Minnesota Passes Wisconsin in Total Jobs

Total 2017 employment in Minnesota eclipsed that of Wisconsin for the first time in history,* despite having over 200,000 fewer people. Just ten years ago, Minnesota had 93,000 fewer jobs than Wisconsin. The Gopher State now has 6,200 more jobs, according to the Quarterly Census of Employment and Wages (QCEW).† In light of recent trends in job and wage growth in the two states, Minnesota has no reason to mimic Wisconsin’s conservative fiscal policies.

During the current business cycle—which began with the onset of the Great Recession in 2007—Minnesota’s employment growth has surpassed that of Wisconsin by nearly 100,000 jobs. In each year since 2010, Minnesota job growth has exceeded that of Wisconsin—a fact which University of Michigan Labor Economist Donald Grimes considers “somewhat remarkable.”

Even if we exclude public sector jobs, total Minnesota employment now surpasses Wisconsin employment. In 2017, Minnesota had 2,473,423 private sector jobs—757 more than Wisconsin (2,472,666). As with total employment, Minnesota’s private job growth has exceeded Wisconsin’s every year since 2010.

Throughout recent history, both states have participated in a national trend in which the number of goods-producing jobs has declined, while the number of service-providing jobs has increased. Wisconsin’s employment base is comprised of an unusually high percentage of goods-producing jobs—a fact which contributes to the state’s lackluster job growth vis-à-vis Minnesota and the rest of the nation.

However, this fact does not fully explain the sub-par job growth in the Badger State. If we examine the goods-producing and service-providing jobs separately, Wisconsin still underperforms Minnesota in each category. Since the beginning of the current business cycle in 2007, the rate of decline in goods-producing jobs has been significantly greater in Wisconsin than in Minnesota, while the rate of growth in service jobs has been significantly less.

The quality of jobs—as measured by wages—has also improved more rapidly in Minnesota than in Wisconsin. Throughout recent history, average annual pay‡ in Minnesota has exceeded that of Wisconsin. Since 2007, the size of the average annual pay gap between the two states has increased by $2,567 (41%) in nominal dollars (i.e., unadjusted for inflation) and by $1,414 (19%) in constant 2017 dollars. Over 80% of the growth in the pay gap between Minnesota and Wisconsin since 2007 has occurred since 2013.

Employment gains in Minnesota consistently outpaced that of Wisconsin, regardless of changes in fiscal policies within each state over time. This trend flies in the face of the conservative narrative that progressive fiscal policies enacted in Minnesota in recent years would undermine Minnesota’s economy, while conservative policies would bolster Wisconsin’s economy. This storyline becomes especially tenuous when we consider that wage growth in Minnesota has significantly outpaced that of Wisconsin since 2013—the year that Minnesota enacted progressive state tax increases. Over the same period, Wisconsin cut its state budget and imposed so-called “right-to-work” laws.

Despite having significantly fewer people, Minnesota has more jobs than Wisconsin and those jobs tend to pay more. In fact, on virtually every economic measure available, Minnesota has outperformed Wisconsin in recent years. In light of this, there is no reason to replicate Wisconsin’s right wing fiscal agenda in the Gopher State.

 

*The Bureau of Labor Statistics compiles employment numbers for both states extending back to 1950. Based on the significant population difference between the two states from 1850 to 1950, it is apparent that Wisconsin had higher total employment than Minnesota during these decades. In each decennial census from 1850 (Wisconsin and Minnesota entered the Union in 1848 and 1858 respectively) to 1950, Wisconsin’s population surpassed Minnesota’s by at least ten percent.

Information in this article is derived from the QCEW. The QCEW is produced by the U.S. Bureau of Labor Statistics (BLS). The QCEW compiles employment and wages of establishments which report to U.S. Unemployment Insurance programs, which includes 97% of all civilian employment in the nation. The QCEW is the most accurate of the BLS programs that measure state and national employment. QCEW data for 2017 is preliminary.

As defined by the BLS, ”average annual pay” includes wages and salaries, as well as “bonuses, the cash value of meals and lodging when supplied, tips and other gratuities, and, in some states, employer contributions to certain deferred compensation plans such as 401(k) plans, and stock options.” In this paragraph—and in the final graph—the conversion of QCEW average annual pay amounts to constant 2017 dollars is based on the Consumer Price Index (CPI).