A Wisconsin Labor Shortage?

I talked briefly on WPR’s Here and Now yesterday, on the Wisconsin “labor shortage”. After making my obligatory comment that economists would not use the term  “shortage” to characterize Wisconsin’s situation, as there were (and are) no barriers to private firms to raising wages and benefits (see this post). However, supply could be constrained — either because of the presence of benefits (e.g., enhanced pandemic-related unemployment insurance), accumulated savings from the previous pandemic rescue packages, perceived increased disutility of work, or fear of illness. But higher wages and more flexible working situations could mitigate the high ratio of job openings to employment.

First, look at what real wages have behaved like:

Figure 1: Wisconsin average hourly earnings in total private industry for all workers, in 2020$ (blue), and in leisure and hospitality services (brown). Uses CPI for Midwest, n.s.a. NBER defined recession dates peak-to-trough shaded gray. Source: BLS employment situation release, BLS CPI release, NBER and author’s calculations.

Clearly, overall real wages (not adjusted for composition) have not risen to induce workers to take the jobs available. This is shown in the next graph — where it makes sense that there’s been an increase in openings as the pandemic has caused some workers to sort themselves into new positions.

Figure 2: Wisconsin Job openings rate, % (black, left scale), and Wisconsin average hourly earnings in total private industry for all workers, in 2020$ (teal, right log scale). Uses CPI for Midwest, n.s.a. NBER defined recession dates peak-to-trough shaded gray. Source: BLS JOLTS, BLS employment situation release, BLS CPI release, NBER and author’s calculations.

Wisconsin job openings rate rose from 4.7% in 2020M02 to a peak 7.4% in 2021M07 – a 2.7 percentage point increase. Nationwide the increase was from 4.4% to 7% in 2021M10. Rates have come down – to 6.6% in Wisconsin as of December. While still high, 5.7% would be the rate using the trend from 2009M06 to 2020M02.

I suspect that the structure of Wisconsin’s economy — a greater share associated with manufacturing — in a period of elevated demand for goods probably exacerbates the number of job openings. It takes time to sort labor/move labor to where the jobs are. However, over time competition for workers (via higher wages, benefits, improved working conditions) should shrink openings rates.

 

 

41 thoughts on “A Wisconsin Labor Shortage?”

    1. baffling

      Moses, thanks for the note. this is not on my radar. the texas border is a difficult area for me to assess. it is full of strong men and peasants, if you will. and they do not always fall within the political categories one would expect. texas is a big state, some of these places are quite remote. Laredo is one of those places. they almost operate in their own little world. but I will try to keep an eye out for more info.
      I have commented on this blog that there is a distinct possibility the state of texas could shift more to democrat. and that is still possible, although the latest efforts by the gop to restrict voting in the state is going to be a big setback. the rest of the nation should understand the type of voter suppression occurring in texas right now. it is not good. the south texas and border area is one big question mark on that transition, in my opinion. my initial feeling was that it would go democrat. but the republicans have actually made inroads in the area, and that may ultimately slow the state’s transition to blue. its related to the strongman comment I referenced earlier. they have a lot of sway, locally.

      1. Moses Herzog

        Been down around Laredo more than once (and that long stretch of nowhere highway around Del Rio (which is an odd experience). I have literally seen Mexican immigrants running under the weeds between barbed wire fenced-off property. I guess it’s not that big of a deal but when you see immigrants dashing under the weeds with your own eyes it seems more surreal and dramatic somehow. Many semi-truck drivers, if they were “laid over” liked to go to the south part of Laredo, over the actual border to “play” assumably the girls and drinks were cheap. I could never bring myself to do it, not necessarily for moral reasons, to be completely honest, but I was afraid of getting “jumped” or getting “rolled over” (having your wallet, etc stolen when semi incapacitated to drink). I didn’t start my heavier drinking until I went over to China, after driving the semi-truck, so it wouldn’t have taken much to get me sauced in those days. Literally only had two cans of beer in the years I drove, and one of my co-drivers had to bully me into it once when we knew we weren’t going to get a load.

