Yet again- it's a wage gap, not a skills gap

This should come to no surprise to the 4-5 regulars that read this site, but a couple of reports in the state confirm that the arguments Wisconsin "job creators" make about the state's alleged "skills gap" have been shown to be complete BS. Instead, what we have are greedy employers being penny-wise and pound-foolish, choosing not to pay qualified employees, and then having the nerve to turn around and blame the law of supply and demand for not providing enough workers at the low wages they choose to offer.

The latest proof of this comes from an extensive report on the alleged skills gap issue from UW-Madison's La Follette School of Public Affairs, and Mike Ivey followed with a great summary of it in the Capital Times. The first point the authors of the report make is that the Great Recession moved high-skill workers into unemployment, and then the slower-than-usual recovery in the Age of Fitzwalkerstan shoved these people into lower-skilled, lower-paying jobs.

The unemployment rates for college graduates are illustrative. These are skilled workers who continue to have a difficult time finding a job. To avoid long-term unemployment, these more educated workers accept lower skilled jobs, changing employers’ perceptions of the “skills” necessary to perform the work and making it more difficult for less educated workers to find jobs (Rampell 2013). The result is an unemployment rate that increases as the education level is reduced. However, Wisconsin’s unemployment rate for college-educated, “skilled” workers persists at twice its pre-recession percentage. This higher percentage is more indicative of weaknesses in Wisconsin’s recovery than a lack of skilled workers.

Overall unemployment in Wisconsin may be high because employers have not seen demand for their goods and services increase enough to justify making additional hires. This explanation suggests that Wisconsin’s unemployment rate remains high because of a lack of need for workers, rather than a mismatch between the skills needed by employers and those supplied by the labor force.

To back this up, the La Follette report mentions that the Census Bureau reported that in 2010, more than half of the state's retail sales, bartenders, telephone operators and tellers had some college experience, and more than 1 in 10 had 4-year college degrees.

The wage gap comes in when the La Follette study starts discussing a possible move to a "high-skill economy", as a way of allowing these high-educated workers to move into jobs that better fit their level of education, which also can increase the chances for less-educated workers to move into the jobs currently held by "overqualified" workers with college experience (especially key when you realize that workers with only a HS diploma had an unemployment rate of over 10% in Wisconsin in 2011, and dropouts were near 19%). However, Wisconsin employers refusing to pay these high-educated workers what they're worth may lead to increased "brain drain", which would continue this losing cycle.

Our analysis suggests that there may be an impending skills gap in jobs requiring a bachelor’s degree in computer science and information technology, human resource and training, and potentially in middle and high school teachers. Targeted programming designed to encourage adults and high school seniors to enter these fields may help to reduce the size of these gaps. Of occupations affected by the projected gaps, computer science and related fields face the largest shortfall of skilled workers.

Despite this projected demand, Wisconsin computer science professionals also face a significant wage disparity compared to national averages, receiving $12,000 less in average income in the state (United States Bureau of Labor Statistics 2013c, 2013d). As long as this disparity persists, investing in education may encourage continued emigration once these candidates receive their degrees.

And given the destruction of teacher take-home pay with Act 10 and Walker's cuts to public education, you can bet that teacher skills gap won't be solved through higher salaries to prospective teachers, despite the high demand being there.

This La Follette report follows a similar report from UW-Milwaukee's Mark Levine earlier this year (I summarized it here) which also slapped down the "skills gap" arguments of business oligarchs like ex-Bucyrus CEO Tim Sullivan (and would it surprise you to know that Walker's task forces on how to improve Wisconsin's economy are filled with a lot of Sullivans and not Levines?). Even the paid-off Journal-Sentinel pointed out the state's low wages, with a big Sunday article on declining wages in both the U.S. and Wisconsin. The U.S. drop in weekly wages from Sept. 2011 - Sept. 2012 was 1.1%, but Wisconsin's drop doubled that in the same QCEW survey.

According to the Bureau of Labor Statistics, private-sector wages in Wisconsin fell 2.2% in the 12 months ended September 2012, ranking the state 44th out of 50. The rate was double the drop in the national average.

Wages in the state's government sector, pressured more by government austerity policies than global competition, registered 49th in the nation during the same period.

With the state also lagging much of the nation in job creation — ranking 44th in the most recent 12-month period — it is apparent that Wisconsin is struggling more than many other states in the transition to 21st-century growth industries from its legacy as a bastion of old-line manufacturing.

Hilariously, the paper goes on to quote WEDC #2 Ryan Murray for reaction, despite the fact that Murray is a 30-year-old lifetime GOP hack with no corporate-sector job experience, and apparently no college degree. Yeah, I'm sure THAT guy has a clue about what makes business work. Maybe the fact that profit-hoarding CEOs and GOP hacks are in charge of the state's workforce development strategy goes a long way toward explaining why Wisconsin is dead last in job growth for the last 12 months, doesn't it?

And don't expect these bad wage numbers in Wisconsin and the U.S. to get any better in the next 2 QCEW reports, which'll come out over the next 4 months. Nationwide, the most recent personal income reports show real disposable income basically being flat for the month of April, and dropping for the first quarter of 2013 (granted, the 1st quarter part is due to the Social Security tax cut ending). It looks even worse in Wisconsin, as despite the generally positive revenue figures that LFB came out with earlier this month, this note was included.

Since the previous estimates were prepared, withholding taxes have increased by 0.9% compared to the same four-month period last year (that's below the rate of inflation, folks) . The year-to-date rate of growth in withholding collections has fallen from 3.8% at the end of December to 2.5% at the end of April.

In fact, blog groupie GeoffT has sent information indicating withholding taxes in Wisconsin actually FELL in March and April 2013 vs. 2012, which indicates total wage income in general had fallen. Combine that with sales taxes being mostly flat when adjusted for inflation, and the La Follette-described cycle of low demand-low wages-low demand seems to be set to continue in Wisconsin for a while.

We'll see if this starts to get traction in a regular media that generally doesn't want to admit the reality of what's really happening with the economy - that low wages and high inequality are keeping demand down, which is keeping a lid on our growth. And until we boot out the oligarchs that love this exploitative system, and the political puppets that do their bidding, that lid on growth will remain.