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Unemployment rate falls to 3.2% over last two months following 'data distortion' at federal level
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WISCONSIN ECONOMY | EMPLOYMENT

Unemployment rate falls to 3.2% over last two months following 'data distortion' at federal level

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Previously reported as flat, Wisconsin’s unemployment rate for September fell to 3.4%, according to revised data from the state Department of Workforce Development.

DWD reported the state’s unemployment rate dropped even further to 3.2% in October, the lowest the state has seen since March 2020, before the COVID-19 pandemic upended the nation’s economy. The national unemployment rate for October was 4.6%.

State and federal officials say a “data distortion” discovered by the U.S. Bureau of Labor Statistics in Michigan affected unemployment data for several neighboring states including Wisconsin. As a result, revised numbers released Thursday show Wisconsin’s unemployment rate in September was lower than the 3.9% that was previously reported in preliminary numbers released last month.

Aug.09 -- Guild Education CEO Rachel Carlson discusses how companies can win the war for talent by offering opportunities to gain new skills and training as an added employee benefit. She speaks with Emily Chang on "Bloomberg Technology."

Scott Hodek, section chief of DWD’s Office of Economic Advisors, said the unemployment drop over the past two months is a result of adjusted data and cannot be attributed to any one economic event, including the end of enhanced federal unemployment benefits on Sept. 6.

“What we’ve seen nationwide and in statewide data, we haven’t really seen a surge in employment growth related to the end of the extended unemployment benefits either in the September or October data,” Hodek said.

Republicans and some business owners had targeted the enhanced benefits earlier this year for exacerbating the state’s workforce shortage by creating a disincentive to work, but DWD officials have said Wisconsin employers struggle to fill jobs due to a workforce gap driven by low birthrates, high retirement rates and low net migration and immigration flows into the state.

“We don’t have a lot of underutilized capacity in general,” Hodek said.

DWD’s report found that Wisconsin lost 1,000 nonfarm jobs from September to October, but added 2,000 private-sector jobs over the same span. The state’s labor participation rate of 66.4% — down from 66.5% in September — is higher than the nationwide average of 61.6%.

“We’ve been working hard over the last 18 months to put our state and economy in the best position to rebound from this pandemic,” Gov. Tony Evers said in a statement. “This is great news for our state and our economic recovery, and I’m proud of our efforts to make sure we bounce back even better than we were before the pandemic hit.”

Wisconsin’s October unemployment report found that nonfarm seasonally adjusted jobs continue to remain relatively flat in the state at 96% of February 2020 levels.

The leisure and hospitality industry, which was hardest hit by the pandemic, was up about 27,500 jobs last month when compared with October of last year, but still remains almost 32,000 jobs lower than what the industry had two years ago.

The U.S. Bureau of Labor Statistics said in a statement Tuesday that an outlier identified in Michigan for the survey used to create unemployment models for the entire region distorted unemployment data for several states including Wisconsin. The bureau has modified the data for September, October and future months, but earlier months in the year will be addressed during the annual revision process for 2021, which is expected to be finished in March 2022.

Hodek said it’s possible the distorted data underestimated the state’s employment rate in previous months, but added it’s too early to say for certain.

“We would be speculating at this point,” he said. “We’ll just have to wait until year-end before we see that overall trend.”

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