Jake has been on a tear with economic news for Wisconsin, and it has been too long since I provided an update on this front. So, I’m going to piggyback off of his efforts.

In general, Wisconsin has seen both solid job AND wage growth the past few years.

While the beginning of 2023 saw a slight slow down, the latter half of 2023 saw significant income growth in the state, especially when compared to other Midwestern states.

Change in net earnings, Midwest Q4 2023

  • Wis. +5.0%
  • Ohio +4.5%
  • Ind. +4.5%
  • Mich +4.4%
  • Minn +3.6%
  • Ill. +3.4%
  • Iowa -0.1%

Source: Wisconsin’s income and growth ended 2023 strong, but was weak earlier in the year (1 April 2024).

Wisconsin is even outpacing Minnesota. Prior to 2020, Minnesota had been outpacing Wisconsin on both fronts to a significant degree.

As Jake points out, however, the annual numbers for Wisconsin have not been that impressive.

But on an annual basis for growth in earnings, we are not as impressive – smack-dab in the middle of the Midwest at 4.6%. We also lagged the US rate of 5.6% for earnings growth. Likewise, our annual income growth of 4.4% falls behind the U.S. rate of 5.2%, which leaves us at 41st in the nation (although we are also penalized due to Wisconsin’s lower population growth vs the rest of the US).

In large part, Jake shows that this “growth” is tied directly to the population “growth” in Wisconsin. Within the state over the last three years, over 20,000 people have left Milwaukee county for other parts of the state (mostly neighboring counties). So, there has been essentially some shuffling of the state’s population “cards.” As a whole, Wisconsin is really only gaining people in Dane and Milwaukee counties (with the out-migration in Milwaukee county essentially canceling out the gains in this one county).

Dane County also gained nearly 6,500 people from international migration, and Milwaukee County added nearly 7,700. Those two counties make up well more than half of the nearly 25,000 that net immigration has added to the state’s population since 2020.

* * *

Dane [nearly 6,000 births] and Milwaukee [nearly 7,000 births] Counties are also on the right side of the third leg of population changes, which is the “natural change” of births vs deaths. Both Dane and Milwaukee have sizable gains in this category, and the counties that house Green Bay and (most of) Appleton have also added more than 1,000 people in the 2020s through more births than deaths.

But the state as a whole has had over 2,300 more deaths than births, with much of those losses over this 3-year period being chalked up to the thousands of excess deaths that happened during the pandemic years of 2020 and 2021. I’ll also note that this has mitigated some of the gains through migration that some of Wisconsin’s counties have seen, with Waukesha County suffering the largest number of losses.

Source: Who’s growing and who’s losing people in Wisconsin in the 2020s? (30 March 2024).

This slow population growth has been putting a crimp on job growth. Jake explains that the February 2023 drop in the state’s unemployment rate from 3.2% to 3.0% “was entirely due to those 4,900 people leaving the Wisconsin labor force.”

The charts Jake has for jobs in general, construction, manufacturing, and the leisure and hospitality sectors in Wisconsin all show rapid growth in 2022 and much slower job growth in 2023. The ceiling created by an aging/retiring workforce and less young people in the state is essentially capping job growth after a post-pandemic rebound, particularly in the construction and manufacturing sectors. Long-term economic growth, then, will be tied to growing the state’s workforce. As Jake explains:

It seems to me that we had two strong years of job growth in 2021 and 2022, but 2023 saw that slow down. While we are still adding jobs, and having a 3.0% unemployment is unquestionably a good thing, we need to make sure that we are expanding our capacity and attractiveness to workers and families to want to come here and stay here. Or else we could well stagnate in 2024, and be limited in how much more we can keep this good thing going.

The good news is that the labor shortage has led to significant wage growth in 2021 and 2022 in the state, something that had been missing throughout the 2010s. Whether that growth in wages can keep pace with the rising cost of housing in Wisconsin is another issue that needs addressing.