109 posts categorized "Wisconsin"

College enrollments falling in Ninth District, nationwide

Something is happening on college campuses across the country—or rather, not happening.

Despite all the messages encouraging college attendance—not to mention job and other data that demonstrate its utility—higher education enrollments have been dropping steadily in recent years, according to data from the National Student Clearinghouse Research Center.

Every state in the Ninth District has witnessed an enrollment drop at degree-granting higher education institutions for at least two consecutive years. The drop from fall 2012 to fall 2014 was highest in Montana, at almost 6 percent, while North Dakota and Minnesota were also above the national average (see chart). In fact, save for South Dakota, enrollments have declined in every other district state for at least three years running.

Some of the reason behind the drop is a cyclical economy. Joblessness, for example, tends to push people into school to obtain better skills for the job market, and enrollments swelled during the Great Recession. A stronger job market is likely pulling many students away from their books.

Demographics are also playing a key role. When national higher education enrollment peaked in 2011, people in their so-called prime college years (18 to 21 years old) were also at their peak and have since declined, leading to lower enrollments.

College enrollments -- 2-26-15

Ad hoc survey: Ninth District businesses plan to ramp up hiring, increase starting pay

The Ninth District economy is in growth mode and employment is expected to increase, based on a recent poll of 140 business contacts from around the district (see methodology below).

Businesses are expecting to expand, with 46 percent of respondents planning to increase employment at their firms and 58 percent of these firms citing anticipated high sales growth as the most important factor behind increased employment. Only 3 percent plan to decrease employment. In the same survey a year ago, 41 percent planned to increase employment and 9 percent planned to cut jobs (see chart).

Other important factors cited for new hiring were overworked staff, the need for additional skills and improved financial condition of firms. The vast majority of respondents plan to use current employee referrals, word of mouth and advertising to get new employees. Forty-eight percent plan to use a recruiting firm, which is up from 22 percent of respondents in last year’s poll. Twenty-seven percent of respondents also plan to raise starting pay compared with only 8 percent last year.

Feb ad hoc survey Ch1+meth -- 2-13-15

Methodology: On Dec. 1, 2014, the Minneapolis Fed emailed a web-based survey to about 600 Beige Book contacts from around the Ninth District. By Feb. 12, 140 contacts had filled out the survey. The respondents come from a variety of industries (see table).

The aches and pains of working-age disability

Since the 1980s, working-age disability has been rising, and particularly over the past decade. Many disorders can qualify a person for one of two major federal disability programs: Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).

However, recipients are increasingly qualifying for these programs because of either mental disorders or conditions related to the musculoskeletal system or connective tissues, which covers a variety of muscle, back and joint disorders like arthritis, back pain, tendonitis and herniated discs.

In Ninth District states, the most common disability diagnosis (at 42 percent) for SSDI recipients is a mental disorder, such as anxiety, post-traumatic stress disorder, depression or bipolar disorder (see Chart 1). While recipient growth in this category exceeded 50 percent from 2003 to 2013, it has leveled off in recent years.

The fastest growing diagnosis involves conditions related to the musculoskeletal system and connective tissue. This category covered about one in four SSDI recipients in 2013; total recipients have doubled over the past decade. Growth in these two major diagnosis categories has also been faster in the Ninth District than in the nation over the past decade (see Chart 2).

For much more on disability trends in the Ninth District, see the January cover of the fedgazette.

Dulguun Batbold, research analyst, contributed data to this article.

Disability diagnosis CH1-2 -- 2-10-15


A look at rising veteran disability

The incidence of working-age, civilian disability, as measured by enrollments in the largest federal disability programs, has been rising for the better part of three decades (see discussion in the January fedgazette). But one other federal disability program has been witnessing even faster growth of late: veteran disability.

Veterans’ disability compensation, as it’s called, is paid to veterans who incur a disability during active military service or are diagnosed with a post-service disability that is presumed to be related to military service. After seeing little growth in the 1990s, the number of veterans qualifying for disability compensation rose by 62 percent from 2000 to 2013, according to the U.S. Department of Veterans Affairs (see Chart 1). During this time, the population of eligible veterans also shrank by 17 percent, according to the Congressional Budget Office.

