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If the labor market was tight before the pandemic, it is even tighter now and the challenges are more acute in southeastern Wisconsin.
Prior to the onset of the COVID-19 pandemic, Wisconsin’s unemployment rate was 3.3%. It spiked to 14.8% in April 2020, but by November 2021 the rate was down to 3%, tying the previous low from a 12-month stretch in late 2017 and 2018, according to data from the U.S. Bureau of Labor Statistics.
Metro Milwaukee’s unemployment rate was 2.2% in November, including a 1.5% rate in Waukesha, Ozaukee and Washington counties and a 2.7% rate in Milwaukee County. Every other county in the region was below 2.3%.
A tight labor market and difficulty finding employees is nothing new for companies, but the pandemic has dramatically altered the way people think about their work.
“Talent shortages continue and employers are competing with a talent pool that has not fully returned to labor markets due to the pandemic,” said Jonas Prising, chairman and chief executive officer of Milwaukee-based workforce solutions firm ManpowerGroup.
Prising will be among the speakers at the annual BizTimes Media Economic Trends Event on Jan. 27 at the Italian Community Center in Milwaukee. The event is sponsored by Annex Wealth Management and BMO Harris Bank.
Even with the unemployment rate below pre-pandemic levels, Wisconsin’s labor market has not fully recovered. The total number of private sector jobs is still down 73,000 from February 2020. The labor force participation rate is 66.4%, up slightly from February 2020, but down from where it was in the fall of 2019. While Wisconsin’s rate is the 10th best in the country, it has been generally trending down since peaking at 68.2% in 2016, according to BLS data.
“Organizations now need to embrace bold thinking on where, when and how work gets done to meet what workers want while balancing the requirements of business,” Prising said. “When the majority of the workforce are in roles requiring some time in the workplace, now is the time to build flexibility into all roles – from shift scheduling in manufacturing to hybrid work in professional services. Today, everyone is seeking the opportunity to choose when and where they work to a greater degree than before.”
Across the country, millions of people shifted to remote work. Some loved it, some hated it, others had mixed feelings. It remains to be seen exactly how many employees will stay remote, but it is clearly a bigger part of the landscape moving forward. At the same time, many workers have reevaluated their relationship with their job, especially in sectors like health care where the stresses of the pandemic have been high.
This new outlook on work has contributed to the so-called “great resignation.” In November, an estimated 4.5 million Americans quit their jobs, according to the BLS. It was the fifth straight month of more than 4 million quits. Wisconsin saw 82,000 quits. It was third most for a month in data that goes back to 2000. The two higher months came in August, at 95,000, and September, at 88,000.
“Organizations need to be places where people come by choice because they know they can develop their skill sets,” Prising said. “The offer to workers today needs to be: However long you work with us, we can promise you for sure that you will have acquired new skills that make you more competitive in the labor market than you were before.”
While some of those quitting their jobs may be leaving the workforce, many are leaving for new jobs. In November, nearly 6.7 million Americans were hired for new jobs, a figure only eclipsed as the economy emerged from COVID shutdowns in June and July of 2021. Wisconsin saw 120,000 hires in September and November, a figure that is in the top 15 in available data.
There is also demand for more hiring. The U.S. saw nearly 10.6 million job openings in November, the sixth straight month above 10 million, including two that topped 11 million. Wisconsin saw 210,000 openings in October, the fifth straight month with more than 200,000. Pre-pandemic, the highest total was 164,000 in late 2018.
More flexibility and a tight labor market have given workers leverage as they consider where they’ll work, something that’s showing up in wages. The average hourly wage in Wisconsin was $28.96 in November, a $2.10 increase from the same month in 2019 and a 4.1% increase from the same time in 2020, according to BLS data. Production workers in Wisconsin’s manufacturing sector are seeing slightly slower gains. The average hourly wage of $22.64 in November was up 3.2% from 2020.
There are also other factors employees will consider beyond wages.
“Skilled talent is going to be and continue to be the competitive advantage for many organizations, but people are going to choose organizations that promise them progress and a skills portfolio that gives them the freedom to choose where they can work,” Prising said.
Where does Wisconsin stand in that competition?
With a 2.8% drop in private-sector employment compared to February 2020, Wisconsin ranks 21st in the country in recovering from pandemic job losses, according to BLS data. With an already low unemployment rate and record numbers of job openings, the state needs more people, but Wisconsin’s population growth has been lagging behind the rest of the country. In 2021, the state ranked 31st in population growth, adding 3,585 residents, according to the U.S. Census Bureau. That slow growth came after the state’s population grew 3.6% in the past decade and the city of Milwaukee’s dropped nearly 3%. The U.S. population grew 7.4% over the same period.
“Here in Wisconsin, we need to be pioneers in showcasing bold, disruptive ideas and collaborating across business, government and education to build a better future of work,” Prising said. “Now the focus should be moving even further towards outcome-focused training that results in real connections to meaningful work, and mobilizing people in the labor market to show them that they have a path to move up, earn more and develop in their careers.”
Of course, Wisconsin is not alone in dealing with workforce challenges.
“Our general approach to training and workforce development in the U.S. is when I need the person and talent, I will go into the market and I will find them,” Prising said. “What organizations are seeing now is that they’re not able to just find people because the talent is not there at scale. And looking ahead it won’t be there at scale.”
Instead, companies should look at what skill levels are needed at what levels for certain roles. In some cases, they may need someone with a four-year degree; in others, they will need someone with a two-year degree or perhaps a series of certificates.
“Most organizations today understand that having access to skilled talent is what’s going to make or break their business strategy,” Prising said. “That’s true for large organizations, medium-sized organizations and smaller organizations.”