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February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 1 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS Wiser.

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Presentation on theme: "February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 1 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS Wiser."— Presentation transcript:

1 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 1 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS Wiser Older Workers Support Group Dennis K. Winters Chief, Office of Economic Advisors Wisconsin Department of Workforce Development February 15, 2013

2 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 2 WELCOME OH, MAN … IT’S EVEN WORSE THAN I THOUGHT

3 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 3 TODAY’S DISCUSSION SET THE STAGE  Brief on current state of economy.  What is the New Economy (briefly)  Workforce trends – quantity and quality.  Job projections

4 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 4 FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY

5 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. ECONOMIC OUTLOOK

6 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 6 Source: BEA, OEA BUSINESS CYCLE SEVERE IT TOOK NINE QUARTERS TO RECOVER Recovered

7 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 7 REAL EARNINGS ARE FLAT

8 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 8 INTEREST INCOME TAKE HIT WITH LOW INTEREST RATES

9 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 9 HOME EQUITY WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING

10 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 10 Source: Federal Reserve Board of Governors REVOLVING CREDIT WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING

11 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 11 NO SAVINGS – WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING

12 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 12 It is difficult to increase consumption when you: 1.have stagnant income, 2.are losing wealth, 3.paying down debt, 4.increasing savings, 5.and are paying more for food and gas.

13 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 13 CORPORATE PROFITS AT NEW RECORDS MOSTLY DUE TO COST CUTTING

14 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 14 MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND

15 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 15 CORPORATE PROFITS BUILDING CASH HOARD

16 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 16 INVESTMENT GROWTH IS IN PRODUCTIVITY, NOT EXPANSION Source: BEA, OEA

17 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 17 Source: Federal Reserve Bank of St. Louis, Economic Research; OEA EXTENDING CREDIT BANKS ARE RETICENT TO LEND FUNDS Reserves of Depository Institutions (billions of dollars)

18 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 18

19 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 19 HOUSING STARTS TRENDING HIGHER

20 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 20 VEHICLE SALES CONTINUE STRONG

21 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 21 THE ECONOMY HAS CHANGED AND SO MUST YOU

22 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 22 ECONOMIC RECOVERY HOW IS THIS ONE NOT LIKE THE OTHER ONES

23 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 23 JOBS RECOVERY HOW IS THIS ONE NOT LIKE THE OTHER ONES

24 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 24 WHAT IS THE NEW ECONOMY

25 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 25 Old Economy Raw Materials Cost Race to Bottom Workers Chased Jobs Quality of Life was luck of the draw New Economy Brain Power Value-Added Products Businesses Chase Talent QoL attracts talent NEW ECONOMY CHANGED CONSTRUCT

26 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 26 Stocks In Intel Microsoft SBC (SWBell) Home Depot Pfizer* Stocks Out Union Carbide Goodyear Chevron Sears Roebuck International Paper* CHANGES IN THE 30 DOW INDUSTRIALS NOVEMBER 1999 * As of 2004

27 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 27 Greater Capitalized Value than Ford and GM Combined 2005 Income before Taxes  from Car Sales ($1.0 Billion)  from Financial Services $3.5 Billion

28 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 28 DESIGNED HERE ASSEMBLED THERE Designed in California Assembled in China

29 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 29 KATHLEEN

30 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 30

31 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 31 So, what will be the biggest socio-economic policy challenge in the next 20 years?

32 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 32 ELDERLY NUMBERS WILL SWELL WIDEN THE SIDEWALKS WILL YA !?

33 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 33 OR PERHAPS THE MORE INTERGENERATIONAL VERSION

34 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 34 QUANTITY

35 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 35 WISCONSIN’S WORKFORCE GROWTH BECOMES FLAT Source: Bureau of Labor Statistics, OEA

36 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 36 BLS RAISED LFPR FOR THE FUTURE PARTICULARLY FOR OLDER COHORTS Source: Bureau of Labor Statistics, Bureau of the Census, OEA

37 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 37 WISCONSIN’S WORKFORCE HIGHER LFPRs OFFER LIMITED GAINS Source: Bureau of Labor Statistics, OEA

38 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 38 LITTLE CHANGES EVEN WITH HIGHER LFPR RETIREMENTS SWAMP PARTICIPATION Source: Bureau of the Census, DOA, OEA

39 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 39 NURSING WORKFORCE IN WISCONSIN DEMOGRAPHICS AT WORK Source: Office of Economic Advisors

40 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. WORKFORCE PARTICIPATION TRENDS DWARF FLUCUATION

41 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. IT’S THE YOUNG THAT ARE DELAYING ENTERING THE WORKFORCE

42 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. CHANGING LFPR GREATLY ALTERS WORKER AGE MIX

43 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 43 QUALITY

44 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 44 "The days are over when you could walk into a paper mill with a high school diploma and run one of the machines." – Patrick Schillinger, former Wisconsin Paper Council President, Center will teach paper-industry technology, Milwaukee Journal Sentinel, JS Online, October 21, FUTURE EMPLOYEES REQUIRE HIGHER SKILLS

45 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 45 TURN YOU LOOSE ON THIS BABY I DON’T THINK SO

46 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 46 “Today in most fields I know, the struggle is about creativity and innovation. There is no script.” – Robert B. Shapiro, former CEO & Chairman, Monsanto Corporation FUTURE EMPLOYERS NEED FOR CREATIVITY & INNOVATION

