population Growth

The employment population ratio measures "the economy's ability to provide jobs for a growing population; its consistent cyclical properties and the relative accuracy of its seasonal adjustment make the ratio especially useful for evaluating demographic employment trends. It answers the question, 'What proportion of the working-age population is employed?'"

In Wisconsin, the ratio for 2011 was 63.5, in 2010 it was 63.6. A .1 percent difference.

The Wisconsin governor draws attention to a declining unemployment rate. Which, in itself, is good. The problem it that the unemployment rate hasn't declined because of the policies of the governor. It has declined in spite of his policies. The unemployment figures of Wisconsin appear better due to slow population growth (16% in Wisconsin versus 24% nationwide, since 1990), more so than any significant job creation.

As the employment population ratio illuminates, job growth has been insignificant in relation to population growth (and population growth was low!). But such unimpressive information isn't good fodder for campaign commercials attempting to convince voters why they should not vote against Walker in a recall election. Regardless of what Governor Walker would like, the employment population ratio illustrates the governor's ineffectiveness at creating jobs.

As Marc Levine describes, in a recent report, "..The unemployment rate is a less telling measure than it once was. It’s simply no longer the best barometer of the country’s economic health...' Others recommend looking to the 'employment-population' ratio for a 'truer picture' of labor market conditions ... Put simply, the employment-population ratio measures the percentage of the working-age population (or a subset of that population) that is employed. Its particular value as a labor market indicator is that it tells us, much better than the flawed, narrower unemployment rate, the extent to which the working age population in a community or among certain racial or ethnic groups is, in fact, working – which is, in the end, what we really want to know about the health of a labor market."

Or, as Paul Krugman states, "My current favorite measure of the labor market, the employment-population ratio of prime-age Americans — employment rather than unemployment so as to avoid distortion by people dropping out, prime-age to avoid demographic issues as the population ages."

Employment Readings

Alternative Measures Of Labor Utilization
Comparing Recessions & Recoveries
Down & Out
Eleven Telling Charts From 2011
Employment Population Ratio
The Employment Situation
Lies, Damned Lies, And Politics
1 Million People Didn't Drop Out Of Labor Force Last Month
Right-Wing Relying On Discredited Information
Wow. But Is The Number Real?