I read John Phelan’s July 28 counterpoint, “Wisconsin-Minnesota comparison was flawed,” in which he critiques the study that I wrote for the Economic Policy Institute (EPI) comparing the two states (see https://tinyurl.com/epi-cooper). I’m writing because, in his remarks, Mr. Phelan blatantly misrepresents my study. He’s also wrong in substance.
Specifically, Phelan’s commentary says:
“And there are plain misrepresentations. The EPI notes that, by December 2017, Wisconsin and Minnesota ‘have reached effectively the same unemployment rate, at 3 percent and 3.1 percent, respectively’ and argues that ‘Minnesota was back at its pre-recession (December 2007) unemployment rate of 4.7 percent by September 2013, fewer than three years after [Gov. Mark] Dayton took office. In contrast, it took until December of 2014 — 15 months later — for Wisconsin to reach its pre-recession unemployment rate of 4.8 percent.’
“But the EPI fails to mention that in the race to these pre-recession levels of unemployment, Wisconsin was starting from a rate of 8.1 percent and Minnesota was starting from a rate of 7.1 percent. From December 2010 to March 2018, Wisconsin’s unemployment rate fell by 5.2 percentage points to 2.9 percent, while Minnesota’s fell by 3.9 percentage points to 3.2 percent.”
We do not “fail to mention” that Wisconsin started at 8.1 percent and Minnesota at 7.1 percent. In fact, the paragraph that he cites reads: “As shown in Figure A, Wisconsin reached a higher unemployment peak in the wake of the recession than Minnesota, hitting 9.2 percent in January 2010 compared with Minnesota’s peak of 8.1 percent in June 2009. By December 2010, the two states were down to 8.1 percent (Wisconsin) and 7.0 percent (Minnesota), and seven years later, both states have reached effectively the same unemployment rate, at 3.0 percent and 3.1 percent, respectively.”
In other words, I make the very point he claims we’ve “failed to mention” in the exact sentence that he cites — but he chooses to omit that portion of the sentence, then claims that we’ve made misrepresentations.
I would also note that his other critique about GDP trends is wrong on substance. He writes:
“The EPI report makes a number of bogus claims based on cherry-picked data. For example, it uses annual data for 2010 to 2016 to claim that Minnesota’s economy has grown faster than Wisconsin’s since January 2011. But we have quarterly data available running from the final quarter of 2010 — a more precise starting point — into the last quarter of 2017. These more precise data show that over this period, in real terms, Minnesota’s economy grew by 10.9 percent and Wisconsin’s by 11.9 percent.”
Quarterly GDP data are not “more precise.” Quarterly GDP data are more volatile than annual data — that’s why the federal Bureau of Economic Analysis issues revisions to the quarterly data for several quarters after each release. As anyone with a knowledge of statistics would know, a larger sample leads to a more precise estimate — so if you want to understand trends more precisely, comparing larger periods increases the sample and smooths out volatility in the data. Phelan should know this if he’s ever taken a basic econ or statistics class.
I don’t mind when serious people scrutinize my research in good faith, but that is not what Phelan is doing.
David Cooper is a senior economic analyst for the Economic Policy Institute and acting director of the Economic Analysis and Research Network.