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THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS

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. WELCOME. OH, MAN … IT’S EVEN WORSE THAN I THOUGHT.

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THE STATE OF THE ECONOMY AND FUTURE WORKFORCE CONSIDERATIONS

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

  2. WELCOME OH, MAN … IT’S EVEN WORSE THAN I THOUGHT

  3. Brief on current state of economy. What is the New Economy (briefly) Workforce trends – quantity and quality. Job projections TODAY’S DISCUSSIONSET THE STAGE

  4. FIRST OF ALL, YOU NEED TOUNDERSTAND WISCONSIN’S ECONOMY

  5. ECONOMIC OUTLOOK

  6. BUSINESS CYCLE SEVEREIT TOOK NINE QUARTERS TO RECOVER Recovered Source: BEA, OEA

  7. REAL EARNINGS ARE FLAT

  8. INTEREST INCOME TAKE HIT WITH LOW INTEREST RATES

  9. HOME EQUITY WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING

  10. REVOLVING CREDIT WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING 10 10 Source: Federal Reserve Board of Governors

  11. NO SAVINGS – WAS USED FOR CONSUMPTION NOW PART OF DELEVERAGING 11 11

  12. It is difficult to increase consumption when you: have stagnant income, are losing wealth, paying down debt, increasing savings, and are paying more for food and gas.

  13. CORPORATE PROFITS AT NEW RECORDS MOSTLY DUE TO COST CUTTING

  14. MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND

  15. CORPORATE PROFITS BUILDING CASH HOARD 15

  16. INVESTMENT GROWTHIS IN PRODUCTIVITY, NOT EXPANSION Source: BEA, OEA

  17. EXTENDING CREDIT BANKS ARE RETICENT TO LEND FUNDS Reserves of Depository Institutions (billions of dollars) Source: Federal Reserve Bank of St. Louis, Economic Research; OEA

  18. HOUSING STARTS TRENDING HIGHER

  19. VEHICLE SALES CONTINUE STRONG

  20. THE ECONOMY HAS CHANGED AND SO MUST YOU

  21. ECONOMIC RECOVERYHOW IS THIS ONE NOT LIKE THE OTHER ONES 22

  22. JOBS RECOVERYHOW IS THIS ONE NOT LIKE THE OTHER ONES

  23. WHAT IS THE NEW ECONOMY

  24. 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 ECONOMYCHANGED CONSTRUCT

  25. Stocks In Stocks Out • Intel • Microsoft • SBC (SWBell) • Home Depot • Pfizer* • Union Carbide • Goodyear • Chevron • Sears Roebuck • International Paper* CHANGES IN THE 30 DOW INDUSTRIALSNOVEMBER 1999 * As of 2004

  26. 2005 Income before Taxes • from Car Sales • ($1.0 Billion) • from Financial Services • $3.5 Billion Greater Capitalized Value than Ford and GM Combined

  27. DESIGNED HERE ASSEMBLED THERE • Designed in California • Assembled in China

  28. KATHLEEN

  29. So, what will be the biggest socio-economic policy challenge in the next 20 years?

  30. ELDERLY NUMBERS WILL SWELLWIDEN THE SIDEWALKS WILL YA !?

  31. OR PERHAPS THE MORE INTERGENERATIONAL VERSION

  32. QUANTITY

  33. WISCONSIN’S WORKFORCE GROWTHBECOMES FLAT Source: Bureau of Labor Statistics, OEA

  34. BLS RAISED LFPR FOR THE FUTUREPARTICULARLY FOR OLDER COHORTS Source: Bureau of Labor Statistics, Bureau of the Census, OEA

  35. WISCONSIN’S WORKFORCE HIGHER LFPRs OFFER LIMITED GAINS Source: Bureau of Labor Statistics, OEA

  36. LITTLE CHANGES EVEN WITH HIGHER LFPR RETIREMENTS SWAMP PARTICIPATION Source: Bureau of the Census, DOA, OEA

  37. NURSING WORKFORCE IN WISCONSINDEMOGRAPHICS AT WORK Source: Office of Economic Advisors

  38. WORKFORCE PARTICIPATION TRENDS DWARF FLUCUATION

  39. IT’S THE YOUNG THAT ARE DELAYING ENTERING THE WORKFORCE

  40. CHANGING LFPR GREATLY ALTERS WORKER AGE MIX

  41. QUALITY

  42. FUTURE EMPLOYEES REQUIRE HIGHER SKILLS "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, 2004.

  43. TURN YOU LOOSE ON THIS BABY I DON’T THINK SO

  44. FUTURE EMPLOYERS NEED FOR CREATIVITY & INNOVATION “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

  45. WORKPLACE REQUIREMENTS CHANGES IN SKILLS USED AT WORK* Nonroutine interactive Nonroutine analytical Routine manual Routine cognitive Nonroutine manual * Based on the Dictionary of Occupational Titles Source: Autor, Levy and Murnane, 2003 Source: K-12 Education and Economic Summit presentation by Alan B. Krueger, Princeton University

  46. EQUAL SKILLS NOW REQUIREDNO TWO-TRACKING • 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. Source: Achieve, Inc, OEA.

  47. Unprecedented – we have never faced a declining workforce before; Assured – demographics will change little; Largely unalterable – demographics and migration patterns do not change abruptly. WORKFORCE TRENDSARE:

  48. 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. RAMIFICATIONS OF WORKFORCE TRENDSARE:

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