16 Jun Wisconsin Labor Shortage on the Horizon
MADISON, WI – In the middle of a recession and high unemployment it seems ironic to speak about a pending labor shortage in Wisconsin, but that was the message to state economic development and political leaders last week in Madison at an event organized by Forward Wisconsin.
Terry Ludeman, labor economist for the Department of Workforce Development and one of Wisconsin’s foremost economists, highlighted that Wisconsin usually has lower unemployment than the national average. “The current trend line is downward sloping into the future,” Ludeman said. This is expected to be a real problem for the state’s economy and tax base as Wisconsin faces a shrinking work force and aging population.
According to Ludeman, Wisconsin ranks twenty-eighth in the U.S. for population growth and is a slow growth state. Wisconsin also ranks below the national average for wages, household income, and percentage of population with college degrees.
An aging workforce
Ludeman is concerned about how we get people to fill jobs. The state’s population of baby boomers makes up 31% of the population. The states rank 39 out of 50 in children under age 5, 38 for children under the age of 18 and 20 for citizens over the age of 65. He predicts that in the next twenty years the state will experience little growth in ages 0-19 and no growth in the 20-39 age bracket. At the same time, the state will experience significant growth in ages 40-59 and the number of citizens over the age of 60 will continue to grow. He predicts through the year 2030, at least 27% of the state’s population will be over 60.
“It’s a supply issue,” Ludeman said. The state is continuing to experience brain drain as college graduates are forced to leave the state in search of careers and higher paying jobs. Once students are college educated in Wisconsin, they leave in percentages way above the national average of 71% who stay in the state they attended college. Illinois retains almost 82% of their college graduates, while Wisconsin retains a little over 61% of college grads. “Wisconsin’s graduates are moving to dynamic and growing cites like Seattle, Denver, Minneapolis, and Chicago,” he said.
Minorities and high school graduates
“We are a white, old state, and a low minority state,” Ludeman said. By 2017 there will not be enough 18 year-olds to replace workers turning 65. “We just can’t keep 18 year-olds in the state,” he said.
Wisconsin ranks 50 in the U.S. in terms of African-Americans who graduate high school and 20 in total high school graduates. This further exasperates the pending labor shortage and future economic growth. Wisconsin has 75,000-80,000 students available to graduate each year, yet only 55,000-60,000 students graduate high school. “This year close to 20,000 students did not graduate,” Ludeman said. The problem is most severe in the state’s largest city, Milwaukee, where only 41% of students completed high school this year.
At the same time, the state is experiencing a small number of people migrating to live in Wisconsin from other states as well as a minority work force that is well below the national average of 11%. Currently, 4% of Wisconsin’s workers are minorities according to statistics presented.
Roger Nacker, president of Wisconsin Economic Development Institute, echoed many of the same concerns that Ludeman discussed and added “some of the largest employers in the state are retailers, including Wal-Mart, Kohls, and Target, further adding to the base low wage earners.”
“Most of our state’s workers do not make 80% of the U.S. average income based on per capita numbers,” said Naker.
Both speakers were in agreement that the state needs to change and adapt quickly, but this will require radical changes.
Additionally there is a trend in companies leaving the state or being purchased by companies in hot growth states with strong capital markets. This will further hurt Wisconsin’s economic development. Recently a company in San Diego purchased Madison based biotech firm PanVera while a company in Alabama purchased a promising medical imaging company, UltraVisual. “We are a incubator state, there is a significant trend in out-of-state businesses buying Wisconsin companies,” said Ludeman. This will cause a further exodus of tax and income dollars for Wisconsin. New start-ups are not replacing these businesses fast enough. “Wisconsin ranks 43 out of 50 as a state for new business start-ups,” he added.
Both speakers agreed that the state, the university and colleges, K-12 education system, and private business must do a better job of aligning education with market opportunities, along with making the state more appealing to minorities and to out-of-state companies, or the state’s economic future will be in question.