A dozen years ago leading economists introduced the concept of business clusters to the world of economic development as a better way to think about how the economy works.
Now, a follow-on concept – skills clusters – has been over-laid on the original organizing concept. It’s a most useful addition to the work of reinventing and growing the Wisconsin economy and its job base. The state and nation continue to lag on job creation, so clear thinking is critical to pulling off a turn-around.
Competitive Wisconsin and it consultants from Manpower conducted the latest analysis of the mismatch between available jobs and available talent and concluded that the state is currently short more than 6000 talented people in five critical skills clusters:
• Financial analysts
• Information technology workers
• Metal manufacturing workers
• Health care specialists
• Mechanical engineers
That compares to a reported more than 30,000 openings for employees across the board in Wisconsin.
More troubling is the Manpower projection that the shortage in the five skill clusters will grow to 54,000 in ten years, give current training and education tends.
These are broad categories of skilled people who work in a cross-section of the state’s mature and emerging business clusters. These sectors and these talented workers can be looked as the tip of the spear of the state’s economy.
These companies and their workers are the exporters and therefore the wealth creators. Their market leading companies sit on top of the supply chains into which many of the rest of us, small and mid-sized businesses, sell products and services. They will be hobbled without enough talent for their growth.
The reason that we have to get these labor force dynamics right is that the state has been stuck in a pattern of anemic job and income growth. Our unemployment rate has been stuck at 7.3% for a year. Which translates into 224,000 people out of work. Another estimated 200,000 are under-employed.
And we have become a low income state, with wages down around the Alabama level.
Further, the people in the skilled clusters are the ones capable of jumping out of their jobs to start new companies, the source of most new jobs.
If Wisconsin does well in agri-business, advanced manufacturing, forest products, medical devices, paper making, health care, financial and insurance services and information technology, its economy and its citizens will do well.
Importantly, too, filling the gap would accelerate growth in our exporting industries and, therefore, in their supply chains. These are the state’s strategic jobs.
Why is the gap projected to jump over the next decade? Reasons cited in the Be Bold 2 report are the growing number of boomer retirements, a net out-migration of workers from Wisconsin, young people educating themselves for go-no-where careers, a high school dropout rate that is still too high, ever higher college tuition, sketchy information about where the job openings are in the present and future tenses.
While these factors may all be valid, they cannot be allowed to become excuses for inaction. The talent gap has to be filled.
In a very real sense, an available tool of talent, especially in the skills clusters, can be a magnet for business expansion. Build the skilled worker pool, and they will come. The converse is also true. If we don’t build it, the companies will go elsewhere.
Gov. Scott Walker has already created two councils to provide over-sight on workforce training issues. That’s one too many.
The Be Bold 2 report recommends combining them into a “Governor’s Talent Development and Acquisition Council.” It deserves the governor’s personal attention and an expert staff. Members should include representatives from the UW System, the Wisconsin Technical College System, the state’s private colleges, key cabinet members, the state’s mature and emerging clusters, unions, regional economic development organizations and professional societies.
The proposed council will have to deal with a strategy warp that is well meaning but strategically flawed. Most of the current workforce development programs, on which more than $4 billion in state and federal money is spent annually, are aimed at people in poverty, at keeping them viable and getting them work-ready. Often, those programs are aimed at putting people in low skill, low pay jobs, without benefits.
Those programs are necessary, but they are stopgap in nature.
More attention needs to be paid to jobs that create prosperity, not just alleviate poverty in the short term. An escape from long-term poverty depends on developing a deep talent pool in the skills clusters.
The new council will also need to take a hard look at the billions spent annually on the state technical college systems at its 47 campuses and at the billions spent on the UW System at its 26 campuses. If those two systems were firing on all cylinders, Wisconsin would not be a laggard on job creation. For reasons that need to be better understood, we are not getting a full return on investment (ROI) on the billions being spent in those three bastions of workforce development. The talent mismatch is a symptom of that poor ROI.
In other words, Wisconsin already spends a ton of money on workforce issues. But the state remains a laggard on job growth and income levels. Our education and training resources needs to be targeted more strategically and astutely.
For that, we need better forecasting of job trends. Where is the puck going to be in 2020? Be Bold 2 lays out those trends in the skills clusters.
An even sharper view of future talent needs could be efficiently pulled from the state’s quarterly survey of 96% of its companies for unemployment insurance (UI) purposes. That census nails the size of the current job base and past job growth or decline quarter to quarter.
First, the UI report needs to be issued within six weeks of the end of each quarter. It is now released a quarter late.
Second, it could be retooled to ask employers for their estimated job needs six months out, a year out and three years out. We would then have forecasts directly from the employers’ mouths.
Third, the results could be sliced and diced by regions, industries and skills clusters.
Such information could be critical for policy makers in the education and training institutions, for students and their parents, for job seekers. They could all set future targets with a clear eye.
The Be Bold report stopped short of really bold initiatives, such as student loan forgiveness for graduates who stay and work in Wisconsin or who move here. It didn’t deal with education reform, because the subject was beyond its scope. That may be work for a Be Bold 3 analysis.
Finally, it is important to keep in mind that job creation is a bigger priority than workforce training. We have some 400,000 million people unemployed or under-employed. The unfilled openings are only a small percentage of that total, but the ones in the five skill clusters hold the whole economy back.
For the prosperity of our citizenry, we have to get this stuff right.