Manufacturers cite workforce, tariffs as biggest challenges

Posted on Jan 8, 2020 :: Insight on Business, Web Exclusive
Jessica Thiel
Posted by of Insight Publications

The statewide workforce shortage continues to be the biggest challenge for business headed into 2020, with the issue forcing employers to become creative to attract and retain the best talent, according to a recent survey conducted by Wisconsin Manufacturers & Commerce, the state chamber of commerce.

With three-quarters of private sector employers reporting difficulty finding workers, more are allowing flexible work schedules, relaxed dress codes, additional vacation and leave time, and the ability to work from home, the survey found.

Other talent attraction and retention efforts mentioned in the survey include employee wellness programs, gym memberships and nutritional coaching, as well as more fun activities like themed lunches and rewards and recognitions like gift cards, events tickets or subscriptions.

“I am not surprised to see companies adopting these types of tactics,” said Kurt Bauer, WMC president and CEO. “As an employer in a city (Madison) with a very low unemployment rate, WMC has embraced many of the same things.”

Bauer noted the latest WMC semiannual survey of Wisconsin CEOs is the 10th consecutive — dating back to summer 2015 — to show at least 65 percent of employers having challenges finding the workers they need.

Wages are also on the rise, according to the survey. A year ago, 38 percent of respondents said they planned to raise wages between 3 and 3.5 percent. Today, it is 45 percent.

That wage gain may be offset to some degree by rising health care costs. Seventy-seven percent of business leaders said their health care costs increased from 2019 to 2020. When asked how they are managing the rising cost, 66 percent said they were forced to increase employee contributions, and 19 percent said they reduced benefits.

Indeed, health care costs were again the second biggest public policy issue facing Wisconsin. Workforce is No. 1, and high taxes and excessive regulation were three and four, respectively.

Tariffs and overall trade issues continue to be top of mind among business leaders as well. Just over 50 percent say tariffs are hurting their business, up from 47 percent six months ago. However, like the last survey, 79 percent support tariffs as a negotiating tactic to force nations like China to play fair.

Optimism in the economy remained steady among business leaders in this survey from six months ago, with respondents rating the state and U.S. economies very similarly. Fifty-nine percent said the Wisconsin economy was “strong” or “very strong,” while 65 percent give the U.S. economy the same rating.

Over 90 percent of business leaders said they were profitable during the preceding six months, and 91.6 predict they will be profitable through the midpoint of 2020. Both percentages are up slightly from a year ago.