WMC survey finds U.S. economy weakening, health care costs rising
Madison – Wisconsin’s worker shortage is forcing state CEOs to get creative to find and retain workers, according to a survey conducted by the State Chamber of Commerce. The semi-annual WMC economic survey of top private sector executives also reveals a general malaise about the national economy and that employer-sponsored health care costs are rising.
Seventy percent of the 265 survey respondents report difficulty finding qualified workers, which is up slightly from 68 percent six months ago and matches the percentage from last summer.
When asked in an open-ended question to describe how employers are dealing with the problem, there was a broad range of responses. Many employers are investing heavily in automation, while others are working with local K-12 schools, technical and four-year colleges to recruit interns and apprentices. Others are doing more internal training and paying for GEDs and professional trade certifications.
Several employers also report offering more flexible work arrangements like telecommuting and increasing hiring incentives, salaries and benefit packages, although responses to a separate question doesn’t reveal a notable rise in hourly wages.
Other responses on how employers are addressing the worker shortage include relying on overtime, outsourcing and temporary agencies. Some are also delaying expansions and turning down contracts they don’t have the workers to complete.
“Everyone who cares about our state’s economy should be alarmed to learn that Wisconsin businesses are being forced to delay expansion projects, aren’t bidding for contracts and are outsourcing work out-of-state because they can’t find employees,” said Kurt R. Bauer, WMC president/CEO. “This is a harbinger of things to come unless business, government and academia can work together to both direct people seeking work toward in-demand careers and to attract more workers from outside Wisconsin to our state.”
The WMC survey also shows that Wisconsin executives see state economic conditions as stable, but view the U.S. economy as weaker than six months ago. Sixty-one percent of respondents rate the Wisconsin economy as “moderate,” down from 62 percent in January. Twenty-one percent say the state’s economy is “strong,” unchanged from the last survey and 1.1 percent rated the economy “very strong,” down from 1.6 percent.
Forty-six percent call the U.S. economy “weak” or “very weak,” up from 37 percent in January; 45.5 percent rated the national economy as “moderate,” down from 48 percent six months ago and just 6.1 percent said it was “strong,” down from 9.8 percent. No one rated the U.S. economy as “very strong.”
Forty-four percent say the Wisconsin economy will experience moderate growth through the end of the year, down from 52 percent in January, while 49 percent believe the state’s economy will be flat over the next six months.
Continuing a trend of more pessimism toward national economic conditions, 21 percent say the U.S. will see moderate growth, down from 39 percent in January and 53 percent a year ago, while 60 percent say growth will be flat.
Despite the above, the number of respondents who said their business was profitable in the last six months rose slightly from 82 percent to 84 percent and 87.7 percent say they will make a profit through the end of the year, up from 85.5 percent.
Eighty-four percent of state business leaders believe the U.S. is headed in the “wrong direction,” according to the survey, a big jump from 76 percent six months ago. The number of executives who believe Wisconsin is headed in the “right direction” is essentially unchanged at 80 percent (it was 79 percent in January).
Health care is tied with a weak national economy as the second biggest concern facing businesses, according to respondents. Labor availability topped the list again. In fact, labor availability and health care (in that order) have been the first and second biggest concerns among business leaders since at least January 2015.
When asked how much per-employee health-coverage costs increased over the past year, more businesses showed a rise between 11-20 percent than in the past three surveys.
For example, this summer 41 percent of respondents said their cost increased between 11-20 percent, while 37 percent said cost rose between 1-10 percent. In January, it was 33.5 percent and 43.4 percent, respectively. A year ago, it was 35 percent to 41 percent. And in January 2015 it was 34 percent between 11-20 percent and 42 percent between 1-10 percent.
The percentage of businesses that plan to increase their employee contribution to manage health care costs also rose in the current survey. Sixty-four percent said they would increase their employee contribution. In January, the number was 58 percent. A year ago, it was 56 percent and January 2015 it was 58 percent.
“Health care costs have been a major burden for businesses and they seem to be getting worse, not better,” said Bauer. “Further, with a weak economy, both nationally and globally, businesses are being forced to pass higher health care costs on to their employees.”
For Further Information Contact:
Kurt R. Bauer, (608) 258-3400