Sunday, October 30, 2016

Wisconsin corporations won't step up to improve state's economy

In a large weekend article in the Milwaukee Journal-Sentinel, there was a discussion generated from a recently released study from UW-Madison and the UW-Extension talking about the state's economic prospects, and how the skills and demographics of the workforce fits in.

One major part of the study discusses how Wisconsin's workforce and job needs are out of sync with each other, not just in education levels required for the jobs, but also in the fact that the jobs aren't existing where the workers live.
In addition to the potential shortage of workers, a quantity issue, there is also a labor quality issue in the form of skill mismatch. A “skills gap” or “mismatch” occurs when despite a high number of job seekers, employers report difficulty finding appropriately skilled workers for the available positions. Such a circumstance suggests that the skill requirements of available jobs do not match those of people looking for work. Based on projections through 2022, Wisconsin faces a potential skill mismatch in that there are more jobs than workers available for low-skill positions requiring a high school diploma (Loritz et al. 2013). Conversely, there are not enough jobs for workers with a college education including associate’s, bachelor’s, and master’s degree holders for the projected job (Loritz et al. 2013).

The shortage of job openings for college degree holders, may partly explain the net negative migration of the young educated workers. Without adequate employment available in Wisconsin, those with college degrees seek jobs at their skill level in other states. This trend suggests that the issue of skill mismatch is at least partly geographic. There are jobs available that require higher education, but the jobs are not in the same place as degree-holding job seekers. The distance between jobs and appropriately skilled job seekers can lead to unemployment or underemployment despite there being both job openings and workers to fill them.

The spatial mismatch also occurs in many large cities, as entry-level job opportunities are often distant from the residences of appropriately skilled workers. The spatial disconnect between inner city residential areas and suburban job opportunities can contribute to the poor employment outcomes for those living in the inner city. Milwaukee, for example, exhibits trends that correspond to geographic mismatch. First, even after accounting for several factors, Blacks in Milwaukee commute far longer to get to their jobs, which suggests they are located further from employers who are offering employment at their skilllevel (Ewing, 2004). Further, there has been evidence of an oversupply of low-skill labor in the inner-city forcing low-skill workers, largely Blacks and Latinos, to commute to the suburbs for employment without any compensation via higher wages.

This geographic mismatch can also be seen in rural Wisconsin. Many larger employers located in smaller communities must draw from a very large geographic area to find a sufficient pool of workers. Given the lack of public transportation, workers are responsible for all commuting related costs. For higher paying jobs the commuting costs may be only a small factor as high wages can support the expense of the commute (a reliable car, gas, and time) and still make the job worthwhile. For lower paying jobs, however, the costs can be more constraining because the expenses represent a larger share of income at low wage levels, reducing both the feasibility of the commute and the incentive. Consequently, fewer workers may seek lower paying jobs that require a costly commute. This latter problem can also play out in urban areas; a lack of reliable transportation for commuting purposes can limit the potential pool of labor.
Another part of the UW report indicates that instead of describing some of these skill mismatches as "brain drain", the bigger problem isn't as much educated people leaving Wisconsin, as much as it is the fact that the state can't get educated workers to come here.
In addition to a changing age structure, migration also affects the pool of available workers. In Wisconsin, both in-migration and out-migration rates of the college-educated and workingage population are low compared to other states (Figures 1 and 2). Only a small share of people leaves the state in any given year. While this low rate of out-migration, particularly of the educated working age population (i.e., brain-drain) does erode the labor pool, perhaps more problematic is the even lower rate of in-migration. Outmigration by itself is not necessarily concerning if there is a sufficient offsetting flow of inmigration. Wisconsin, however, has not been able to successfully recruit residents (in-migrants) leading to negative net migration. In a sense, Wisconsin is not suffering from a brain-drain but more from the lack of brain-gain. We expect that more precise analysis would show the migration trends in Wisconsin are part of a more general rural to urban trend in the U.S., in that the out-migration from Wisconsin, a relatively rural state, flows primarily to the Twin Cities and Chicago area (Robinson et al, 2016).
It's worthy to contrast those findings to what a prominent member of the state's business community says in the Journal-Sentinel article, as he blames the educational system and the workers themselves, instead of calling on businesses to take proactive steps to reduce these spatial and educational workforce gaps.
Tim Sullivan sees things differently. The former CEO of Bucyrus International served as Gov. Scott Walker's special consultant for business and workforce development a few years ago, and has been a prominent voice speaking on the so-called skills gap that many in industry say has left job openings unfilled....

"If anything, we should be emphasizing our technical college system," he said.

In a report he prepared for Walker four years ago, Sullivan said some 34,000 students enrolled in the state's technical colleges already had four-year degrees - indicating they were struggling to find employment and were seeking more job-specific skills.

"Education's supposed to really provide you the skill sets to get you a job and to go through life being able to provide for yourself and your family," Sullivan said. "If you're not marrying or tying the educational system to the available job market, it's crazy."
WHOA. First of all, this shows that Sullivan thinks that all forms of education should be geared towards the needs of business, much like how Assembly Speaker Robbin' Vos mocked the UW after the 2014 elections.
The Republican agenda for next year also includes several changes for the University of Wisconsin, according to Vos. He said that he wants to ensure that faculty spend more time teaching, and that research is geared toward helping the state's economy.