        I like that area down there, has a certain charm that’s hard to describe, similar to New Orleans in its character of uniqueness. I’ll be pulling for the progressive candidate AOC endorsed and watching that political race with my peripheral vision for sure. Still holding out hope Texas can go blue again.

  2. Moses Herzog

    I’m very ignorant about these things. I don’t have any children (Yes, society can let out a big sigh of relief). But I know many churches offer a kind of daycare service. I wonder how Churches’ daycare rates compare to “typical” privately run daycare businesses?? I just can’t even imagine what American Moms are going through right now (over the past two years I mean) when they don’t have that “disposable income” to have someone watch the children. I guess that problem is being semi-relieved now as the virus lets off. But it’s just hard to imagine how Moms battle through that. But I think if the larger companies through a kind of “economies of scale” could offer these daycare services at a “cut rate” to average working women, they might be surprised how much that facilitates or boosts their ability to hire more workers, and have happy workers on the job.

    That’s all ATM from Captain Obvious.

    1. Moses Herzog

      “Well I turned out ok” …….. said the 1980s “latchkey kid”, as he grasped his right shoulder to conceal the nervous twitching and covered the left side of his face to hide the involuntary facial spasm. “Thank goodness for that” (joke).

    2. T. Shaw

      Eat more oysters.

      Wear boxers instead of tightie-whities.

      Candy’s dandy, but liquor’s quicker.

      Keep pitching.

      I’m here for you, man. We have nine grandchildren. That’s frightening.

    3. baffling

      daycare is a huge problem. if a 10 year old has to stay home for 2 weeks because school is closed, there are some options. but it is impossible for a 3 year olds daycare to be closed and a family (mother or father) to stay at home and also do remote work.
      even without the pandemic, it is the mothers working at Walmart who suffer. since those companies historically did not provide set schedules, getting somebody to babysit on a random schedule is nearly impossible. daycare and early childhood education should be a major priority for anybody concerned with improving the future of our country. I am talking to you, conservative family values folks.

  3. ltr

    A really nice discussion, but I have been wondering about employer complaints about worker shortages in manufacturing and limited technology investment and limited productivity gains in manufacturing. Why has manufacturing productivity been so limited for so long:

    https://fred.stlouisfed.org/graph/?g=lSy9

    January 30, 2018

    Manufacturing and Nonfarm Business Productivity, * 1988-2021

    * Output per hour of all persons

    (Percent change)

    https://fred.stlouisfed.org/graph/?g=lSyd

    January 30, 2018

    Manufacturing and Nonfarm Business Productivity, * 1988-2021

    * Output per hour of all persons

    (Indexed to 1988)

  4. ltr

    https://fred.stlouisfed.org/graph/?g=z21W

    January 15, 2018

    Shares of Gross Domestic Product for Private Fixed Nonresidential & Residential Investment Spending, Government Consumption & Gross Investment and Exports of Goods & Services, 2017-2021

    https://fred.stlouisfed.org/graph/?g=z21I

    January 15, 2018

    Shares of Gross Domestic Product for Private Fixed Nonresidential & Residential Investment Spending, Government Consumption & Gross Investment and Exports of Goods & Services, 2017-2021

    (Indexed to 2017)

  5. ltr

    https://fred.stlouisfed.org/graph/?g=KH4x

    January 15, 2018

    Real Average Hourly Earnings of All Employees in Manufacturing, 2017-2022

    (Indexed to 2017)

    https://fred.stlouisfed.org/graph/?g=MfvN

    January 15, 2018

    Real Average Hourly Earnings in Manufacturing, * 2017-2022

    * Production and nonsupervisory workers

    (Indexed to 2017)

    https://fred.stlouisfed.org/graph/?g=MfvD

    January 15, 2018

    Real Average Hourly Earnings in Manufacturing, * 1978-2022

    * Production and nonsupervisory workers

    (Indexed to 1978)

  7. Ivan

    Is part of that fall in real average hourly earnings explained by the steep fall and slow recovery of the low wage service sector jobs?

