Recently we conducted economic surveys in Dane County, Milwaukee and Waukesha Counties, and Northeast Wisconsin. What was somewhat surprising is that slightly over 50% of the businesses surveyed were hiring. What is even more interesting is that there are also applicant shortages at over 50% of the companies who are hiring. How can there be a labor shortage, when unemployment rates remain so high?
We asked a question to help categorize the applicant shortages - are companies looking for recent graduates or experienced workers with high school, technical school, undergraduate, or graduate degrees? The answers to this were quite interesting. We found that the top two categories included tech school graduates, with over 50% of those hiring indicating a shortage of experienced, technical school grads - by far the largest category. The bottom two categories were experienced and recent grad school graduates, with only about 5% of firms needing recent grad school graduates.
When digging into the data further, the business segment that is doing the best by far is manufacturing. Wisconsin is the number one state with the nation as far as the percentage of its workforce employed in the manufacturing sector. In Northeast Wisconsin, one out of four residents are employed by a manufacturer. Manufacturing is performing very well according to the survey results, with the overall strongest gains across revenues, profitability, and employee number increases. They also have the largest shortage of workers, with almost half of manufacturers hiring.
In thinking about how manufacturing has changed, you have to realize that the average global wage is roughly $1.00/hour. That's why many unskilled manufacturing jobs are done outside of the United States. To be competitive, most companies have replaced unskilled labor with technology such as robotics, and manufacturing jobs now often involve running computerized equipment, not back breaking work. As a result, manufacturing jobs that are still done in the U.S. and Wisconsin have transitioned into more of a "tech” job than a traditional "manual labor" job.
I recently toured a manufacturing facility in the Milwaukee area that is committing significant resources to train new workers because the tech schools are not turning out trained students fast enough to run their computerized manufacturing equipment. I had a similar conversation with a client in the Madison area that said he could hire 100 workers right now if he could find tech school graduates trained to do the work needed in his company’s particular application in the medical field.
A similar phenomenon is also occurring in the medical field as our aging population needs more medical attention and diagnostic testing, many of which are procedures performed by technicians who often are technical school graduates. The medical industry is relatively recession resistant and is growing due to aging baby boomers, and there is a need for technically trained people to fill the growing number of healthcare related jobs.
So why aren't more kids going to tech school? I believe this is a societal and parental question. For the past couple of generations, we have frequently defined success as going to college in order to get a "good job." Our education system and parents have pushed kids that way. But times have changed. Many recent college graduates are not finding jobs out of school, and at the same time we have a shortage of qualified technical workers. It seems our labor supply and demand are a bit mismatched at the moment. It will be interesting to see if society and parents redefine what success might look like and to see if our educational system adjusts at all to better meet the current needs of our workforce.