Starting around late 2021, about a year-and-a-half after the onset of the COVID-19 pandemic, the job market in Wisconsin and around the country became incredibly favorable to those looking for a new position. People were quitting their jobs in record numbers. Companies were offering higher and higher wages to lure candidates away or to keep employees from leaving.
Fast forward to mid-2023 and many measures of the labor market would suggest things have only continued to become more favorable for job candidates.
Wisconsin’s unemployment rate, for instance, ended 2022 at 3% and has continued to fall and reached 2.4% in May, a record low, according to data from the U.S. Bureau of Labor Statistics.
The state’s labor force participation rate, which measures the portion of the state’s population working or looking for work, has also increased 0.6 percentage points since February, reversing a downward trend from the prior 18 months and reaching 65.1%.
Both Wisconsin’s unemployment and labor force participation rates are better than the national rates.
Wisconsin has also averaged 200,000 job openings per month for the first four months of the year. Pre-pandemic, that figure was typically around 150,000, according to BLS data.
However, despite the strong data, there are signs the labor market has cooled.
Companies are still in need of top talent and are having trouble filling key roles, but they’re being more selective about filling less critical roles, said Jim Morgan, vice president of workforce strategies at Waukesha-based nonprofit employer association MRA.
“We’re not in that panic of we’ve got to attract, we’ve got to attract,” Morgan said.
The data on job openings is one sign of that shift. While the 200,000 average monthly openings figure is still higher than pre-pandemic, it is down from around 226,000 in 2022.
“It is without a doubt, still a candidate-driven marketplace,” said John Hagenow, chief executive officer and managing partner at Waterford-based Fusion Recruiters.
Fusion does recruiting for managerial, director, vice president and C-suite roles with nearly half of its retained search work in Wisconsin.
Hagenow said the current labor market is the most unique he has seen in his career. While the market may favor job candidates, he noted top talent is not necessarily looking for new opportunities at the moment. Candidates are a bit anxious, and many would prefer to have stability.
Ryan Festerling, CEO of Brookfield-based staffing firm QPS Employment Group, is seeing something similar. He noted his company’s data has shown more candidates at least interested in looking at a new opportunity, but a higher percentage are unwilling to actually make the jump to a new role.
Data on the number of people quitting their jobs supports what Festerling and Hagenow are seeing. The number of quits per month in Wisconsin was as high as 95,000 in late 2021, but this year it has averaged around 64,500, a figure more in line with pre-pandemic levels.
Even though the unemployment rate has reached a record low, wage growth has slowed down. In the first five months of 2022, the average hourly wage in the state averaged a 7% year-over-year increase, topping out at 8.1% in May. This year, the average increase is 3.2%, including a 2.3% increase in May.
Festerling said candidates are less likely to leave for a small increase in wages. He said transparency from a company about what a job is and what it is not, a willingness to talk with candidates about what their future could look like and talking about what the future of the work will be are things that increase the likelihood a candidate will take a new role.
He also pointed out flexibility is something employees are looking for regardless of their wage or salary, adding that in many ways flexibility could be even more important for someone making $17 per hour as an assembler.
“The best companies are figuring that out in a way that doesn’t disrupt their manufacturing or warehouse environment,” Festerling said.
Hagenow noted that attracting top talent still does require paying top dollar in many cases and wages are not keeping up with the pace of inflation.
“Despite everything else that’s going on, money still rules,” Morgan said.
Money may make a big difference, but there are still a number of factors that go into attracting and retaining employees. Hagenow said in many cases people will leave a role because of their manager.
“The employment brand and culture remain critical,” he said.
Morgan said companies are becoming more and more strategic about their internal talent supply, focusing on preparing current employees for the next level up so that when the business does need to hire for an open role, it will be one that is easier to fill.
Festerling said companies are also trying to work at a very granular level to use compensation not just in hiring, but also to improve the proficiency of their teams. That means tying wage increases to added skills and professional development, which not only helps the business, but also provides a clear pathway for employees to earn more.
