Wisconsin unemployment rate rises

  • Wisconsin's unemployment rate jumped to 7.6 percent in January, now the same as the national rate. The number was only 5.8 percent in December.

Wisconsin's unemployment rate jumped to 7.6 percent in January, the same as the national rate, according to the state Department of Workforce Development.

In December, the state's unemployment rate was 5.8 percent. At the end of January 2008, it was only 4.9 percent. The new number means roughly 234,000 of 3 million workers are seeking work.

"The jump in Wisconsin's unemployment rate underscores the economic challenges we face as a nation," said the department's secretary Roberta Gassman in a press release.

January saw a loss of 72,700 non-farm jobs, according to the DWD. There were 31,700 lost manufacturing jobs, 17,400 in professional and business services, and 11,000 in construction. The state added 9,700 jobs last month in education and health services.

This news is not entirely unexpected given that according to the U.S. Bureau of Labor Statistics, unemployment rose in 46 of 50 states and the District of Columbia in 2008. The national rate was 7.2 percent at the end of 2008 and it rose another four-tenths of a point in January.

Until these new numbers were released, Wisconsin's unemployment numbers were tracking lower than the national unemployment rate, according to Bret Mayborne, chief economic research director for the Metropolitan Milwaukee Association of Commerce.

"The U.S. was about a point higher than the metropolitan Milwaukee rate, and the metro rate compared favorably," Mayborne said. "However there will be a considerable increase in unemployment rates, with everything fairly rising in the last two to three months."

Mayborne said the local economy was at or near the bottom of the economic downturn, but only time would tell. He warned the economy was likely to get worse before it gets better, especially given some new potential worrisome trends.

The MMAC has opposed a proposition of paying sick leave to employees. On Feb. 6, a Milwaukee Country circuit judge granted a temporary injunction against enacting the proposal.

Also, the prospect of a new minimum wage of $7.60 per hour would eclipse the market equilibrium of the current rate: $6.50 per hour. For employers, paying an increased rate could drive the unemployment rate higher.

"It bothers me in a sense because it gives companies an excuse that may be looking at Wisconsin to look elsewhere if you have different minimum wage rates," Mayborne said.

"At least on the margins, it will harm economic growth, as it potentially gives a disadvantage to hire workers where business might take a hit on the front end to get an employee hired," he said.

Jerilyn Goodman, press secretary for Rep. Tammy Baldwin (D-Wisconsin), said many people are being affected by the current economic crisis.

Baldwin represents Wisconsin's 2nd Congressional District, with offices in Madison and Beloit. The district has seven counties, ranging from Baraboo in the north to Beloit in the south.

"When our plants close, such as a large plant in Waukesha County, or a GM Plant that closed in Janesville, it doesn't only affect us at the plant, but all the services that are provided," Goodman said. "A child care center had to close because parents couldn't pay the health care."

Noreen Lephardt, an adjunct associate professor of economics at Marquette said businesses closing will create a ripple effect. She was careful to say that correlation is not causation.

"Basic simple economics say that there will be more unemployment with a wage rate that is set above the equilibrium," she said. "This new minimum wage should lead one to expect higher levels of unemployment in the future."

Nationally, Michigan's unemployment rate is the highest at 8.4 percent, primarily due to the struggling automotive industry. Rhode Island had the largest rate jump, with a 5.2 percent to 7.8 percent rise.

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