Wisconsin’s return to near pre-pandemic unemployment levels has brought with it the reemergence of one of the biggest challenges facing some of the state’s largest industries — a workforce shortage.
The need for workers in multiple sectors of the economy has Republicans and the state’s largest business lobby calling on the state to end its participation in enhanced federal pandemic unemployment benefits, which they say creates a disincentive to work.
Liberals point to long-term structural changes as an opportunity to provide higher wages, better benefits, more skills-based training and adequate child care offerings — a need that was drastically amplified with the onset of the COVID-19 pandemic — as necessary to get more Wisconsinites into the workforce.
“There are structural factors in our society that have brought us to this point where we have high numbers of unemployed still, especially among low-skilled workers, and now we have a burgeoning demand for qualified workers,” Wisconsin AFL-CIO president Stephanie Bloomingdale said. “To now complain that unemployed workers are getting $300 extra to get us through the pandemic — it falls short.”
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Some of the industries hardest hit by the pandemic include public-facing businesses like bars, restaurants, hotels and tourism. As more Wisconsinites receive vaccines and local public health restrictions relax, many of those businesses are looking to build back to pre-pandemic staffing levels.
“I think many owners are bending over backwards to find the staff that they need,” said Bill Elliott, president and CEO of the Wisconsin Hotel and Lodging Association.
In February, the American Hotel and Lodging Association estimated Wisconsin lost more than 11,000 direct hotel jobs last year. The association expects the state to lose about another 9,300 such jobs this year.
Kristine Hillmer, president and CEO of the Wisconsin Restaurant Association, said 10% of Wisconsin restaurants have already shuttered their doors because of the pandemic and another 20-30% are at risk of closing.
Hillmer said restaurant owners across the state are feeling additional pressure to build up their staff, despite some lingering public health orders limiting venue capacity, with hopes of a surge in business this summer.
“There are no easy solutions on the horizon,” Hillmer said.
In Dane County alone, the hospitality industry fell from more than 22,000 employees to a little over 15,000 last year, according to the Wisconsin Department of Tourism. About 2,000 of the jobs lost last year were located in Downtown Madison, representing 44% of the Downtown hospitality workforce.
Other sectors of the economy, including manufacturers and motor carriers, faced a workforce shortage before the pandemic hit.
With hopes of drawing talent amid a tight labor market, some businesses have turned to wage increases, sign-on bonuses and other incentives to meet staffing demands.
“The list just goes on and on,” said Seth Lentz, CEO of the Workforce Development Board of South Central Wisconsin.
“Companies are looking for talent and if somebody wants a career, they’re prepared to capitalize on the talent and support individuals in developing their skills and talents and pursuing careers.”
After skyrocketing to about 14% in April 2020 due to the pandemic and subsequent shutdowns or restrictions on several industries, Wisconsin’s unemployment rate began to slowly fall last year. As of March, the unemployment rate was 3.8% — near the 3.5% rate in February 2020, according to the state Department of Workforce Development.
The state was still down 129,000 non-farm jobs and 98,300 private-sector jobs when compared with last March.
Employers added 266,000 jobs nationwide in April, considerably fewer than the 770,000 jobs added in March and far fewer than the 1 million jobs projected by Dow Jones.
With hopes of getting more people back to work, Wisconsin Manufacturers and Commerce on Tuesday sent a letter to Gov. Tony Evers urging him to follow a handful of other states, including Iowa, by ending Wisconsin’s participation in the enhanced federal unemployment benefits program, which offers individuals $300 in weekly unemployment benefits in addition to the state’s maximum weekly benefit of $370.
“Right now in Wisconsin, you can get $16.75 an hour essentially to be unemployed and sit on the sidelines,” WMC spokesman Nick Novak said. “If we don’t fix this immediately, it’s going to cause irreparable harm.”
WMC also has asked that Evers use some of the federal stimulus to provide sign-on bonuses to create added incentive to work.
U.S. Sen. Ron Johnson, R-Oshkosh, also took aim at federal unemployment benefits during an interview with “Fox News Radio” earlier this month.
“The biggest problem we have now in our economy is that the federal government has subsidized sitting on your couch,” Johnson said. “We are paying people not to work, so employers cannot hire the people they need to run their manufacturing plants or be in the service industry.”
U.S. Rep. Mark Pocan, D-Black Earth, a small-business owner for more than three decades, said in an interview he favors the federal unemployment program, which is slated to run through September.
“Anyone who thinks that is the biggest barrier is probably on the side of paying their employees a very low wage and that’s why they’re having a hard time finding employees,” Pocan said.
Some state Republicans, including Assembly Speaker Robin Vos, R-Rochester, have called for an end to the state’s waiver of the work search requirement in order to be eligible for unemployment benefits. The waiver is set to expire in July, but Vos said legislative Republicans are “prepared to repeal the rule so we can get people back to work.”
Sen. Steve Nass, R-Whitewater, who co-chairs the Legislature’s rules committee, said he wants to reinstate the rule by the end of the month. If reinstated, unemployed people will have to perform four work-search activities each week in order to obtain benefits.
Speaking with the Wisconsin Valley Editorial Board on Monday, Evers said, “there is no question: There is a shortage of workers” in the state.
However, the Democratic governor pushed back against eliminating the state’s work search requirement waiver, adding that “the more people we get vaccinated, the better off we will be.”
Evers has not weighed in on calls by WMC and some Republicans to end the state’s participation in enhanced federal unemployment benefits.
Jon Peacock, executive director of the liberal Wisconsin Budget Project, also said it’s premature to eliminate enhanced unemployment benefits until more residents are vaccinated. Almost 40% of the state’s population has been fully inoculated, according to the state Department of Health Services.
Instead of striking federal unemployment benefits, Peacock said lawmakers should focus on barriers to employment by improving access to child care, expanding BadgerCare eligibility and increasing the minimum wage, which has remained at $7.25 an hour since 2009.
Laura Dresser, associate director of the Center on Wisconsin Strategy, a UW-Madison liberal think tank, agreed, adding that limited access to child care has kept many individuals, largely women, from returning to work.
“The pandemic exposed and exacerbated every underlying inequality that this labor market generated and this is especially true for leisure and hospitality workers,” Dresser said. “These workers work at the bottom of the labor market, with the lowest wages around, and they have the weakest benefit packages.”
A familiar shortage
For some industries like manufacturing and trucking, finding enough employees to meet demand was a challenge long before the pandemic.
“Historically, we generate more jobs than we have people to fill those jobs,” said Steven Deller, professor and community development specialist with the Center for Community and Economic Development at UW-Madison. “To put it crudely, we don’t have enough bodies to fill the jobs that the economy has generated.”
Dan Johnson, vice president of the Wisconsin Motor Carriers Association said an explosion of online shopping and shortages of goods at grocery stores and pharmacies in the early months of the pandemic “put an incredible strain” on the trucking industry that has yet to let up.
One of the biggest challenges in fields like manufacturing and the trucking industry is that the number of young individuals seeking those jobs is outpaced by the number of workers who are aging out of the workforce. Increasing demand in those industries further exacerbates the need for more workers.
“We used to talk about the skills gap, the fact that we didn’t have enough people with the right skills for the job, but now we just don’t even have enough people to fill the jobs that we have,” Novak said, adding that an increased focus on talent attraction could help draw more workers to the state.
Dennis Winters, chief economist for the state Department of Workforce Development, said another potential resource already in Wisconsin includes those who need basic workforce skills training or remedial education. Those not searching for work, who are not counted in unemployment measurements, provide another potential labor pool.
“That’s a resource that is available and needs to be tapped,” Winters said.
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