Low unemployment is leading to increased wages for Eau Claire workers according to John Koskinen, Chief Economist for the Wisconsin Department of Revenue who spoke at the Chamber's June 15th Eggs & Issues. Presenting on the State of the Wisconsin Economy, the data Koskinen provided hit home for many local businesses and provided a greater context for trends that are being seen locally.
The Unemployment Rate Locally and Statewide
Many of the businesses in Eau Claire and Wisconsin are facing a common problem: a labor force shortage. Today, Wisconsin has an all-time record low unemployment rate of 2.8%, down from its previous 40-year low of 3.0%. An economy is considered to be at full employment once it hits a 4.0% unemployment rate, indicating that Wisconsin is well beyond full-employment. See the map below for a seven year comparison.
This trend extends to the city and county of Eau Claire. The county hit a record low unemployment rate in March of 2018, and the city’s rate reached a record low of 2.7% in April. See the graph below for a history of Eau Claire's unemployment rate.
The Labor Shortage and Its Upward Pull on Wages
Despite the difficulties that result from low unemployment such as employers being unable to fill needed positions, there is a benefit which increases the local and state economy’s competitiveness and benefits employees: wage increases. After years of wage stagnation in the Eau Claire Area, wages have been increasing since 2013. This trend is also being seen statewide. Rising wages are directly related to a low unemployment rate as the need for workers pulls up wages to attract and retain employees. See the graph below for a history of wage trends in the Eau Claire Area.
A Strong Local and State Economy
The phenomenon of rising wages is not the only sign of a strengthened local and state economy. Wisconsin Ranks 15th in median household income when adjusted for cost of living. The business expansion rate that has been increasing in the Eau Claire Area and Wisconsin since 2010 ranks Wisconsin as 18th in net job creation. Additionally, Wisconsin is 2nd in the nation (next to Minnesota) for “main street entrepreneurship.” This last accolade of being 2nd in the nation for main street entrepreneurship, means that small businesses have a high survival rate of 50.77%. Wisconsin does have a low business entrance rate, but Koskinen noted that this is actually indicative of low business turnover and the ability for small businesses to better survive once they are established in comparison to other states.
Net migration can be a factor related to workforce shortages. Koskinen was optimistic that the trend was moving in a positive direction. Wisconsin has about equal in- and out-migration rates. Both rates are rising some, but out-migration at a slower pace. Koskinen explained that the slightly positive balance of migration comes from people moving from Illinois, and that most of the population lost to out-migration move to Florida or Arizona. The mostly neutral net-migration has provided the benefit of increasing wages resulting from a labor shortage and at minimum shows that the state is not losing citizens more than it is attracting and retaining, but greater in-migration would be beneficial to help meet employer needs.
In addition to the measures mentioned above, Koskinen detailed 12 different measures of evaluating the strength of the local and state economy such as real GDP, educational attainment, tax burden, housing, poverty, and health care.
Click here to view the full presentation.
Posted by: Kaylee Tracy, Legislative & Workforce Development Intern
Eau Claire Chamber
The Eau Claire Chamber of Commerce has more than 1,200 members.