Though historical data on veteran disability by state are not publicly available, recent data suggest that the same growth trend is occurring in Ninth District states. From 2011 to 2013, every district state saw growth of at least 7 percent in veteran disability; Minnesota’s 12 percent growth topped the national average (see Chart 2).

Veterans disability Ch1-2

Across district states, 187,000 veterans received disability benefits in 2013. That translates to a small but notable portion of the district labor force—ranging from about 2 percent (Wisconsin) to almost 4 percent (Montana), with most district states above the national average (see Chart 3).

Veterans disability Ch3

While veterans receiving disability compensation are spread throughout a given state, they tend to be more concentrated around military bases, such as Camp Ripley in central Minnesota, Ellsworth Air Force Base in Rapid City, S.D., and Malmstrom Air Force Base near Great Falls, Mont. (see map).

Dulguun Batbold, research analyst, contributed data to this article.

Veterans disability -- Map 2-4-15

 

Mixed year for district mid-cap stocks in 2014

Stocks of mid-cap companies in the Ninth District had a lackluster year in 2014, closing the year with a less than 1 percent overall gain, following a 29 percent increase in 2013. Meanwhile, the benchmark S&P MidCap 400 Index increased 8 percent in 2014. Despite the 2014 performance, the longer-run trend in the district index remains broadly consistent with that in the larger S&P MidCap 400 Index (see Chart 1).

9th Dist stock index CH1 -- 1-26-15

Performance was mixed across companies in the index with gains in half almost offset by losses in the other half. The top performer was C. H. Robinson Worldwide, a freight transportation and logistics company based in Eden Prairie, Minn., which saw its market cap increase by $2.1 billion (24 percent) in 2014. Stratasys, a manufacturer of 3D printers also based in Eden Prairie had the largest loss at $2.3 billion (36 percent) of its market value.

In terms of sector composition, Ninth District companies in the services, basic materials and consumer goods sectors posted overall gains in market value (see Chart 2). The services sector had a particularly strong year in 2014, adding $4.9 billion in market cap. Notable performers in this category include the Buffalo Wild Wings restaurant chain (24 percent increase in market value), SuperValu, a food retail company (32 percent), and Patterson Cos., a medical equipment wholesaler (14 percent). Together, these performers added $1.9 billion in market capitalization to the sector total.

9th Dist stock index CH2 -- 1-26-15

In all other sectors, district mid-cap stocks posted overall decreases in market values. After Stratasys, worst performers included MDU Resources Group, a diversified utilities company based in Bismarck, N.D., whose market capitalization decreased by $1.2 billion (21 percent); Donaldson Company, a Minneapolis-based manufacturer of filtration systems, which dropped by $1.1 billion (17 percent); and Raven Industries, a diversified machinery producer based in Sioux Falls, S.D., with a $0.5 billion (36 percent) decline in market value.

The Ninth District Mid-Cap Stock Index applies a methodology similar to the one used by the S&P Midcap 400 Index to track changes in market valuations of mid-sized publicly traded companies headquartered in the district. For more details, see the index methodology.

Beige Book recap: Modest growth in Ninth District

Over the past two months, the Ninth District economy has seen modest growth, according to the latest Beige Book information released by the Federal Reserve Bank of Minneapolis. Increased activity was noted in consumer spending, professional services, manufacturing and non-energy mining. Activity was level in tourism and mixed in commercial construction, commercial real estate and agriculture. Energy, residential real estate and residential construction were down. Labor markets continued to tighten since the previous report. While overall wage increases remained modest, there were examples of steeper increases in some regions and industries.

Consumer spending and tourism: Consumer spending increased moderately. Mall and retail representatives across district states reported solid traffic and sales. Overall tourism was about level with a year ago, according to a variety of sources. Construction and real estate: Construction activity was mixed in the district’s larger cities. In Sioux Falls, S.D., the value of November commercial permits increased from a year ago, but fell in Billings, Mont.

Residential construction: Activity was mostly lower. In the Minneapolis-St. Paul area, the value of December residential permits decreased 9 percent from a year earlier and also dropped in the Bismarck, N.D. area (November data). Residential activity was stronger in Billings and Sioux Falls, however. Home sales were generally lower from a year earlier (in November). In the Sioux Falls area, home sales were down 12 percent, inventory increased 1 percent and the median sales price increased 6 percent relative to a year earlier. Sales were also down in northwestern Wisconsin, and the median sales price was 6 percent lower. Minnesota home sales were down 13 percent, inventories of homes for sale increased 5 percent and the median sales price rose 3 percent. Home sales in the Bismarck area were about level with last year.

