2024 Economic Trends
It’s clear from the data, the labor market in Wisconsin is not as hot as it was a few years ago. The state’s unemployment rate was 3.3% in December. While that’s lower than the national figure – of 3.7% – and would have been a record low prior to 2016, it is up almost a
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Labor Market Snapshot (change from December 2022) Unemployment Rate Wisconsin: 3.3% (+0.3%) U.S.: 3.7% (+0.2%) Labor Force Participation Wisconsin: 65.9% (+1.3%) U.S.: 62.5% (-0.3%) Average Hourly Wage Wisconsin: $32.25 (+5.4%) $34.20 (+4.1%)Still, she cautioned that businesses should not take a softer job market and economy to mean their workforce challenges have all been solved. The demographics of the job market – characterized by retiring baby boomers and not enough new workers available to enter the labor pool – suggest conditions will remain tight into the 2030s. “I always feel like when there’s a little bit of a market correction, like right now, it’s important not to suddenly feel like, ‘Well, I’m the employer. I have the power,’” Mallet said. “Let’s do good business. Let’s take care of our employees. Let’s do right by our employees, and we’ll all be better off for it in the long run.” Not all of the data points to employers having all the power. On wages, for example, Wisconsin saw a more than 5% year-over-year increase in average hourly pay across all private sector workers every month since June. Those increases come on top of a 6.3% average monthly increase in 2022. In the decade before the pandemic, only two years – 2018 and 2013 – had an average increase topping 3%. While wages are growing faster than in the past, they have slowed compared to the peak of the Great Resignation period. Malett said her firm is currently seeing an average increase of 7% to 8% when people are moving from one job to another. Back in 2022, that average was closer to 18% or 20%. “It’s good to see it come back in line. I don’t think it was sustainable,” she said. Wisconsin has also seen an uptick in labor force participation, which counts the number of people working or actively looking for a job. The rate, which has generally trended down since the mid-to-late 1990s, climbed 1.3 percentage points in 2023, reaching 65.9% as of December. It’s the strongest year-over-year increase since early 1994. “We’re definitely seeing more candidates coming in the doors,” Malett said, noting that the “post and pray” tactics of 2022 have been replaced by more candidate referrals and better response to job postings. However, she cautioned that she is not seeing a massive wave of retirees returning to the workforce or people that stayed home during the pandemic returning to work. As for how employers are handling the shift toward a softer job market, Malett said the small to mid-size clients her firm serves are not turning to layoffs to control their costs amid economic uncertainty. “I think we lost touch of what the right staffing levels were according to engineering plans in these manufacturing companies because the backlogs were so big that I think companies right now are focused on figuring out what are the optimal staffing levels again,” she said. Specific areas where companies are shifting include a slowdown in hiring for human resource and engineering positions with an uptick in accounting and finance. “We’ve seen a strong uptick with mid-level managers, and we think that’s largely because less and less people today want manager positions,” Malett said. Firms having success with employee retention share some commonalities, she said. The top thing is an ability to offer flexibility. While employers have been able to push more employees to return to the office, workers are still seeking the flexibility that the option of remote work allows. Even in manufacturing, Malett said many clients are shifting to four-day work weeks and finding success. The other area of emphasis for successful firms is training and development, especially for frontline and mid-level management positions, Malett said.
