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One year has made a big difference in Wisconsin’s labor market. The unemployment rate? Jumped from 3.2% in March 2020 to 14.8% in April and was still at 10.4% in May.
In July 2020, the unemployment rate was 7.2%, and the total labor force had shrunk by 1.5% compared to the previous year. While things had improved from the spring, the jobs picture was much different than where it was prior to the pandemic.
Fast forward to now and the image coming from the job market shares a lot of similarities with its pre-pandemic counterpart. The state unemployment rate for May, the most recent data, was 3.9% compared to 3.3% in May 2019. Labor force participation has been rising in recent months, reaching 66.1% in May compared to 66.8% in May 2019. The total labor force is still about 8,000 people smaller than it was in 2019.
There is still work to be done on the state’s employment front. Private sector payrolls are down about 100,000 compared to pre-pandemic, although that is a dramatic improvement from being down 300,000 in May 2020.
More than half of the remaining drop comes from the leisure and hospitality sector, where accommodation and food services employment was down 38,000 from May 2019, a 16% decrease, and arts, entertainment and recreation employment was down 12,000 or 28%.
Employment in durable goods manufacturing is down more than 16,000, or 5.6%, from May 2019 while nondurable goods employment is actually up more than 5,000, or almost 2.8%.
With the labor market returning to pre-pandemic conditions, many employers are once again bemoaning the difficulties they are having filling open positions. Many pointed to the additional $300 in weekly unemployment benefits added during the COVID-19 pandemic as a factor in keeping workers on the sidelines. Lawmakers in Wisconsin voted to end the enhanced benefit earlier this year, but Gov. Tony Evers vetoed the measure, arguing there was a lack of evidence suggesting eliminating the benefit would bring people into the workforce.
“Eliminating this lifeline for many Wisconsinites will cause continued economic hardships for those impacted the most by the pandemic and create additional hurdles for individuals to return to family-sustaining jobs,” Evers said in his veto message.
Ryan Festerling, president of Brookfield-based staffing firm QPS Employment Group, said it is likely the benefit is keeping some people on the sidelines but added that his firm has not seen a dramatic increase in applicants in states that have ended the benefit.
“I would love to tell you that it was this big light switch that all of the sudden candidates came out of the woodwork. It’s just not the case,” he said.
In a survey of its membership released in June, Wisconsin Manufacturers & Commerce found 85% of respondents favored ending the enhanced benefit. The survey also found 86% were having difficulty hiring, but among that group, 35% blamed the enhanced benefits while 30% pointed to a lack of qualified applicants and 26% cited an overall lack of people.
The challenges in hiring do not appear to be dissipating any time soon. ManpowerGroup found a net employment outlook, which subtracts the percentage of firms planning to cut staff from the percentage planning to add, of 40% heading into the third quarter for metro Milwaukee. It was the highest reading to date for the region and among the 15 best outlooks in the country. The previous high was 33% heading into the third quarters in 2018 and 2019.
The competitive labor market means employers will need to work hard to fulfill those visions of increased hiring. Festerling pointed to several strategies businesses can consider.
For starters, he said companies should not expect that increasing pay rates alone will bring in new employees.
“We definitely see that pay rates help, but I don’t think even some of our best-paying employers are sitting in the catbird seat saying ‘we’re good.’ They have openings as well,” Festerling said, noting some businesses move to implement a raise only to find the market has continued upward while they were making the change. “We have to make sure we don’t look at it as the thing to fix it, cause it’s just not.”
Festerling said companies should look within their own organization, identify what is working and expand and emulate those actions. That could mean studying new hire turnover at a very detailed level or looking at the impact remote work or scheduling has on company culture.
“A lot of this is going to be about supervisors engaging, a lot of it is going to be doing things that are a little bit unconventional,” Festerling said.
“If the people side of your equation is actually causing you to not hit your numbers … what if we started from the labor standpoint and said what is the best scheduling that we can do for our people?” he added.