News of the Day

Wage growth in Wisconsin has been slowing down this year, but inflation-adjusted personal incomes are expected to grow slightly after declining last year.

The state’s year-over-year change in annual pay was 5.6 percent in November, down from 8 percent in the same month of 2022, according to a report from ADP Research Institute.

Liv Wang, lead data scientist at ADP Research Institute, said wage growth has been elevated since the pandemic, but it’s now moving toward a “more sustainable level” as inflation cools. Wang said she anticipates wage growth will continue to slow over the next year or two.

“One of the factors is we are moving away from the pandemic effects, (and) things are cooling in the labor market,” she said. “Also, the financial environment is tightening as the (Federal Reserve) keeps raising interest rates, so employers may be preparing for the tightening situation right now.”

That slowdown has been felt across sectors in 2023, but has been especially pronounced in the leisure and hospitality industry, according to the ADP report.

The ADP report showed median wage gains in leisure and hospitality nationally far outpaced all other industries from late 2021 through 2022, peaking last March when they were 16.9 percent higher than the previous year. The next closest industry that month was trade, transportation and utilities at 8.8 percent wage growth.

This year, wage growth in leisure and hospitality slowed significantly. As of November, median wages in that sector were 6.5 percent higher than the previous year. Most other industries came in between 5 and 6 percent.

U.S. retail sales rose 3.1% between November 1 and December 24, as shoppers looked for last-minute Christmas deals amid big promotions, a Mastercard report showed on Tuesday.

The increase is lower than the 3.7% growth Mastercard forecast in September and last year’s 7.6% rise as higher interest rates and inflation pressured consumer spending.

Ecommerce sales grew at the slower pace of 6.3% compared to last year’s 10.6% as the popularity of online shopping came off pandemic highs, the report showed.

Sales in the apparel and restaurant categories rose 2.4% and 7.8%, respectively, during the holiday shopping period, according to the Mastercard SpendingPulse report, while sales of electronics fell 0.4%.

In a decision released Friday, the court’s liberal majority said the current maps violate the Wisconsin Constitution’s requirement that districts must be contiguous.

Writing for the majority, Justice Jill Karofsky said the constitution’s contiguity requirements “mean what they say,” a mandate she said was supported by past precedent and common sense.

“Because the current state legislative districts contain separate, detached territory and therefore violate the constitution’s contiguity requirements, we enjoin the Wisconsin Elections Commission from using the current legislative maps in future elections,” Karofsky said.

Democratic voters who filed the redistricting lawsuit also argued the court’s former conservative majority violated the constitution’s separation of powers doctrine when it chose maps that were vetoed by Democratic Gov. Tony Evers. Karofsky said the court didn’t need to address that claim after deciding the maps do not satisfy the constitution’s contiguity requirement.

Karofsky also said the court will not order new elections for all 132 state lawmakers, as Democratic plaintiffs requested, calling such a move a “drastic remedy.”

The court did not immediately draw new districts to replace the current ones but said it would begin that process in case the Legislature and governor are not able to agree on new maps.

“Remedial maps must be adopted prior to the 2024 elections,” Karofsky wrote. “We are hopeful that the legislative process will produce new legislative district maps. However, should that fail to happen, this court is prepared to adopt remedial maps.”

Housing affordability plummeted this year to the lowest level on record amid the astronomical rise in mortgage rates, which put ownership out of reach for millions of Americans, according to a new report published by Redfin.

Just 15.5% of homes for sale in 2023 were considered affordable for the typical U.S. household, the lowest level on record since Redfin began tracking the data in 2013. It marks a steep drop from the typical 40% seen before the pandemic home-buying boom began, and the 20.7% figure recorded in 2022.

The decline in affordability is partially due to a drop in listings – which fell 21.2% over the course of the year – but is largely a result of the spike in mortgage rates and subsequent rise in home prices this year.

Combined, the two have helped to push the typical portion of average wages nationwide required for major homeownership expenses up to 35%, according to a separate report published by real estate data provider ATTOM.

Froedtert Heath, based in Milwaukee, and ThedaCare, based in the Fox Valley, have been working on the merger since it was announced in April. The health systems announced Tuesday they will become one organization effective Jan. 1.

It’s the latest hospital merger to get finalized in Wisconsin, as the state has experienced several in recent years. This summer, Marshfield Clinic Health System and Essentia Health entered an agreement with Minnesota-based Essentia Health to create a new health care network serving parts of four states. A little over a year ago, Gundersen Health System and Bellin Health completed a merger, and Advocate Aurora Health and Atrium Health did the same one day later.

That’s as the health care industry has consolidated substantially over the last two decades, and at a more rapid pace since 2010, according to a 2020 study by Harvard Medical School.

While mergers may have benefits for health systems, Rachel Werner, a health care economist at the University of Pennsylvania, recently told WPR’s “The Morning Show” that mergers in general have a negative effect on prices.

“They tend to increase the price that insurers pay for care for commercially insured individuals, and they don’t really have any improvement in quality,” she said. “Really, what we see are just higher prices — no improvement for patients.”

The Wisconsin Supreme Court heard arguments Tuesday in a case that could hold broad implications for the state’s “gig economy” and how companies like Amazon pay into a fund for unemployed workers.

At issue in the case is precisely how the term “employee” is defined when it comes to gig workers, and who gets to define it.

