June 03, 2023

Research (4)

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by Dale Knapp, Executive Director, Forward Analytics

Executive Summary

With unemployment at record lows, Wisconsin businesses are facing a worker shortage that could persist for decades. The reason? The state does not have a enough young people to replace retiring baby boomers over the next 10 to 15 years and migration patterns have not shifted for the better.

The ability of a state to naturally grow its workforce over time can be measured by comparing the number of residents under 16 years of age to the number who are 50 to 64 years of age. Many in this older group will likely leave the workforce over the ensuing 15 years and be replaced by those in the younger group. The larger the ratio, the greater the state’s ability to grow the labor force.

For example, Wisconsin had 1.75 residents under 16 for each resident 50 to 64 years of age in 1990, and the state’s workforce expanded almost 17% over the next 15 years. By 2000, this ratio had fallen to 1.42 young people per resident near retirement, and the labor force expanded just 4.1% during 2000-2015. At 0.87 in 2017, this long-term indicator points to a shrinking labor pool over the next 15 years.

To grow its labor force, Wisconsin will need to attract workers from other states. However, the state has not fared well in attracting key population groups since 2010. In fact, the state’s migration patterns began shifting after 2000 and have only worsened among key age groups since.

Since at least 1990, Wisconsin has lost young people as they age from their early twenties into their late twenties. That pattern continued during 2010-2015 with the state losing almost 30,000 of these young people, many recent college graduates.

The state has typically recouped those losses by attracting people in their thirties, forties, and even fifties. For example, during 2000-2005, the state experienced a net outflow of about 25,000 young adults, but added over 40,000 residents in the older groups. However, during 2010-2015, the state not only lost 30,000 young adults to other states, it also lost population among those in the older groups. This partly explains the state’s current labor shortage.

The recent net loss of residents in their “family formation” years creates a second, long-term problem for the state. Those moving into the state who are in their late twenties to early fifties often bring with them children, who will be part of the future workforce. Indeed, during both 2000-2005 and 2005-2010, the state added more than 40,000 children from migration.

However, during 2010-2015, net migration of children to the state totaled fewer than 10,000. This large drop in the net migration of children portends trouble for long term workforce growth in Wisconsin.

Read the full report here.

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