CWERB - Special Report: Jobs and Income in Central Wisconsin

From the early 1980s to the early 1990s, the Central Wisconsin economy performed well. New jobs created in the area amounted to about 39,800, a dramatic growth rate of 45 percent in employment compared to the State's 17 percent change (Figure 1)1. Moreover, the growth of wages, salaries, and income in our region exceeded the performance of the State (Figure 2). This report, based on the most recent data available, identifies the major sources of job and income growth. The industries that experienced the fastest growth during this period of time are highlighted, and explanations for per capita income differences in Central Wisconsin during the 1982‑1993 time frame are provided.

A recent study published by the La Follette Institute of Public Affairs2, indicated that most of the growth in employment for Wisconsin during the last decade was in white‑collar occupations. The North central region, in which Marathon, Portage, and Wood counties are located, experienced rapid growth in administrative and technical sales employment. and low growth in business services employment due largely to a decline in insurance industry payrolls during the 1980s. Also, the study showed the North central region had the lowest growth rate in employment requiring a college degree and the highest growth rate in jobs where a high school education is sufficient.

The purpose of this paper is to examine these changes and analyze the changing nature of our Central Wisconsin economy.

Since the early 1980s the Central Wisconsin economy created more than 39,800 jobs. Of the three counties in this region, Marathon created 21,000 jobs, a growth of 62 percent, Portage 9,500 jobs, a growth of 45 percent, and Wood 8,900 jobs, a growth of 28 percent (Figure 3). As noted above, the comparable growth rate for the State of Wisconsin was only 17 percent.

Employment data were divided into five major industrial sectors to help analyze the nature of the changes in our job market. These sectors are manufacturing, service, trade, construction, and government. As Figure 4 shows, all five sectors experienced substantial increase in employment. The service industry, together with manufacturing and trade, provided most of the increase in employment opportunities for the local economy (Figure 5). By looking at the percentage growth rates in Figure 6, we find that the fastest growing sector in the region was constriction, although it represents a small portion of total employment. The largest sector, the service industry, also grew rapidly in employment followed by the trade, manufacturing and government sectors.

Marathon county had the fastest employment growth in four out of the five industrial categories. It led in the manufacturing, service, trade, and government sectors. Portage county's growth in construction payrolls topped the region for this classification. Wood county employment growth rates were substantial except for manufacturing, where little change was attained. (Figure 7).

The different employment growth rates of these sectors have led to significant structural changes in our economy. These structural changes can be measured by changes In the relative share or proportion of jobs provided by each industrial sector. Figure 8 indicates that the change in the relative share of jobs generated by government and construction is more evident than in the other sectors. The government's relative share of employment declined by about 13 percent for the region. On the other hand, the relative share of jobs provided by construction has increased by about 70 percent for the region. The relative portion of jobs provided by the service industry in Central Wisconsin has increased significantly, gaining about 8 percent. The relative share of jobs provided by trade basically remained unchanged. The share of jobs provided by manufacturing in Central Wisconsin has declined by about 9 percent even though the absolute number of jobs in manufacturing has increased and the sector provides about 25 percent of total non‑farm employment in our region.

As indicated by Figure 2, the Central Wisconsin economy out performed the State in terms of the growth rate of wages and salaries, per capita income, non‑farm personal income, and total personal income. The decrease of farm income In this region was somewhat less than that for the State economy. In addition, the absolute increase in per capita income in our region was impressive. From 1982 to 1992 per capita income, measured in 1992 dollars, increased by $2,938 to $19,038 for the State. But, per capita income Increased by $3,423 for Marathon, by $2,579 for Portage, and by $3,398 for Wood (Figure 9). Notice that Marathon and Portage County still lag the State in per capita Income by $1,500 and $2,247 respectively.

Earnings by industry are presented in ten categories to allow for a detailed analysis of income growth. Over the time period of 1982‑1992, the Central Wisconsin's growth rate of income derived from construction, manufacturing, transportation and public utilities, wholesale, and government exceeded that of the State economy (Figure 10). On the other hand, the State economy out performed the Central Wisconsin in the growth rate of income derived from service; finance, insurance, and real estate; retail; mining; and agricultural service, forestry, fisheries, and related activities (Figure 11).

Figure 12 shows how the individual counties compare to each other and the State in terms of income growth by sector.