47 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 47 Source: Autor, Levy and Murnane, 2003 Nonroutine manual Routine cognitive Routine manual Nonroutine analytical Nonroutine interactive WORKPLACE REQUIREMENTS CHANGES IN SKILLS USED AT WORK* Source: K-12 Education and Economic Summit presentation by Alan B. Krueger, Princeton University * Based on the Dictionary of Occupational Titles

48 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 48 Entry level jobs with family supporting wages and advancement opportunities require same knowledge foundation and skill set as those entering post-secondary education. Advanced reading Advanced writing Advanced mathematics (Algebra II) Fastest growing occupations earning greater than $30,000 per year, require some post-secondary education. EQUAL SKILLS NOW REQUIRED NO TWO-TRACKING Source: Achieve, Inc, OEA.

49 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 49 WORKFORCE TRENDS ARE:  Unprecedented – we have never faced a declining workforce before;  Assured – demographics will change little;  Largely unalterable – demographics and migration patterns do not change abruptly.

50 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 50 RAMIFICATIONS OF WORKFORCE TRENDS ARE:  Potentially devastating – without sufficient productivity gains the state’s economy will stagnate;  Necessitating a focus on talent – large investments in education and training are needed;  Requiring match – talent supply and industry demand must be matched or you lose both.

51 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 51 … the number of unemployed persons (12.8 million) and the unemployment rate (8.3 percent) … have shown little movement thus far in BLS, July 2012 employment report, August 3, 2012 US Employers post the most jobs in 4 years; by Christopher S. Rugaber, AP economics writer, Posted: Aug 07, :42 AM CDT State manufacturers have jobs, need workers; postcresent.com; by Holly Hartung, Grace Edquist and Matt Oleson, Wisconsin Center for Investigative Journalism, August 1, 2012 Marinette Marine struggles to attract young workers, Training, dozens of positions available, but applicants are few By Rick Barrett of the Journal Sentinel, June 16, 2012 WAIT, WHAT HOW CAN YOU HAVE BOTH?!

52 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 52 Forgive me, A little economic theory

53 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. Supply Theory Tells Us More Pay Yields More Work

54 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. $100 per day yields 3 days work (total earnings = $300) Area = $300

55 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. Increased pay translates into increased work (increased earnings)

56 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. Well, the guy only shows up for two days. This gives what we call a backward-bending supply curve.

57 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. At new wage, it only take 2 days to make $300 = S`

58 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 58  We face a serious quantity challenge  We face a serious quality challenge  We need to break into the lower crust of the chronically unemployed  Many are not prepared technically or civilly  Backward-bending supply curve for labor. THINGS HAVE CHANGED BREAKING NEW GROUND

59 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 59 JOB PROSPECTS

60 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 60 Breach still May 2015 Old equation: y = x – New equation: y = x – JOB RECOVERY STILL A WAYS TO GO

61 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 61 JOB OPENINGS BY OCCUPATIONAL GROUP Source: Office of Economic Advisors, Wisconsin Projections

62 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 62 TOP OCCUPATIONS WITH MOST NEW JOBS Source: Office of Economic Advisors, Wisconsin Projections

63 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 63 FASTEST GROWING OCCUPATIONS Note: Only occupations with at least 500 jobs in 2018 were included. Source: Office of Economic Advisors, Wisconsin Projections

64 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 64 MOST “IN DEMAND” OCCUPATIONS WISCONSIN, Note: Occupations most “in demand” satisfy the following criteria: 1. Annual growth rate is above the statewide average of 0.27% between 2008 and Annual median wage is higher than the State’s median wage for all jobs ($32,351) 3. Top 30 total job openings (openings due to either new jobs and/or replacement needs) Among top 100 fastest growing occupations Among top 100 occupations with the most new jobs between 2008 and 2018 Among top 100 highest-paid occupations Source: Office of Economic Advisors, Wisconsin Projections

65 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. He said, She said.

66 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 66 HE SAID, HEY BABE, LOOK THE ECONOMY IS GROWING NICELY

67 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 67 SHE SAID, WE STILL HAVE A WAYS TO GO, DEAR

68 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 68 HE SAID LOOK HONEY, THE HOUSING MARKET IS PICKING UP

69 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 69 SHE SAID SWEETHEART, WE’RE NEVER GETTING BACK THERE

70 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 70 HE SAID, SUGAR, JOBS ARE CLIMBING

71 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 71 SHE SAID, DARLING, DON’T PISS OFF YOUR BOSS

72 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 72 HE SAID, LOVE, THEY’RE JACKING UP WAGES EVERYWHERE The minimum wage will increase in 10 states on January 1, Employers to be more generous with pay raises next year, CNNMoney. An improving job market is boosting wages, Herald and News. SHRM consensus is for an average budget increase of 3 percent. Hay Group says 3 percent salary increases in 2013.

73 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 73 SHE SAID, JIM, GET A GRIP

74 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 74 HE SAID, DREAMBOAT, WE’RE GONNA BE RICH INCOME GROWTH (Q1:2010 – Q3:2012) Source: BEA, OEA

75 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 75 SHE SAID, YOU DOLT, WAKE UP AND SMELL THE COFFEE

76 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W.

77 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 77 Questions ?

78 February 15, 2013 THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS W.O.W. 78 Dennis Winters Phone: Website: OEA website: CONTACT INFORMATION


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