From WisPolitics.com
Two reports from the University of Wisconsin highlight the good and the potential bad of the state’s currently booming economy.
The mixed outlook reflects similar concerns nationally.
One report focuses on the state’s labor shortages, while the other looks at the state’s rising housing market.
– The first report from a UW-Madison liberal think tank shows Wisconsin’s labor force participation rate has exceeded pre-pandemic levels.
The Center on Wisconsin Strategy, or COWS, report shows that labor force participation in the state reached 66.4 percent in February 2022, compared to 66.1 percent in February 2020.
Meanwhile, the state’s workforce reached 3.14 million in February, up 40,000 from February 2020, the report shows. At the same time, however, the state’s overall employment level remains about 77,000 jobs below the pre-pandemic total. These figures differ because the number of people in work also includes jobseekers.
The report also highlights how certain industries are recovering faster than others – including some that have been hardest hit by the pandemic. COWS finds employment in the leisure and hospitality industry down 4.2 percent from pre-pandemic levels. But that’s after more than half of workers in this industry lost their jobs in April 2020, the report’s authors note.
By comparison, employment in education, healthcare, and state and local governments remains more than 5 percent below pre-pandemic levels, according to the report. Manufacturing employment is just 0.1 percent lower than before the pandemic, while construction employment has recovered.
The Department of Human Resources recently announced that the state’s unemployment rate hit 2.9 percent in February, hitting the state’s all-time low of March 2020.
COWS also argues that low-wage workers “need a new ‘normal'” as the state economy continues to recover. The report’s authors say the low unemployment rate “is likely to give workers more leverage” to get higher wages and more jobs, but they say “stronger public policy” can help sustain these changes.
“Strong public health, accessible health insurance, and affordable and quality childcare (with decently paid providers) are ways the state can help workers remain in the workplace in the ever-changing context of this global pandemic,” they wrote you .
– UW-Extension’s second report highlights “increasing concern” that another real estate market bubble may be on the horizon.
“Although safeguards have been put in place to prevent secondary financial markets from collapsing again, if history repeats itself, the potential economic pain for homeowners could be significant,” wrote Steven Deller, a professor in UW-Madison’s Department of Agricultural and Applied Economics.
Using state housing data from the Federal Housing Finance Agency, he found that house prices have risen rapidly in recent years. While these numbers illustrate the growth, collapse, and slow recovery of the real estate market that began in the mid-2000s, Deller says they also suggest that a similar scenario could play out in the near future.
While some Wisconsin areas, like Eau Claire, have seen steeper increases over the past five years, he noted that “every market reviewed here” saw sharp price increases through 2021, despite the economic challenges of the pandemic. These include Fond du Lac, Janesville, Beloit, La Crosse, Madison and Milwaukee.
“The strong growth in recent years, coupled with the surge in 2021, is not only evidence of the shortage of homes in the market, but also the beginning of another housing bubble,” he wrote. “While the growth rate slowed in the final quarter of 2021, the sharp rise in home prices across Wisconsin is further evidence of the challenges in the real estate market.”
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The Capitol Report is written by the editors of WisPolitics.com, a Madison-based bipartisan news service specializing in government and political coverage, and is distributed for publication by members of the Wisconsin Newspaper Association.
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