Out of the ten industries, some have become more important than before as sources of income for the people of Central Wisconsin. These industrial sectors are service, construction, and agricultural service, forestry and fisheries. For example, the service sector alone constituted 20.7 percent of total regional income in 1992 compared to 18.2 percent in 1982. Figure 13 shows the percentage growth of the relative shares of these industrial sectors. In contrast, the percentage share of income in Central Wisconsin derived from the remainder of the other sources of income declined in their relative Importance. (Figure 14). Please note that while manufacturing's share of relative total income fell by about 7 percent, k Is still the largest source of income In the region (accounting for 30.8 percent of total regional income). Manufacturing's fatal Income has increased over the decade, but not as fast as some of the other sectors cited above. Thus, it has diminished its relative importance.

The growth in personal income documented above indicates a strong economic performance for this area. However, these positive data must be balanced by examining family income and poverty statistics. As Table 1 Indicates, there has been virtual stagnation in median family income over the last census period. Family income in Central Wisconsin has increased by less than one percent while a small decline occurred at the State level. It must be noted that family size decreased during this period as shown by a 3.2% decline in persons per household for the State and a 4.8% drop in persons per household for Central Wisconsin. Therefore, it is reasonable to conclude that the ability of families to provide an appropriate standard of living increased moderately.

Wisconsin

Central Wisconsin

1979

$40 418

$39,218

1989

$39,894

$39,552

However, during this period there was an increase in the percent of the population that were living in poverty according to the government's official poverty threshold. As Table 2 shows, the poverty rate increased for both the State and Central Wisconsin. It is clear that for low income people, the community gains in jobs, wages, and personal income were not sufficient to improve their standard of living.

Wisconsin

Central Wisconsin

1980

8.7

1990

10.7

9.3

Portage county has experienced higher growth rates than Wood county in both employment and income in the 1980s and 1990s, however, the per capita income gap between these two counties has increased from $1,512 to $2,331 during this period of time. What explains this discrepancy?

The changes in demographic factors probably explain most of the difference. During the 1980s, Portage County had a higher population growth, 6.9 percent, compared with Wood County's growth rate of only 1.1 percent. Additionally, the age structure of the population may help explain the difference in per capita income. Income increases with age and educational attainment. Most people reach their peak income about age 45. Additionally, older people tend to have higher incomes and smaller families than younger persons, thus contributing to higher per capita income. In Wood county we found that 32.4 percent of the total population Is 45 years or older and only 26.4 percent of the population in Portage falls into the same category. Marathon's per capita income in 1992, $17,735, falls between per capita incomes of Portage and Wood. 30.7 percent of the population in Marathon is age 45 or older, again falling between the same indicators for Portage and Wood. The local area per capita income data should be used with caution since a higher per capital income may not be indicative of the economic well‑being of the region. For instance, a major construction project may substantially raise the per capita income of an area for several years since these projects attract highly paid workers from other communities with their income measured at the construction site. On the other hand, the presence of a large college population will tend to keep the per capita income of an area at a lower level because the residents of these institutions have little attributable income. Again, a lower per capita personal income does riot necessarily indicate a low level of prosperity.

This paper has identified several Important trends In the Central Wisconsin economy since the early 1980s. The most significant development has been a dramatic 45 percent growth in employment with most of the Increase occurring in the manufacturing, service, and trade sectors. Per capita income has increased over twenty percent which exceeds the growth rate of the State of Wisconsin. The construction industry in Central Wisconsin has exhibited very large percentage increases in jobs and income generation. However, family incomes have virtually stagnated during this period which parallels the experience in the State and Nation. Unfortunately, poverty rates in Central Wisconsin have edged higher.

Based on the structural changes documented in this report, it is clear that we live in a dynamic region that is continually adapting to changing circumstances. The forces of change are both internal and external to the area. For example, the globalization of the economy has placed tremendous pressure on local business firms to become more efficient in their operations. Playing key roles in this dynamic process are new government spending and taxation patterns, shifts in population demographics, and technological change. Certainly the next decade promises an economy that will continue to develop and evolve, and the people of Central Wisconsin will fully participate in this dynamic process.

1. The beginning year for different counties varies slightly due to data availability. This could understate the change in employment over the time period.

2. The Growth of Business Services in Wisconsin, Donald A. Nichols, Center For Research on the Wisconsin Economy, Robert M. La Follette Institute of Public Affairs, University of Wisconsin‑Madison.

3. These ten categories are agricultural services, forestry, fisheries and other (Ag. Serv.), mining, construction (constr.). manufacturing (manu.), transportation and public utilities (TPU), wholesale trade, retail trade, finance, insurance, and real estate (FIRE), service, and government (Gov't). Farming is not included in these data.