Saturday, July 13, 2013

Fed data shows low wages cause Wis "skills gap"

I find it remarkable how this meme of a "worker skills gap" continues to find its way into discussions about Wisconsin's manufacturing economy. Here's the latest example from the Fox Valley's "New North Business to Business." And the complaints by business owners should sound familiar.
This “skills gap” – the difference between the increasing number of available positions with New North region employers and the comparably small number of job applicants qualified to fill those roles – is a growing concern as unemployment creeps downward and our skills-based economy demands more workers with associate’s degree technical training, or the leadership and strategic management knowledge that’s often regarded with a bachelor’s or master’s degree. Add to that a number of veteran employees in mid- to highly-skilled jobs looking toward retirement in a few years, and the skills gap becomes all the more dire.

“People just don’t understand what the real problem is and just how close we are to crisis,” said John Petak, one of the co-owners of Oshkosh-based industrial saw producer Marvel Manufacturing Co., during a mid-July workforce summit conducted by Competitive Wisconsin Inc. in Oshkosh. Petak indicated his own company is anticipating 25 percent of its workforce will retire in the next five years, and despite proactive measure to hire replacements before those veteran employees leave, Marvel is having trouble finding qualified job candidates. It’s not alone....

The above-mentioned job candidate shortage for machine operators pales in comparison to the needs of the transportation industry. In Wisconsin alone, there is a need for 8,000 to 10,000 truck drivers and more than 400 diesel technicians annually, according to the Wisconsin Trucking Consortium, a statewide industry group that’s actively looking to tackle the worker shortage.
As a former Econ teacher, I can tell you that a shortage comes from more demand than supply. And this alleged worker shortage can be solved in 1 of 2 ways- reducing demand for these workers (unlikely given what the article describes), or increasing the supply.

A quick look to the manufacturing stats in the recently-released Quarterly Census on Wages and Employment gives some of the answers to why there's a worker "shortage" in Wisconsin.

Average weekly manufacturing wage, Midwest
Ill. $1,284
Mich $1,278
Minn $1,158
Ohio $1,119
Ind. $1,099
Iowa $1,090
Wis. $1,079

Kinda hard to get the candidates you want when you pay the least of all of the states in your region, isn't it? Econ 101 tells you that raising wages would help Wisconsin employers lower this skills gap, and encourage more people to enter the work force.

Now there was some progress made in 2012 on the wage stats, as Wisconsin's 4.3% increase was only behind Illinois for the best weekly wage increases in the Midwest. But even that number is misleading, as it's on the heels of a major drop in wages during Year 1 in the Age of Fitzwalkerstan, which was something that didn't happen even during the worst years of the Great Recession.

Average manufacturing wage, Wisconsin Q4 2008-2012
2008 $973 (+2.4%)
2009 $1,007 (+3.5%)
2010 $1,074 (+6.7%)
2011 $1,035 (-3.6%)
2012 $1,079 (+4.3%)

And manufacturers only added 8,000 jobs in Wisconsin manufacturing in 2012, the lowest increase in the 3 years the state has added jobs since the end of the Recession, so it's clear that employers are choosing to squeeze out more hours of their current workers in exchange for mild raises.

So instead of the WMCs and Competitive Wisconsins of the world whining about the tech schools and the employees being produced, maybe they should step up to the plate, and pay these people what they're worth. I imagine a lot of their problems would disappear if they'd pay on a scale closer to Minnesota and Illinois than to Georgia, South Carolina, and Tennessee.

Basically, the business community complaining about the "skills gap," is like the Bucks whining about Dwight Howard playing for the Houston Rockets instead of wanting to be in Milwaukee, when the Rockets are the ones offering top dollar. The corporate media wants to keep the zombie lie of a skills gap alive as long as possible, and it's up to us to debunk it at every turn.

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