“Of course I want research, but I want to have research done in a way that focuses on growing our economy, not on ancient mating habits of whatever,” said Vos. “So we want to try to have priorities that are focused on growing our economy.”
In the world of right-wingers like Tim Sullivan and Robbin' Vos, there is no value in an educated public that has an understanding of the outside world, or in the concept of any type of public good, but instead everything should be geared around the monetary value of what can be obtained by that education. And denigrating the concept of higher education isn't a good thing, as UW researcher Steven Deller is quoted in the Journal-Sentinel article as saying that the college-educated are the group that starts most businesses, a stat that Wisconsin ranked dead-last in for each of the last two years, according to the Kaufmann Foundation. And turning Wisconsin into an low-educated, low-quality of life place isn't something that's going to bring those highly-educated people here when they can choose to go to many other areas that are a lot more enjoyable to live in and to find a qualified pool of workers.

Second of all, note that Sullivan doesn't say part of the answer involves raising wages to make a technical education a viable, attractive option for potential workers, and in encouraging start-ups that attract talent which leads to further growth. That's because oligarchs like Sullivan don't want well-paid employees and don't want start-ups- both of those developments threaten the market share and power of established Wisconsin businesses. And because those guys are the puppetmasters of the Wisconsin GOP, it explains why their policies have been based on funneling increasing amounts of power and money to a handful of currently-existing businesses over encouraging the economy to go in new directions, and in competing for the high-skill talent that can spark that new development.

I find it mystifying that this business community isn't demanding improvements in education and quality of life from the State Legislature, but apparently they prefer the easy, lazy way to operate over a more vibrant state economy that might have more competition, but could also help all sizes of businesses, and make Wisconsin more attractive for people to relocate to. That regressive mentality goes a long way toward explaining why this state's economy continues to flounder and lag most of our neighbors, and it won't change until oligarchs like Tim Sullivan and their puppet legislators are taken out of the equation when it comes to determining the direction of the state's economic policy.


  1. I've long been dubious about the so-called skills gap. It seems to me more of a management failure.

    In several organizations I've been a part of both public and private, we've hired people to do a specific thing, and since we're all about efficiency, we don't train them in anything else or allow them to branch out of the role we've assigned them. We don't train people to back up our existing personnel. Rather than trying to prepare lower echelon people to take on greater responsibility, when something opens up, we just go looking for somebody who already has those skills.

    After all, why promote a junior chemist who's doing great work only to hire a new junior chemist and end up with two chemists having to ramp up in their new jobs? If we just go out and hire a senior chemist we have two chemists doing great work.

    But if nobody shows up on the day we need them, willing to work for what we're willing to pay and having exactly the background we need, we just flop back in our chairs and blame the skills gap.

    Meanwhile, our existing personnel, having been told that the organization is not interested in advancing them because of the efficiencies which have developed in their present roles (yes, I've heard people say exactly that) hit the road looking for a better opportunity.

    People leave organizations they love and which need them over a couple thousand dollars and a little opportunity all them time.

    A disposable workforce for a disposable nation I suppose.

    1. That's a really good insight Jeff, thanks for sharing it.

      Your last two paragraphs sums it up well. Too many Wisconsin businesses think they can dictate all the terms of employment and wage scale, and treat workers as pieces of meat, but somehow they get surprised when the feeling becomes mutual from employees in a time of near-full employment.

      And instead of adjusting, they whine and ask for more favors from WisGOP legislators. No wonder our business climate lags.

  2. Don't worry, our corporate overlords at WMC already have this figured out:

    "Wisconsin needs workers and to attract them the state needs to market itself as a great place to live and work to people in neighboring states in the same way it targets tourists. That is the message WMC President/CEO Kurt R. Bauer delivered today...
    we can target states like Illinois and Minnesota for a marketing campaign that touts Wisconsin's low cost of living, high quality of life, great schools, vibrant communities, short commute times and beautiful scenery."

    Brilliant! WMC has spared no expense to trash our schools/universities, quality of life, environment, depress wages, and probably increased cost of living with all their downhill-tax-shifting. And people are voting with their feet, so... taxpayer funded marketing campaign!

    1. The backwardsness of the WMC crowd is sickening. Not only do they think PR will substitute for an actual better quality of life, and improving education and the workforce.

      On a related note, this Administration also thinks that shelling out absurd amounts of tax credits to get some Illinois company to relocate 10 miles north into Kenosha County (as we saw last week) is more important than giving assistance to a homegrown business that will actually create new economic activity.

      Do these idiots not know that people with talent talk amongst themselves, and that those talented people use the Internet for actual information- like finding out about Wisconsin's cuts to K-12 and higher education, and the clueless and corrupt economic policies of the WisGOPs that are currently in charge. And they choose to go elsewhwere.

  3. As part of my job I talk to businesses about their employment needs. Yes the skills gap is an issue but increasingly it's become not being able to recruit from outside of Wisconsin. They can't sell this shithole of a state that Wisconsin has become under Walker and the Repubs. I don't see it getting any better either, only worse. You can't gut schools and universities, gut road repair and our environment and expect families to want to move here.

    1. I thoroughly believe that. Quality of life matters. Thanks for sharing