Manufacturing: Activity increased slightly. A manufacturing index increased in December from the previous month in Minnesota and South Dakota, but fell slightly in North Dakota. However, the index pointed to continued expansion in all three states. Through October, manufactured exports in district states were up 1 percent compared with the same period a year earlier.

Energy and mining: The energy sector slowed slightly in response to lower output prices. Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota. Mining activity increased slightly. District iron ore mines were operating at or near capacity, with November production slightly higher than a year earlier.

Agriculture: Conditions remained mixed, with livestock and dairy producers faring better than crop farmers. A Minneapolis Fed third-quarter survey found that a majority of farm incomes had fallen from a year earlier and that capital spending also decreased. The fourth quarter outlook was also weaker, according to the survey. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay and milk; prices increased for cattle, hogs, eggs and poultry.

Employment and wages: Labor markets continued to tighten since the previous report. Overall wage increases remained modest, but there were examples of steeper increases in some regions and industries. Some construction firms in the Minneapolis-St. Paul area noted that labor costs have increased recently. In addition, some managers at Minneapolis-St. Paul area restaurants indicated that they were increasing wages to attract employees.

See the full Beige Book report for more details on the national and Ninth District performance.

Historic preservation: This old tax credit

Historic renovation activity over the past few years in Minnesota and Wisconsin points to the power of income tax incentives to spur rehabilitation of old buildings.

By defraying renovation expenses, historic rehabilitation tax credits are intended to save culturally significant structures that would otherwise deteriorate and eventually fall to the wrecking ball. Property owners can apply for a federal income tax credit worth 20 percent of the cost of restoring income-producing buildings, and in many states, state income tax credits that can be combined with the federal credit.

In 2013, the National Park Service accepted applications for renovation projects in Ninth District states (excluding Michigan) eligible for over $60 million in federal and state historic preservation tax credits, most of it in Minnesota and Wisconsin.

An unknown share of projects that received credits likely would have occurred without credits, or with the federal credit alone. In some cases, credits may serve to increase profits rather than provide the minimum return on investment necessary to make the project worthwhile. But data on historic rehab tax credit projects in Minnesota and Wisconsin indicate that more hammers swing on renovation projects when tax incentives increase.

In 2010, the Minnesota Legislature enacted a 20 percent historic preservation tax credit to match the federal credit, which was enacted in the 1970s. In subsequent years, the number of historic renovation projects applying for a tax credit (federal and/or state) rose sharply (see chart), although some of the increase was likely due to improved economic conditions in the wake of the Great Recession. Total estimated renovation costs also jumped.

In Wisconsin, historic tax credit projects surged last year after the state raised its modest 5 percent credit to the same level as Minnesota’s. From 2013 to 2014, estimated costs of active renovation projects swelled sevenfold to over $260 million, according to the Wisconsin state historic preservation office.

This apparent tax credit effect doesn’t necessarily mean that income tax credits are the best mechanism for fostering historic preservation. South Dakota has no historic preservation tax credit, but the state offers to freeze property tax assessments on rehabilitated buildings for eight years. In Minnesota, consumers support historic preservation through sales taxes allocated to arts and cultural heritage programs.

Other forms of financial support for historic preservation in the district and nationwide include rehabilitation grants funded by gaming revenue, the purchase of historic façade easements by cities and tax-deductible private donations.

Historic preservation

Sure it’s cold, but we’re upwardly mobile

If you live in a Ninth District state, which do you prefer, moving out or moving up? Probably the former if you don’t like the cold, but likely the latter in most other cases. And while Ninth District states have cold winters, so too do they offer better upward income mobility than the nation overall, according to data from a team of researchers from Harvard and UC-Berkeley.

The research project, dubbed Equality of Opportunity, collected income data on millions of parents in the last half of the 1990s. It then tracked how kids from low-income families in this sample fared in 2011 and 2012, when they were in their early 30s. (For more information on the study’s methodology, go here.)

