A recent Wall Street Journal article that examined wage growth in four cities across the country showed how the front edge of the body gap — the demographic-induced worker shortage — is beginning to affect wages. The article prompted me to do a little research on what we’re seeing in Wisconsin and how we will be affected.
My reading of statistics from both the Bureau of Labor Statistics and the Wisconsin Department of Workforce Development shows little consistent evidence of increasing wages, an observation that was confirmed in a podcast with Ted Gayer of the Brookings Institute. In fact, Gayer said he expected to see some wage increase in each of the past four years and was baffled that it hasn’t happened to this point. February’s report by the U.S. Department of Labor indicating that wages saw their biggest gains last year since the recession suggests the time may be at hand.
The data does show we are at full employment — both in Wisconsin and the country in general. There are initiatives to pull non-traditional workers off the sidelines and recruit new workers to the state, but the laws of supply and demand cannot be suspended forever. Wages will begin to increase, and companies that aren’t paying attention will be caught off guard.
Mitigating the body gap will require companies to have a strong narrative that provides compelling reasons for someone to work for them. Have you established a strong brand with a clear vision of how you make a difference? You should be able to tell a concise, compelling story about your operation to attract and retain the best talent.
The best workers are in high demand and will be locked in early. Traditional approaches to attract these workers are both expensive and less effective. Most companies focus on some combination of pay and benefits to secure talent. Fair compensation is important, but few companies have ever been able to afford high salaries as their key attraction/retention element.
Wisconsin’s growth trajectory makes a talent strategy critical for future survival. Two large companies — Haribo and Foxconn — are coming and will put a severe strain on the present workforce. On the positive side, they also will attract many new workers to the state. These arrivals create a small window for present employers to react. Companies in the state have two choices: Take advantage of this window or be left behind.
Many workers will come to Wisconsin for reasons other than working for Foxconn or Haribo. Some will not be hired or will decide that being a small cog in a large machine is not for them. Others will be trailing spouses or extended family moving with the employee. A strong brand and compelling narrative can bring these workers to your door.
The alternative will be disastrous for many companies. These companies will need substantial compensation packages to recruit and retain their employees. Not many companies have been able to afford to pay top-level wages and stay profitable and competitive.
You may have less than a year to establish your brand and talent narrative. Create a compelling story about your company and the difference you make in the world. Engage with companies in your community to build a strong ecosystem that attracts the best talent. Accomplish this, and you will be well-positioned to take advantage of future trends. Φ
Buckley Brinkman is executive director of the Wisconsin Center for Manufacturing & Productivity, which collaborates with the UW-Stout Manufacturing Outreach Center and the Wisconsin Manufacturing Extension Partnership to help Wisconsin manufacturers grow and become more profitable.