After DWD initially found that Amazon Logistics owed the backpay, the agency’s decision was upheld twice — first by an administrative law judge, then later by Wisconsin’s Labor Industry Review Commission, or LIRC.

Amazon Logistics challenged those decisions in court, with mixed results. In 2021, Waukesha County Circuit Court Judge Michael Boren ruled that the company had proven that its workers were not “employees” under the law. Then in April, a state appeals court overturned Bohren, ruling against Amazon and in favor of the state.

Further muddying the waters is how lower courts, and LIRC, arrived at their decisions.

Under Wisconsin law, a company can demonstrate its workers are independent contractors, and not employees, if they satisfy six of nine factors. For example, if a person has multiple contracts, they satisfy one of those criteria. If they are not “economically dependent” on a single employer, they satisfy another.

LIRC found that the workers in question satisfied only one of the nine criteria, meaning Amazon should have paid unemployment taxes to the state. Judge Bohren ruled that the workers satisfied all nine criteria, meaning the company was exempt. The Court of Appeals put the number at five.

When DWD initially argued its complaint against Amazon Logistics, it called some of the delivery service’s workers to testify. Amazon did not, though company attorney Michael Kenneally told justices it wasn’t necessary.

“Our position is that there is no representative Amazon Flex driver,” Kenneally said. “The purpose of the whole program is to be flexible. That’s why it’s called what it is.”

The case could prove significant because the court would be ruling on how Wisconsin’s independent contractor law applies to gig workers for the first time. Kenneally described it as a clear-cut interpretation of the law, though some justices hinted at a willingness to defer to the DWD and LIRC, given their subject matter expertise on unemployment law.

U.S. single-family homebuilding surged to more than a 1-1/2-year high in November and could gain further momentum, with declining mortgage rates and incentives from builders likely to draw potential buyers back into the housing market.

The report from the Commerce Department on Tuesday also showed permits for future construction of single-family housing last month increased to the highest level since May 2022. A jump in mortgage rates had dampened new construction activity in recent months. The new housing market remains underpinned by an acute shortage of previously owned homes available for sale.

Single-family housing starts, which account for the bulk of homebuilding, jumped 18.0% to a seasonally adjusted annual rate of 1.143 million units last month, the Commerce Department’s Census Bureau said. That was the highest level since April 2022.

Activity was also likely supported by warmer temperatures and dry conditions. Data for October was revised slightly lower to show starts rising to a rate of 969,000 units instead of the previously reported 970,000 units.

Single-family homebuilding soared in the Northeast, Midwest and the densely populated South. It declined in the West.

Republican lawmakers on Friday called for layoffs at Wisconsin agencies and criticized remote work policies after an audit revealed that state employees were spending substantially more time working from home than in their offices.

Most state agencies allow employees to work remotely up to five days a week, and employees at several agency headquarters seldom used their ID cards to access the buildings, according to the audit published Friday by the nonpartisan Legislative Audit Bureau.

“The audit shows massive waste on expensive unnecessary physical structures,” Republican Sen. Eric Wimberger, who co-chairs the Legislature’s audit committee, said in a statement.

Key card data reviewed by auditors also suggested that some state employees may be working in person less often than stipulated by their remote work agreements.

Wimberger said that since agencies say remote work makes them more efficient, he believes staff cuts are in order. Auditors proposed renting fewer state office spaces if officials don’t require employees to return to in-person work.

Of the 39 agencies in Democratic Gov. Tony Evers’ administration that auditors reviewed, 26 allowed employees to work from home up to five days a week. The same held true for most University of Wisconsin institutions.

In the first six months of 2023, more than 3,000 state employees at four major headquarters buildings in Madison used their key cards to access the buildings an average of 1.3 times a week.

Auditors reported that on average less than a third of work stations were in use at the University of Wisconsin System and the offices of 15 state agencies that they visited repeatedly in July and August.

The Internal Revenue Service today issued the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2024, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 67 cents per mile driven for business use, up 1.5 cents from 2023.
• 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2024-08 also contains the optional 2024 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2024 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

The Federal Reserve said Wednesday it will hold interest rates steady at a 22-year high for the third consecutive meeting, as US economic growth slows and investors look toward the beginning of rate cuts sometime next year.

The Fed has raised rates 11 times since March 2022 to combat high inflation, which has slowed markedly after hitting a four-decade high last summer.

Still, the central bank hasn’t crossed the finish line just yet. Fed officials are expecting inflation to cool next year at a slightly faster pace than previously estimated, according to their latest set of economic projections, released Wednesday.

Some economists say the final mile of the Fed’s historic inflation fight will be the most difficult. In his post-meeting news conference, Fed Chair Jerome Powell reiterated that additional rate hikes remain on the table.

As expected, the Fed chief got peppered with questions from reporters on the central bank’s approach to cutting rates.

Powell said “no one is declaring victory” just yet, and that doing so would be “premature,” but he admitted that officials are, at the very least, already discussing rate cuts.

“The question of when will it become appropriate to begin dialing back policy, that begins to come into view and is clearly a topic of discussion now in the world and was also a discussion for us at our meeting today,” Powell said.

A key question for the Fed early next year will be: What are the criteria for rate cuts?

Powell said “you want to be reducing restriction on the economy well before 2%.” He said that waiting to cut rates until inflation reaches 2% would “be too late.”