Wisconsin Unemployment Increased in October

After five months of diminishing job growth, Wisconsin employment fell in October, with service industry employees, including  bar and restaurant workers, bearing the greatest impact.

Unemployment in the state rose to 5.7% in October, the Department of Workforce Development (DWD) reported Thursday, a slight uptick from 5.4% in September.

The state’s service sector lost 20,900 jobs. Gains in other sectors offset some of those losses, leaving the state with a net loss of 14,700 jobs, according to DWD. Manufacturing and construction both experienced strong growth.

October was the first month in which the total number of jobs fell and unemployment increased since April, when the state lost about 450,000 jobs in the early weeks of the COVID-19 pandemic. Those job losses were due in part to businesses that closed, temporarily or permanently, because of the statewide shelter in place order due to COVID-19, and in part because consumers cut spending.

“We’re still down about 226,000 jobs since our February peak,” says Scott Hodek, section chief for the DWD’s Office of Economic Advisors.

Starting in May, job growth resumed, with robust growth in June. But while it continued in July, August and September, it tapered off over those three months before turning negative in October.

The October decline, concentrated in the leisure and hospitality sector, came as local health authorities — as well as, for a brief period, the state — limited indoor gatherings to try to keep the coronavirus from spreading. But it also likely reflects consumer wariness about catching the virus in close quarters with strangers as well as caution about spending.

“Not every consumer is willing to go back out to their normal kind of spending patterns just yet,” says Hodek. “Pretty much everything is linked to whether they feel safe or not.”

With October’s report, “What we have long worried about has finally come — the turn back to job loss instead of job growth,” says Laura Dresser, associate director of COWS, a University of Wisconsin research and policy center that examines the economy’s impact on working people.

Benefits such as supplemental unemployment payments under the CARES Act have ended, leaving people with less income to spend, Dresser says. “We know that the disease is increasing,” she adds. “And those two factors are a heavy weight on the economy that show up in this report.”

In addition to the big hit to leisure and hospitality jobs in the state, education and healthcare jobs also showed declines. “That’s about this economic malaise spreading a little bit,” Dresser says.

For the economy to rebound again will require reversing the current surge of increasing numbers of cases of the virus, she says, and would be assisted by new federal relief aid to provide income support for people who have lost work from the pandemic.

But COVID-19 itself is the primary driver of the economic decline.

“People want to pretend that the problem with the economy is the public health closures, the shutdowns, the lockdowns,” Dresser says. “That misunderstands what’s going on. The disease is the economic problem. When the disease is out of control, people will not go out.”

Reprinted with permission of Wisconsin Examiner.