1. Examining The Skills Gap in Wisconsin Prepared for the Wisconsin Legislative Council Jennifer Cunha Megan Loritz Ben Nerad Phil Sletten

2. Presentation Overview ● What is the Skills Gap? ● Literature Review ● Indicator Analysis ● Projection Analysis ● Current Policies ● Policy Recommendations

3. What is the Skills Gap? ● As unemployment remains high, some employers say it is difficult to find workers with sufficient skills for available positions ● Suggests that the supply of skilled workers in the state does not sufficiently meet the demand

4. Literature Review ● Companies Face Shortage of Trained Workers (Sullivan 2012; Competitive Wisconsin 2012 /Be Bold 2 report) ● Wage Levels Offered by Employers Too Low Skills mismatch may be corrected if companies offered higher wages (Davidson 2012; Holzer 2013*) ● Macroeconomic Impacts of Recent Recession Weak aggregate demand for products/services insufficient to strain a companies’ workforce, employers have little incentive to hire (Levine 2013; Şahin, Song, Topa, Violante 2012; Lazear, Spletzer 2012) *Holzer explains, but does not necessarily support, this interpretation.

5. Wisconsin’s Economy: Economic Indicators ● Used by economists to analyze the economic performance and make predictions ● Indicators may suggest magnitude of a skills gap using economic theory ● We explored the following economic indicators: Unemployment rates by level of education Educational attainment of persons in low-skill jobs Occupations with the most projected job openings

6. Wisconsin’s Economy: Economic Indicators ● Unemployment rate for college-educated, “skilled” workers persists at nearly twice its pre-recession rate Unemployment Rates in Wisconsin by Education Level 2000, 2005, & 2011

7. Wisconsin’s Economy: Economic Indicators ● Many Wisconsin college-educated workers are employed in jobs that require less education than they possess Educational Attainment of Persons in Wisconsin in Jobs Requiring Less than a High School Diploma, 2010 Occupation % With Some College or Associate’s Degree % With Bachelor’s Degree or More Total % With Post- Secondary Education Retail Salespersons40.80%19.30%60.10% Bartenders43.90%12.70%56.60% Telephone Operators43.60%12.70%56.30% Tellers42.80%11.40%54.20% Waiters and Waitresses41.90%7.00%48.90% Taxi Drivers and Chauffeurs34.40%12.40%46.80% Bus Drivers34.40%9.40%43.80% Stock Clerks and Order Filers33.10%7.00%40.10% Cashiers33.10%6.10%39.20%

8. Wisconsin’s Economy: Economic Indicators ● Underemployment and over-qualification are relatively new phenomena in Wisconsin’s labor market Percent of Jobholders in Low-Skill Occupations Holding Bachelor’s Degrees or More in Wisconsin, 2000- 2010 Occupation20002010 Retail Salespersons16.60%19.30% Bartenders7.90%12.70% Tellers8.00%11.40% Bus Drivers6.60%9.40% Cashiers3.40%6.10%

9. Economic Indicators: Results ● Economic indicators do not suggest a skills gap in Wisconsin’s labor force ● Educated individuals may continue to lack job opportunities at skill level Almost all of the top 20 occupations with the largest projected job growth require a high school degree or less (DWD Projections)

10. Projection Methods ● Demand: DWD Projections ● Supply: Graduates from Wisconsin Institutions High schools, colleges and universities, GED earners Adjusted for estimated migration, workforce participation Adjustments for potential anomalies caused by recessions ● Projections Methods Upper and lower bounds, accounts for some uncertainty Regression models, percent changes based on previous years (2000 to 2011) Official projections where available (high school)

11. Projection Analysis Degree Level Total Projected Job Openings (2012-2020) Skilled Additions to Workforce (2012-2020 graduates) - Upper Estimate Skilled Additions to Workforce (2012-2020 graduates) - Lower Estimate Skills Gap (negative indicates surplus, or no Skills Gap) - Upper Estimates Skills Gap (negative indicates surplus, or no Skills Gap) - Lower Estimates Less than High School 284,00037,36013,290246,640270,710 High School 378,380180,890117,430197,490260,950 Some College/ Post Secondary Non-Degree 46,940282,700246,010(235,760)(199,070) Associate’s 46,490105,94095,860(59,450)(49,370) Bachelor’s 132,170269,920234,560(137,750)(102,390) Master’s 14,740 81,95077,580 (67,210)(62,840) Doctoral or Professional 21,16020,30019,8208601,340 Totals 923,880979,060804,550(55,180)119,330

13. Implications of Projection Analysis ● Little evidence of skills gap by education level ● Slight undersupply of highest educated Likely medical doctors and lawyers ● More high-skill workers than jobs available Many job openings at the high school or less level Workers with some college or more may not find jobs to match education level Only in aggregate, not for specific skills

14. Individual Occupation Analysis ● Skills gaps exist for specific occupations Analysis based on high levels of demand, degree specificity Included occupations: 1.Registered Nurses 2.General and Operations Managers 3.Hairdressers, Hairstylists, and Cosmetologists 4.Elementary School Teachers 5.Middle and High School Teachers 6.Accountants and Auditors 7.Nursing Aides, Orderlies, and Attendants 8.Human Resources, Labor Relations, and Training Specialists 9.Computer and Information Systems Workers

15. Individual Occupation Analysis Results Middle and High School Teacher Projection Analysis, 2012-2020 Projection No Growth Scenario Annual 2% Decline Additional Workforce Entrants, 2012-2020 8,2807,3706,670 Projected Openings, 2012-2020 8,330 Skills Gap (negative indicates surplus) 509601,660

16. Individual Occupation Analysis Results Human Resources, Labor Relations, and Training Projection Analysis, 2012-2020 Projection No Growth Scenario Annual 2% Decline Additional Workforce Entrants, 2012-2020 3,3402,5302,290 Projected Openings, 2012-2020 5,690 Skills Gap (negative indicates surplus) 2,3503,1603,400

17. Individual Occupation Analysis Results Computer Science and Information Systems Projection Analysis, 2012-2020 Projection No Growth Scenario Annual 2% Decline Additional Workforce Entrants, 2012-2020 6,3505,6105,080 Projected Openings, 2012-2020 17,870 Skills Gap (negative indicates surplus) 11,52012,26012,790

18. Current Workforce Development Policies ● Workforce Training Wisconsin Works (W-2) program Workforce Investment Act (WIA) ● Education Programs Career and Technical Education (CTE) programs Wisconsin Technical College System (WTCS) University of Wisconsin System ● Recent Proposals More WTCS and FoodShare recipient funding Grants for new employee training DWD Labor Market Information System

19. Policy Recommendations ● Monitor Projections of the Skills Gap Include supply/demand projections in DWD’s Labor Market Information System ● Promote a High-Skill Economy Commission to explore how state could promote a high-skill economy Incentivize venture capital and start-ups Encourage students to get degrees in areas with projected skills gaps Targeted programming for skills in computer sciences ● Ease Transitions to Workforce College Scorecard and Labor Market Information System Expanded funding for experiential learning programs in high school Make it easier for adults to go back to school

20. Thank You for Your Time Any Questions?

21. For further information Contact the La Follette School’s publications office at 608-263-7657 or publications@lafollette.wisc.edu Or see www.lafollette.wisc.edu/publications/workshops.html Thank you