Continuing Labor Shortage Problems for Wisconsin

(Image Source: Christopher Burns / Unsplash)

Wisconsin IDEA

Insight • Data • Economics • Analysis

Wisconsin Appears Headed for a Soft-Landing

One of the most commonly identified problems hindering the economic growth of Wisconsin is chronic labor shortages. Coming out of the pandemic firms have struggled to find a sufficient supply of workers. As a result, firms have been reluctant to let workers go despite indications of an economic slowdown. This reluctance is, many economists believe, a primary factor in lower expectations of a recession in favor of the now predicted “soft-landing” of the economy.

Figure 1. Labor Shortage Patterns for Wisconsin

If we trace the pattern of Wisconsin job openings and the number of unemployed persons over the past several years, we can see a few clear patterns. From early 2011 through 2015 and 2016 the number of unemployed exceeded the number of job openings with an average unemployment rate of about 6.6. One could argue Wisconsin had a surplus of workers. Starting in early 2017 the number of job openings exceeded the number of unemployed with an average unemployment rate between January 2017 and the start of the pandemic (April 2022) of 3.2 percent. The shock of the pandemic to unemployment is clear as is the relatively quick recovery. Notice, however, that the number of job openings throughout the pandemic was relatively stable with a surge of new openings as we moved out of the pandemic shutdown.

While the surge might appear unique it appears that the surge was a return to the longer-term upward trend in job openings. At the same time, the number of unemployed appears to have returned to its long-term downward trend. While the post pandemic labor shortage appears much larger, it is more likely a reflection of trends in Wisconsin labor shortages there were present since early 2017: the pandemic appears to have simply caused a short-term disruption of longer-term trends. Looking at the most recent number of job openings there is little evidence of an economic recession, but rather a simple slowdown and when coupled with modest upticks in the unemployment rate, Wisconsin appears headed for a soft-landing.

Our Work

Latest News & Updates

Support Extension