2017 ECONOMIC AND WORKFORCE PROFILE Washington County
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1 2017 ECONOMIC AND WORKFORCE PROFILE Washington County STATE OF WISCONSIN DETI WGT-P (R. 3/2018)
2 Percentage of Total Popula on, Ages 65 and Older
3 Wisconsin now has more people employed and more private sector jobs than at any me in its history. As of this wri ng, the state added 56,100 jobs during 2016 and Employment increased in almost all industry sectors, with prominent gains in construc on, manufacturing, and healthcare. Wisconsin s unemployment rate is near lows not seen in a genera on, decreasing from 4.3 percent in January 2016 to 3.2 percent in December 2017, on a seasonally adjusted basis. Wisconsin faces a worker quan ty challenge. The number of re ring Baby Boomers nearly match the influx of new workers, resul ng in a slow growing workforce and placing constraints on the ability by employers across all industries to hire talent. Many businesses report that the lack of available workers has hindered expansion and, in some cases, even curtailed their ability to meet current product orders. The blue line, orange line graph to the right illustrates the situa on in Wisconsin and other upper Midwest states. While Wisconsin's popula on will con nue to grow over the next twenty years, the workforce faces serious constraints. The labor force par cipa on rate (LFPR), defined as the labor force (sum of employed and unemployed) divided by the total popula on ages 16 and older, measures the popula on's engagement in the workforce and serves as an indicator in determining how Wisconsin's workforce will be constrained. The overall LFPR peaked in the late 1990s and has been trending lower ever since. The LFPR of peaks across Source: Local Area Unemployment Sta s cs, Bureau of Labor Sta s cs the age cohort at over ninety percent and decreases rapidly into the single digits by age seventy. Baby Boomers have and con nue to exit with respect to their LFPR. The mass of Baby Boomers has moved into the work lifecycle stage of declining LFPRs, with the tail end of the cohort turning 55 in Source: Bureau of Labor Sta s cs A recent development is the change in the labor force par cipa on rate trend. The LFPR of older workers (those aged 55 years and older) has turned upwards, resul ng in fla ening of the overall LFPR. More boomers are staying in the workforce longer, which may portend higher workforce growth over the coming years. Due to the size of the Baby Boomer cohort and the sensi vity of the LFPR to workforce growth rates, a rela vely small change in the LFPR of older workers would significantly boost the number in the workforce. 1
4 Popula on and Demographics Source: Demographic Services Center, Wisconsin Department of Administra on The chart above lists Washington County s ten largest municipali es and compares popula on growth since 2010 at the municipal, county, state, and na onal level. Popula on growth in Wisconsin and Washington County was slow as compared to the United States, although Washington's growth rate was somewhat higher than the state s. County growth of 2,250 residents or 1.7 percent was distributed differently among municipali es. The Town of Jackson and Village of Slinger grew at above average rates. The Ci es of West Bend and Har ord grew at slower rates but due to their larger size, added more new residents. Together, the two ci es grew by 1,002 or 45 percent of net popula on growth in the county during the period. The graph to the right displays the components of popula on growth in Washington County, the state, and the na on. The components include migra on, which is movement of residents into and out of the area, and natural increases and decreases resul ng from births and deaths. Components of Popula on Change Unlike Wisconsin, which lost more people to migra on than it gained, net migra on in Washington County was posi ve. Natural increases in popula on are closely correlated with age demographics. Strong natural increases generally occur in younger popula ons, which have higher fer lity and birth rates and lower death rates. At 42.1 years, the median age of Washington County residents was older than the state median of Source: Demographic Services Center, Wisconsin Department of Administra on 2
5 Labor Force Dynamics 39.0 and the Source: Local Area Unemployment Sta s cs, Bureau of Labor Sta s cs county s rate of natural increase of 1.3 percent was correspondingly lower. The graph above tracks the monthly unemployment rate in Washington County since 2000 and compares it to state and na onal rates during the same me. Since this unemployment data has not been seasonally adjusted, or smoothed, the graph also shows seasonal employment varia ons within each year. The seasonality of the county s labor market is moderate and typical, with normal peaks of unemployment early in the year and again in summer as students enter the job market in search of work, and normal troughs late in the year. A er peaking in early 2010, rates fell steadily as the economy recovered from the Great Recession. Washington County s average annual unemployment rate in 2016 was 3.5 percent, substan ally lower than the na onal rate of 4.9 percent and state rate of 4.1 percent. Source: Local Area Unemployment Sta s cs, Bureau of Labor Sta s cs The unemployment rate represents the por on of an area s labor force that is unemployed. The chart to the le displays those 3
