Employment on the Stateline
The overall picture seems to indicate some recent softening in the labor market. In fact, unemployment rates are up significantly in the first quarter of 2007. The last quarter of 2006 was very much a straight-and-steady one for Green County. Jefferson and Walworth counties had rather mild employment gains as well, but unlike Green County they had increases in the number of unemployed, thus a significant increase in unemployment rates. Lafayette County, on the other hand, seemed to have a fair degree of labor market stability with strong growth in both labor force and employment numbers. Rock County was the only one to see absolute decreases in the number of unemployed, although it continued to have a higher unemployment rate than any of the other counties or even that of the state.
The first quarter of 2007, however, seems to have been one of broad labor market deterioration. In particular, the market reversal in Rock County seems to have been particularly pronounced with a county unemployment rate of 6.5 percent and a 16 percent increase in the number of unemployed. This is clearly related to the shedding of workers with falls in absolute employment in Rock. If we had to guess, we’d opine that the income figures for Rock County in next fall’s Report will be similarly disheartening. Jefferson and Walworth counties also seem to have some weakening with large increases in the number of unemployed, though the situation seems better in Jefferson. While both saw year-to-year increases in their unemployment rates to 5.6 percent (still slightly better than the state average of 5.7 percent), Jefferson County did so while maintaining 2 percent plus growth in its labor force and employment, while Walworth saw absolute declines in employment. Green County saw labor force and employment growth double that of Jefferson, such that its unemployment rate nearly matches that of Jefferson and Walworth. Lafayette County could be said to have come through the first quarter of the year least scathed, as it was able to maintain the employment and labor force growth of other counties but without the large increases in the number of unemployed.
Table 7 gives us a more detailed breakdown of county employment patterns in the non-farm sectors. The difference in employment figures between Tables 6 and 7 can give a sense of agricultural employment trends which we do not formally report. The last quarter of 2006 saw non-farm employment gains in all counties except Green and Walworth, and in the case of the latter due only to increased employment with local government. By the first quarter of 2007 Walworth County was losing jobs, the public sector notwithstanding, as was Rock County.
One sector that has been of particular recent concern is housing. Will the recent excesses in the housing and construction market have big impacts on the labor force? In our data, Construction is lumped together with Natural Resources and Mining, but in general Construction is the dominant field in this group. Employment in the fourth quarter of 2006 did show very large year-to-year losses in several counties; For example, a 15 percent decline in Green County and an 11.5 percent decline in Rock County. However, Lafayette and Walworth counties showed equally large gains in the same period. If we look at the first quarter of this year, we see big employment gains in all counties, definitely going against the state trend. There was certainly significant decreases between the end of 2006 and the beginning of 2007 although it’s hard to say how much of this is seasonal or market-driven. More importantly, however, is the relative size of this sector in the employment of all counties. While Construction tends to be one of the better paying occupations, employment is at most about 5.5 percent of overall private employment in the eastern three counties, the same as for the state. Lafayette and Green counties deviate little from this, at 6 and 4 percent of private employment respectively. Thus, while loss of employment is most assuredly a burden for the workers that experience it, there is a limit to how big an impact shrinkage in construction will have overall. As noted previously in this Report, there may be good reason to believe that immigrant workers will bear more of the burden, at least initially. However, it is likely too early to see the full impact of the housing shock. We expect the next Report to show more clearly the local impact of adjustments in the housing market.
Lafayette is arguably showing the greatest proportional improvement in employment. Most sectors show sustained improvement from the previous year with particularly notable growth in Resources and Construction and Education and Health Services. The sectors with the largest employment were a bit more mixed. Manufacturing was slightly improved over the year, but Trade was down and up; both were stable one quarter to the next. Skilled Services (i.e., Information, Professional, etc.) showed some weakening by the first quarter of 2007. To the same extent, Lafayette County’s employment is most improved while Walworth County’s is the most deteriorated. As noted, the Resources and Construction sectors showed tremendous employment growth of more than 10 percent for the year. However, given the relatively small size of these sectors it wasn’t enough to counteract the declines in the three largest employing sectors of Manufacturing, Trade, and Hospitality. There was some growth in the Financial and various Service sectors over the year.
In Rock County, the story is Manufacturing, with a big 8.66 percent decline in the year to the first quarter of 2007 in the county’s largest employer. Similar proportional increases were had in the Transportation, Warehousing and Utilities sector, but with its much smaller size the absolute number of jobs is lower. Jefferson County at least held on to most of its manufacturing jobs. Jefferson employment only fell in the Financial Activities and Trade sectors and only by small proportions. Green County managed to gain Manufacturing jobs, though the second-largest sector showed some weakness.
One interesting story is that across nearly all counties, there was significant growth in the various Skilled Services, in particular Educational and Health Services. In every county, Educational and Health services grew over the year and by a greater proportion than the state-wide average. We call these occupations “skilled services” because they generally need at least a post-secondary degree if not a graduate degree, and tend to pay better than unskilled services. Across the nation, and indeed in rich countries in general, Skilled Services has been a growing part of the economy, not just in terms of the gross domestic product but also in terms of employment. From a macroeconomic perspective, it is no matter that employment in skilled services tends to increase while employment in other sectors may hold steady or even decrease, as has been the case with Manufacturing. However, it is not possible to just move individual workers from declining to expanding sectors. The post-secondary degree usually necessary for expanding sectors requires substantial investment of time and money, and that is even without considering what might be necessary to get someone prepared to even enter higher education. Even within other sectors, the skill threshold for employment is getting higher. It will be a significant challenge for the state and its communities to provide for the educational needs not just of our young learners, but also the adult working-age population.
Correction: In the last issue of the Report, we mistakenly switched the employment numbers in Financial Activities with those for Information, Professional and Business Services, Other Services for both Rock County and Wisconsin. We apologize for the error.