      1. Ivan

        Figure 2 show a very unusual swing of the two parameters in opposite directions from mid 2020. I am trying to understand why the “Real average hourly earnings” spiked up at the beginning of the pandemic, then fell from about $28.50 to about $26 in spite of an increase in the low wage sector. Sticky wages should prevent actual wage falls, especially when there are plenty of job openings.

        If you went from e.g., 50% leisure (@ $12/hour) and 50% non-leisure (@$30/hour) to 25% leisure (@$14/hour) and 75% non-leisure (@$30/hour) that would push the real wages drastically up. Then as those % move slowly back to normal (50/50), the total real average hourly wages would slowly fall – even as nobody took an actual wage cut.

        1. Menzie Chinn Post author

          Ivan: Wisconsin average hourly earnings as plotted includes all workers, not just production/nonsupervisory. (FRED variable AHETPI at national level has only production/nonsup workers). So when the pandemic hit, and many workers were let off, average wages of remaining workers went up. Reverse happened as recovery occurred; but inflation picked up so that measured nominal wages did not keep up with prices – so on net, measured average real wages are down. For an individual worker who stayed in his/her job, their real wage might or might not have gone down as far as shown.

  11. ltr

    What I find most surprising in a saddening way is the lack of earnings progress of transportation and warehouse workers, even through a time when so large and growing a portion of purchasing is being done online:

    https://fred.stlouisfed.org/graph/?g=JvTl

    January 15, 2018

    Real Average Hourly Earnings of All Employees in Transportation and Warehousing, 2017-2022

    (Indexed to 2017)

    https://fred.stlouisfed.org/graph/?g=mvfM

    January 15, 2018

    Real Average Hourly Earnings in Transportation and Warehousing, * 2000-2022

    * Production and nonsupervisory employees

    (Indexed to 2000)

    https://fred.stlouisfed.org/graph/?g=ufab

    January 15, 2018

    Real Average Hourly Earnings in Transportation and Warehousing, * 1980-2022

    * Production and nonsupervisory employees

    (Indexed to 1980)

  12. Macroduck

    Keep in mind, openings reflect an emoyer behavior, but not the employer behavior job seekers care most about. Job seekers care about hiring. Back in 2018, openings rose to the highest level then on record, in absolute terms and relative to hiring. One should view openings relative to whatever behavioral change took place in 2018. The earlier history of the series doesn’t tell much about today’s employer behavior.

    https://fred.stlouisfed.org/graph/?g=MfTJ

    Which is a long-winded way of saying openings are cheap and exaggerate demand for workers at the current wage.

    1. Moses Herzog

      Thank you. With at least one of our blog hosts excluded, and a few others, I frankly don’t think most economists “get” that, and very frankly I think I could get a lot of children to understand that. It’s not that damned hard~~ but you will read commentary after commentary by those with economics degrees discussing “openings” numbers It’s like putting out 200 large cardboard boxes in a park with “Vacancy open” written in crayon on the outside and going “Well, there’s a surplus of housing now, but these bums just don’t ‘want’ a place to stay”. But the many “trained” economists think that when a sh*t job becomes open, we’re all supposed to come running or “These people do not desire to work for a living”.

  13. rsm

    Would an inflation-adjusted basic income cause employers to attract employees because their jobs are actually fun, not because they produce the kind of profits enjoyed by economics bloggers, amirite?

    2. Barkley Rosser

      rsm,

      “profits of economics bloggers”? Some blogs run ads and make money. I do not see any here. I think Jim and Menzie are getting zero profits, and that is an estimate with a zero error bound. Amirite? *yes)

      1. pgl

        I think it has been well established that the hosts here like DeLong, Krugman, etc. do blogging without being paid any form of compensation. The suggestion that economist bloggers are do this for profits is not only STUPID but highly insulting.

    1. Moses Herzog

      More, about the violent tactics.
      https://www.cnn.com/2022/01/25/politics/alex-jones-january-6-plead-fifth/index.html

      Alex Jones uses violent terminology all the time, then says “I said violence, but I don’t mean violence”. His followers, who are lucky if they have a token high school degree from Sh*twater Arkansas are going to be able to decipher that this fraudster in “health supplements” doesn’t mean violence when he continually uses violent words?? When they were smearing human feces all over the USA Capitol and threatening Congress, I’m not sure Alex Jones “violent but not violent” message got through.

