The shortage of qualified and/or willing workers is getting worse and is holding back Wisconsin’s economy, according to a semi-annual survey conducted by Wisconsin Manufacturers & Commerce, the state chamber of commerce. The survey of 306 top business executives also shows concern about rising health care costs on the eve of full implementation of the federal Affordable Care Act.
Seventy percent of survey respondents reported having trouble hiring employees, up from 64 percent in January and 53 percent a year ago. A lack of qualified applicants was the top reason given at 52 percent. Thirty-two percent say they are having trouble finding employees for all levels and fields.
Labor shortage was the No. 1 concern of business leaders when asked two separate questions on what is the top public policy issue facing Wisconsin (26 percent) and what is the top concern facing your company (27 percent). Health care affordability was second for both questions, but it was the top response when executives were asked to identify “what one thing state government could do to help your business.” Twenty-eight percent said “make health care costs more affordable,” 25 percent said “reduce/reform regulations” and 21 percent said “reduce taxes.”
Forty-one percent of respondents from companies that offer employee health care benefits said costs rose between 1 percent and 10 percent in the last 12 months, while 46 percent said costs rose 11 percent or higher. Those numbers are likely to rise as the ACA’s previously delayed provisions take effect. When asked how employers plan to deal with health care cost increases, 56 percent said “increase employee contribution” and 25 percent said “decrease benefits.”
The worker shortage and health care came up frequently in answers to the open-ended question “what do you believe is holding back the economy and job growth?” “Indecision, especially with immigration reform and health care” was one response. Another was: “It has become so expensive and difficult to hire and retain employees that there is no choice but to automate and that limits job growth.”
“Wisconsin business leaders are becoming increasingly frustrated with the lack of qualified workers as well as the lack of action by politicians to address the issue,” said Kurt Bauer, WMC president and chief executive officer. “The sad irony is that as the economy improves, there is greater demand for workers. But if businesses can’t find workers, then the economy can’t achieve its full potential.” Bauer also said health care cost increases are off-setting wage growth and contributing to wage stagnation.
Business leaders rate the Wisconsin economy stronger than the national economy and predict that trend to continue through the end of the year. Twenty-seven percent rate Wisconsin’s economy as “strong,” 63 percent say it is “moderate” and 6 percent say it is “weak.” By contrast, just 9 percent of respondents say the U.S. economy is “strong,” 63 percent say it is “moderate,” 23 percent say it is “weak” and 3 percent say it is “very weak.”
In the next six months, 71 percent say Wisconsin’s economy will see “good” to “moderate” growth, 24 percent say growth will be “flat” and just 2.6 percent say the state economy will “decline.” Just 1 percent said the U.S. economy will see “good” growth over the next two quarters,
53.6 percent see “moderate” growth, 37 percent say the national economy will be “flat” and 6 percent say the economy will “decline.”
Fifty-three percent of Wisconsin employers plan to hire in the next six months, down slightly from January. More than 70 percent see wages increasing by 2.1 percent or higher, including 36 percent who see wages increasing more than 3 percent.
Overall, 91 percent of respondents say Wisconsin is headed in the right direction, down from a high of 96 percent six months ago.
Other findings from the survey show the strong dollar is hurting more businesses than it is helping. Thirty-three percent say it is “somewhat hurting” or “hurting” versus 17 percent who say it is either “helping” or “somewhat helping.” Also, business leaders remain supportive of Wisconsin’s new Right to Work law by a strong 15 to 1 margin.
WMC surveyed 1,219 CEOs whose companies are WMC members. The survey was conducted by mail and email during the month of May. Of those, 306 responded.