The study split the country into more than 700 commuting zones, which are rough approximations of local economies (urban and rural). It then ranked commuting zones for absolute upward mobility—roughly, the average national income rank of a child from low-income parents in the commuting zone.

The data show that Ninth District states stand out for high absolute upward mobility. The distribution of scores for commuting zones in every district state (including the combined region of northwestern Wisconsin and the Upper Peninsula of Michigan) skewed higher than scores for all other commuting zones not in the Ninth District (see charts below).

For more data and discussion on this topic, see the October fedgazette for in-depth articles on both high income mobility and low income mobility in the Ninth District.

  Absolute income distribution 9th states -- 11-13-14

A summer of steady growth in the Ninth District

The Ninth District economy continued to show signs of steady growth through the summer months, characterized by job growth, decreases in unemployment rates and gains in home building.

As of August, nonfarm employment in district states was up 1.8 percent relative to a year ago, posting a net increase of about 122,000 jobs. North Dakota reported the strongest employment growth among district states, accounting for about one in every six jobs added in the Ninth District over the past 12 months despite the state’s workforce comprising only 7 percent of the district total. Employment growth in other district states was largely in line with the national trend (up 1.8 percent), except in South Dakota, where nonfarm employment growth was 0.7 percent.

The district unemployment rate dropped to 4.7 percent over the same period, down 0.8 percentage points from a year ago. The spread in unemployment rates among district states has narrowed over the past 12 months. Regions with relatively high unemployment rates, such as the Upper Peninsula of Michigan, Wisconsin and Montana, posted larger year-over-year declines than Minnesota and the Dakotas, where unemployment rates started out much lower last year.

Manufacturing wage growth in the district slowed to 1.4 percent during the three-month period ending in August, compared with a growth rate of 2.5 percent during the same period a year earlier. With the exception of North Dakota and Wisconsin, growth in manufacturing wages in district states was below the national average of 1.6 percent. Montana’s manufacturing workers reported the lowest year-over-year growth rate in hourly earnings among district states, which barely reversed the flat or declining trend in manufacturing wages in the state for much of 2013 and early 2014.

During second quarter 2014, personal income growth (adjusted for inflation) across district states was positive, posting a 2.2 percent overall increase relative to a year ago for the district. Except for North Dakota, all district states posted lower personal income growth rates relative to the national average of 2.4 percent, while South Dakota’s state ranking in growth was near the bottom.

New housing authorizations for the three-month period ending in August were up 8.2 percent in district states; however, rates varied widely among district states. Montana and South Dakota posted year-over-year declines of over 20 percent in new housing authorizations, while North Dakota showed a 42 percent increase over the same period. Housing authorizations in Minnesota and Wisconsin were up 5 percent and 10 percent, respectively, closer to the national average of 7.7 percent.

Home prices continued to show increases in several district cities. During the second quarter of 2014, home prices were 7.4 percent higher than a year ago in Bismarck, N.D., 6.7 percent higher in Minneapolis-St. Paul, 3.2 percent higher in Fargo, N.D., and 2.6 percent higher in Sioux Falls, S.D. Nationally, home prices increased by 4.4 percent during the same period.

For current and historical data on the economic indicators referenced here, see the “Monthly Summary” spreadsheet, along with other Ninth District data that are updated regularly.

Minnesota: The land of 10,000 deep-fried things

The annual Minnesota State Fair finished on a high note this year, setting an attendance record of 1.82 million. The state’s fair is known for its unusual popularity compared with fairs of other states, and it is the second-largest state fair in the nation, second only to Texas.

The fair’s popularity has continued to grow slowly and steadily over time, with only occasional and modest declines in annual attendance (see chart). One of the reasons for this steady attendance pattern likely has something to do with simple population growth. Since 1990, the Minnesota State Fair has typically attracted the equivalent of about one of every three residents (fluctuating modestly between about 31 percent and 36 percent of the state population in a given year). As the population has grown, so too has State Fair attendance.

That doesn’t, however, explain why the Minnesota State Fair is popular to more of its residents than those of other states. For example, attendance at the Wisconsin State Fair represents fewer than one in five state residents. The State Fair of Texas attracts about 2.8 million visitors (over 24 days, compared to Minnesota’s 11 days). Still, that works out to barely one in 10 residents of the Lone Star State.

State Fair attendance -- 10-15-14