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home : news : state news December 4, 2016

6/26/2012 7:42:00 AM
Nearly half of state's construction jobs vanished
Report: Recovery continues, but at a slower pace

Richard Moore
Investigative Reporter


Like the rest of the nation, Wisconsin is seeing economic improvement in a weak recovery that has slowed in recent months. But improvement in some sectors is slower than others, and it's perhaps worst in the construction industry, where nearly half of the industry's Wisconsin jobs have disappeared since 2006.

According to a new state economic outlook issued this past week by the Wisconsin Department of Revenue, employment in the construction industry peaked in 2006 at 130,100 jobs, but has declined by 46 percent since then. The worst may be over, the report states, both for the state's general economy and for the construction industry, but the climb back will be especially long in construction, with 2015 employment projected to still be less than in 2006.

"Construction jobs losses seem to have hit bottom by the end of 2011," the report states. "After this prolonged decline, construction employment will grow 1.8 percent in 2012 and 2.4 percent in 2013. The outlook then calls for strong growth above 7 percent in the next two years. Full recovery will take longer. Despite the strong growth rates through 2015 construction employment will still be 13 percent less than its peak in 2006."

Overall, the economy continues to improve, but the report cautions that the pace of recovery has slowed in recent months, as it has across the nation.

For example, the revenue department expects employment to grow by 1 percent in 2012 and 1.7 percent in 2013, which would lower the state's unemployment rate from 6.8 percent last month to 6.5 percent in 2012 and to 6.1 percent in 2013. The unemployment rate peaked at 9.1 percent at the height of the recession in mid-2009.

The outlook for personal income is improving but is likewise tepid, the department reports. In 2011, Wisconsin's personal income growth of 5.2 percent matched and slightly exceeded the national growth rate of 5.1 percent. But the agency estimates that the growth rate will drop to 2.9 percent in 2012 and to 4.1 percent in 2013.

"Personal income growth was driven by strong growth in rental, dividend and proprietors' income, while wages and salaries income grew 4.2 percent," the report states. "After adjusting for inflation, real wages grew 1.7 percent."

All the numbers do add up to a recovery, the report stressed, but one that lost some steam this year.

"The economy continues to recover but the pace of the recovery has slowed in recent months," the report states. "The labor market continues its recovery, but after healthy gains in late 2011 and early 2012, it has slowed in the last three months. Personal income growth slowed in the second half of 2011 and early 2012."

What's more, agency researchers continued, national personal consumption growth has slowed in recent months, posting the slowest growth rates of the last 20 months, while U.S. real GDP (gross domestic product) growth was revised downward to 1.9 percent in the first quarter of 2012. In addition, while the state's real GDP growth was revised upward for 2010, the preliminary estimate for 2011 shows growth at only 1.1 percent.

Meanwhile, the housing sector at both the state and national levels has only begun a tepid recovery.



Government and manufacturing

As expected, with budget cuts taking effect in the current biennium, public-sector employment has not fared as well as private-sector employment, the department confirmed.

While total employment grew by .4 percent in 2011, private employment grew twice as fast at .8 percent.

"Wisconsin government employment declined 1.6 percent in 2011 and should fall 1.5 percent in 2012," the report states. "Government employment will stabilize in 2013, showing mild increases of 0.6 percent in 2013 and 0.5 percent in 2014. By the end of the forecast period, government employment will still be 10,600 jobs lower than its peak seven years earlier."

The manufacturing sector fared much better, the report states, having recovered more than a quarter of the jobs lost during the recession. Most of that has occurred in the durable goods sector.

"Jobs in the manufacturing sector grew 2.8 percent in 2011, and the forecast expects strong growth in manufacturing employment, 2.5 percent and 3.6 percent in 2012 and 2013," the outlook predicts. "Wisconsin employment in manufacturing by the end of 2015 will be within 3 percent of its previous peak in mid-2006. In contrast, U.S. manufacturing sector will be within 10 percent of its mid-2006 peak."

The bottom line is that Wisconsin is on its way to better economic health, assuming the national recovery doesn't stall completely. In many ways, the state's economic future is tied to the national economy; by some measures, though, the state is expected to outperform the rest of the nation, the agency indicated.

"The state economy followed the national economy into the recession and it will exhibit a similar pattern into the recovery," the report states. "Anemic demand, high unemployment, tight credit, and a sluggish housing market restrain the recovery."

By the end of the forecast period, though, researchers expect Wisconsin's unemployment rate to hover above prerecession levels, but remain substantially lower than the national rate.

"Both Wisconsin and national unemployment rates have been declining for the past two years," the report states. "The Wisconsin unemployment rate declined more rapidly than the national rate, with a difference that reached 1.6 percentage points in the fourth quarter of 2011. ... By the end of the forecast period, the Wisconsin unemployment rate will be 4.7 percent, higher than its pre-recession level, but lower than the 6.3 percent national unemployment rate."

Richard Moore may be reached at richardmoore.gov@gmail.com





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