Despite the end of extra federal unemployment benefits early last month, Wisconsin's unemployment rate remained at 3.9%, where it has been since April, according to new data from the state Department of Workforce Development.
The report, released Thursday, Oct. 21, provides the first look at Wisconsin's unemployment rate after the extra benefits expired on Sept. 6. Republicans and some business owners had argued the enhanced benefits were exacerbating the state's workforce shortage challenges by creating a disincentive to work, but others said Wisconsin's labor woes are more complicated and won't be going away anytime soon.
"I think we're probably looking now at 2023 in terms of any sort of normalcy," Rimantas Buinevicius, executive search partner with Patina Solutions, said during a labor shortage discussion hosted last week by the Wisconsin Alumni Association. "I think it's going to be related to seeing pure confidence that COVID infection rates aren't going to come back and the supply chain coming back to normal, because until the supply chain comes back to normal, there's just no way you're going to get back to a normal situation."
Kim Ruhl, associate director of the Center for Research on the Wisconsin Economy, agreed with Buinevicius, adding that "it's definitely going to be measured in years, not months."
DWD's report, which is based on U.S. Bureau of Labor Statistics preliminary employment estimates, found that total non-farm jobs in Wisconsin remained the same as in August, while private-sector jobs in the state dropped by 100. The state's labor-participation rate increased slightly from 66.5% in August to 66.6% last month.
Scott Hodek, section chief of DWD's Office of Economic Advisors, said month-to-month jobs numbers tend to fluctuate, especially in recent months due to disruptions caused by the ongoing COVID-19 pandemic. In August, the state lost 8,200 private-sector jobs and 10,400 non-farm jobs.
The state also continues to fare better than the national unemployment rate, which was 4.8% last month.
Enhanced benefits, which provided unemployed people $300 in weekly payments in addition to the state's maximum weekly benefit of $370, were enacted to help the tens of thousands of Americans who found themselves out of work during the COVID-19 pandemic.
However, public opinion surrounding those benefits began to sour over the course of the pandemic as businesses returning to more normal operations found themselves unable to find enough willing workers — a challenge that was present long before the pandemic.
Legislative Republicans tried to end the benefits, which 20 other Republican-controlled states had done. But Gov. Tony Evers vetoed those efforts, pointing to the need to address other barriers to employment, including transportation, child care and wages in order to get more people back to work.
"The pandemic really exacerbated and exposed some underlying issues in these labor markets, and those are issues relating to low wage jobs and gender inequality in the way we think about the distribution of care work," Laura Dresser, associate director of the liberal Center on Wisconsin Strategy, said last week.
Wisconsin's nonfarm jobs in September remained at 96% of pre-pandemic levels in February 2020.
Kurt Bauer, president and CEO of Wisconsin Manufacturers and Commerce, said he still believes the federal government is competing with the private sector through stimulus payments and the child tax credit.
"I think for some that is an incentive for them to stay out of the labor force," he said. "Clearly our labor participation rate has not rebounded to pre-COVID levels, which tells you that people are out of the workforce that had been in the workforce. The question is why?"
DWD officials said Wisconsin employers continue to struggle to fill jobs due to a workforce gap driven by low birthrates, high retirement rates and low net migration and immigration flows into the state.
"The labor force may decline by 2035, rather than just be flat," Hodek said. "This is essentially the retirement of the baby boomer generation. As that generation ages and in turn ages out of the labor force, it becomes more and more difficult to replace those job openings."
Republican lawmakers earlier this month introduced a package of bills that would, among other measures, require drug testing for those claiming unemployment benefits, directing job seekers to apply for specific positions and provide cash payments to businesses that hire long-term unemployed individuals — those who have spent 27 weeks or more on unemployment. The bills authors have said the package aims to transform the state unemployment system into a "reemployment program."
Shawn Phetteplace, state manager for the Main Street Alliance, which represents more than 100 small businesses across Wisconsin, said expanded access to child care, paid leave and health care coverage — provisions proposed in President Joe Biden's "Build Back Better" plan — would go a long way to get more people, especially women, back into the workforce.
"The lack of affordable, flexible child care, paid leave and the Medicaid 'cliff,' which provides an incentive for workers to reduce hours, all contribute far more to our challenges than any impact enhanced unemployment insurance had on the market," Phetteplace said. "Organizations like WMC and leadership in the Legislature wanted to blame workers first, instead of figuring out what barriers exist for them. Let's have an honest discussion to help small businesses."
Evers in July allocated $130 million in federal stimulus funds to help connect unemployed people with work opportunities with hopes of addressing ongoing workforce shortage challenges across the state.
WMC, the state's largest business organization, on Thursday sent a letter to Evers calling on the governor to spend $3 million in state dollars and federal coronavirus stimulus funds to launch a talent attraction campaign aimed at drawing more out-of-state workers to Wisconsin.
"Unless something changes, we are going to continue to have fewer workers for the jobs we have right now, let alone ones we hope to create, so this is an economic imperative for us," Bauer said.
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