Jun 25, 201808:21 PMMaking Madison
with Buckley Brinkman
Growing without workers
(page 1 of 2)
It finally happened.
For the first time in over 80 years, we have more jobs than workers. The numbers make the body gap an official phenomenon. An aging workforce that is not growing puts incredible pressure on the world’s economic growth. This issue will hit Wisconsin harder than most states. The shortage of new workers requires us to be smart and think differently about how we will continue to grow. It’s no longer enough to find incremental improvements. Flat workforce growth requires us to transform our approaches.
The latest workforce statistics document the body gap resulting from our falling fertility rates during the past 50 years. In 1960, the average family had 3.7 kids. Today that number is 1.9. That’s a problem because it takes a rate of 2.1 just to maintain our population. It’s also alarming that all of our workforce growth in the past 10 years came from people older than 55. These trends are not going to change in the next 20 years, and they will hit Wisconsin hard.
Start with the fact that Wisconsin is a smaller state. We have the 17th largest workforce, about one-sixth the size of California’s. In this case size matters, as similar percentage changes in the workforce generate much larger numbers in larger states.
Wisconsin also fights two other long-term trends. First, urban areas have been gaining population at the expense of rural areas for over 100 years. Wisconsin follows that trend with most of our northern counties now having a median age over 60. The second trend is the overall southern migration in the U.S. that started with the invention of air conditioning. Both of these are broad, long-established movements with little prospect of reversal.
In case you’re not depressed enough, let me fire one more at you. Wisconsin ranks in the middle tier of states in net out-migration. In fact, in almost every year of our history, Wisconsin has been a net supplier of people. One upside emerges from the gross migration statistics. We are the fifth lowest state in gross out-migration. Very few people leave Wisconsin. The state ends up in the middle of the pack because even fewer people move here: we are dead last in in-migration. The combination of these two figures creates a very stable population.
Still, we face an uphill battle to sustain economic growth because that growth results from both workforce and productivity growth. A shortage of people never before constrained our growth. There were always more than enough workers, with more on the way. In fact, we equated job growth with economic growth and saw low unemployment as a universally positive condition. Workers are now a choke point for the economy. We need to find ways to create growth that leverages the available workforce.
Productivity improvement is a critical factor to make more with less. Automation is certainly a part of the equation, but only a part. Most companies can make significant improvements by creating efficient and effective processes before thinking about how to deploy new technology. Transformation depends on fully engaging the best talent around techniques that make the best use of available resources, and then applying relevant technology to make those processes even more effective. That’s the most effective order — talent, techniques, and then applying technology.