      1. GREGORY BOTT

        Tactics of the globalist elite that “Jones” represents. Understand the con, you will get the neoliberal undercurrents behind it.

    1. Barkley Rosser

      Or at least making it look like he can in an effort to wring out some kind of concession to save his face.

      He kind of reminds me of Nixon a half century ago, whining about the US being a “pitiful helpless giant” as we lost in Vietnam. Here he has this yuuuuge military, but somehow nobody does what he wants them to. So he is tryhing to see if he can use all those bloody useless tanks to get something. Except he still really does not know what.

      I do not know how this is going to end, but it is up to Putin, and it really is unclear what he is thinking, isolated most of the time in his dacha as he reportedly is, and facing old age, a stagnant economy, and rising opposition among his population. OK. Time to go after Ukraine! But to what end? If he conquers it, he will have a giant mess on his hands, especially as there will certainly be a serious ongoing opposition to his conquest and rule. He better try to cut some deal on the republics. That may be achievable without too much destruction.

        1. pgl

          Like he cannot but their produce using oil exports? This is not about economics alone no matter how many incredibly stupid comments from Princeton Steve to the contrary.

      1. macroduck

        Ah, the bot is no longer pretending to be a character from a Graham Greene novel. Now, he’s pretending to be a Russia analyst.

        Why hasn’t Russia invaded? Well why has Russia made preparations to invade? See? Shallow rhetorical questions are so easy, anybody can play!

        Fact is, we don’t know what Putin will do. Eventually, somebody’s guess will turn out to be right. If that somebody is honest (s)he will admit to a lucky guess.

        One thing we know right now is tha the bot has no clue.

  16. Moses Herzog

    Juwan Howard acting like a January 6th protester today. Or possibly Juwan Howard is just an Alex Jones fan. You never know. What a great example for young people, and I bet nothing bad might have happened with an entire arena of thousands of emotional Wisconsin fans nearby. Nothing else worse could have happened, Naaaah.

    1. pgl

      One coach whines about the other coach calling a time out in a game that was over while the other coach was wondering why Michigan was in a full court press in a game that had already been won. Both coaches were acting like children but I would not be surprised if Howard was banned from coaching the rest of the season. Which is weird as he in past has been a true professional. Maybe that ritual of the after game hand shake line needs to be revisited if coaches cannot act like adults.

      1. Moses Herzog

        In actuality Juwan had been in another fight with the coach of Maryland, and in a recent game had grabbed a LIVE ball off the court and then b*tched when he got the “T” call. It’s an automatic “T” if you grab a live ball off the court. Juwan has shown a pattern of violent and irrational behavior, to which his standard excuse is “I’m from the south side”. Fine, go back to the south side with the rest of the illiterates and wrestle in the gutter. This is D-1 basketball not the local 7-11 with your “Born Loser” tattoo on your upper arm

        You’ve been watching too much Steve “Women Bring Violence Upon Themselves” Smith again.

      2. Moses Herzog

        It’s interesting to note, as I am typing this (Menzie and Prof Hamilton have the post times Pacific Standard Time) Juwan Howard has YET to apologize for his actions, which spells out to me the man has serious and troubling mental issues. I wouldn’t label them sociopathic just yet, but I’d say it’s borderline sociopathic.

        1. Moses Herzog

          *label him sociopathic I should have typed, rather than “them”. The behavior is no doubt sociopathic style behavior, whether Juwan is or not reamins to be seen. But I have a very strong feeling, especially with no apology hours after the fact, we’re going to be seeing more extreme and very possibly violent behavior by Juwan. You can smell it.

          And what would Juwan do when cameras aren’t rolling?? Are you willing to wager a man who acts that way with TV cameras rolling acts what way when cameras are not rolling?? Going to be interesting what more we hear about Juwan in the future. Whether Steven A Smith thinks he deserves a pass for “what what” reasons or not.

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