6 Industry Employment and Wages components as annual averages and tracks labor force growth over me. Between 2000 and 2016, Washington County's labor force grew by 7,162 labor force par cipants or 10.3 percent, which was more than double 4.9 per cent state average labor force growth during the same period. The employment and wage distribu on graph above shows the one year change in employment and the eco nomic impact of industry sectors in Washington County from both an employment and payroll perspec ve. Some data has been suppressed for confiden ality. The county s job base grew by 740 jobs or 1.4 percent during Average annual statewide job growth was also 1.4 percent in Educa on and Health Services added the most jobs in All employment growth was concentrated in the Health Care subsector rather than Educa on Services. There was also sig nificant growth in Leisure and Hospitality, primarily in the Food Service subsector. Man ufacturing lost the most jobs in 2016 but remains Washing ton s largest sector in terms of both jobs and wages despite the job losses. The table to the le shows annual average wage by in dustry in Washington County, compares those wages to the statewide average, and dis 4
7 Employment Projec ons plays the county s one year change in each of the sectors. Some data has been suppressed for confiden ality. Washington s average annual wage is 6.8 percent lower than the state average and decreased 0.6 percent in Statewide annual wage growth was 1.2 percent. The decline in the county s average wage is due to the loss of high wage Manufacturing jobs combined with growth in lower wage sectors. The table above presents ten year regional employment projec ons by industry sector for the W O W Workforce Development Area, which is comprised of Waukesha, Ozaukee, and Washington coun es. The change in the number of jobs from 2014 to 2024 represents new jobs expected to be created during the period. In 2014, Waukesha had the largest share of the region s employment, with 71 percent of the region s jobs. Ozaukee and Washington coun es had 13 and 16 percent, respec vely. Ten year regional employment is projected to exceed projected statewide job growth of six percent. Jobs in the three county area are expected to increase seven percent between 2014 and 2024, with average annual growth of 0.7 percent or 2,753 jobs per year. Employment in the area exceeded projec ons, growing by 5,550 new jobs or 1.7 percent during The Professional and Business Services sector, which provides professional, technical, and administra ve services to businesses, and Educa on and Health Services sector and are projected to add the most jobs between 2014 and Within the larger Educa on and Health Services sector, Health Services employment is expected to grow faster than Educa onal Services. This is due, in part, to demographic trends, with the elderly por on of the popula on expanding while the school age por on is shrinking. Large investments in new schools, classrooms, and teaching jobs are not an cipated, however this does not mean we won t need many new teachers. 5
8 Employment ProjecƟons Source: Office of Economic Advisors, Wisconsin Department of Workforce Development, September 2015 To get a be er idea of the types of jobs included in employment projec ons, we can also look at expected job growth by occupa on. The table above displays projected total job openings through 2024, which includes both openings resul ng from crea on of new jobs (Change column) and replacement openings in previously created jobs that are an cipated to occur as incumbent workers leave those posi ons, necessita ng the hiring of new workers to replace them (Replacement Openings column). Large numbers of Baby Boomers are expected to re re within the next few years, which is why projected replacement openings exceed the number of openings expected to occur because of job growth. This phenomenon is occurring not only in the W O W region, but throughout the state economy as well. Large numbers of annual job openings are projected in Sales and Related, Food Prepara on and Serving, and Office and Administra ve Support, which is expected to have the most job openings despite few new projected jobs in the occupa on. And many replacement openings are projected in other occupa ons that are not expected to grow significantly, such as Produc on and Educa on, Training and Library. This is especially common in occupa ons with older workforces and large numbers of an cipated re re ments during the projec on period, as well as low wage occupa ons which tend to have younger workforces but higher rates of employee turnover. 6
9 The workforce age distribu on within each of W O W Workforce Development Area s major industries displayed above presents a detailed view of the area's workforce age demographics. Considerable differences in age composi on among industry sectors are evident. Industries which commonly base pay on seniority, such as Manufacturing and Public Administra on, employ the oldest workers. Other industries like Construc on or Leisure and Hospitality typically employ the youngest workers because many of their jobs are physically demanding and/or seasonal or part me in nature, making them either unsuitable or unappealing to older workers. The highest rates of workforce par cipa on are seen among those who are of prime working age, which is generally considered to be between 25 and 54 years. Sixty two percent of the area s workers in all industries are of prime working age, with the age group accoun ng for 22 percent of the workforce, the largest share. Almost one quarter (23 percent) of area workers in all sectors are older than age 54. Public Administra on has the highest por on of workers age 55 and older (31 percent), but it is a rela vely small sector employing only three percent of the area s workforce. In Manufacturing, the second largest employment sector behind Trade, Transporta on and U li es, 27 percent of workers are age 55 and older. This explains, in part, why 83% of projected Produc on occupa on openings discussed on the previous page are to replace exi ng workers rather than to fill new jobs. The large number of older workers across all industries is concerning because when they inevitably re re, employers may encounter difficulty finding younger workers with the skills and experience necessary to replace them. For More Informa on: Wandy Miezio Regional Economist WOW WDA Phone: (262) wandy.miezio@dwd.wisconsin.gov 7
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