DWD Chief Economist Dennis Winters expects manufacturing employment in Wisconsin to exceed pre-pandemic levels in the near future.
In an interview Friday, Winters said it “might be a couple months” before that occurs.
“The outstanding thing that we don’t know about yet is what the general economy is going to be doing, and the Fed action that they’re using to combat inflation,” he told WisBusiness.com, referring to higher interest rates.
Manufacturing employment in the state has reached 99.2 percent of pre-pandemic levels, according to figures provided by the state Department of Workforce Development. The number of manufacturing jobs in Wisconsin was around 479,000 in February 2020 before dropping to about 440,000 in April 2020. Since then, that number has recovered to just under 475,000.
At the same time, U.S. manufacturing employment has rebounded slightly above pre-pandemic levels.
But even before the pandemic, Winters explained, much of the manufacturing job gains at the national level have occurred in the southeastern and western United States. Going back to the 1990s and early 2000s, he said many car manufacturers began moving production to states like Alabama, Georgia and the Carolinas rather than traditional industrial hubs in the Midwest like Michigan and Ohio.
He noted billions of dollars in government incentives helped pull those plants to the South. Some of the companies — such as foreign automakers — were looking to avoid using union labor in their operations and saw the region as more favorable on that front, he said.
Meanwhile, manufacturing growth in the southwestern states has centered around information technology such as computers, Winters said. He also highlighted the investments Tesla is making in battery plants in the region.
Manufacturing jobs in Wisconsin peaked in early 2000, when the industry employed around 600,000 jobs in 2000, according to Winters.
“It just kind of ratcheted down through some of the recessions, as you saw in the dot-com bubble and the Great Recession … but it’s been climbing since the end of the Great Recession,” he said, noting the only major dip since then was seen during the pandemic.
Aside from the regional changes, Winters pointed to companies moving production jobs overseas as a major factor in the manufacturing decline, as well as “reclassification” of certain positions.
“If a manufacturer is doing its own HR and its own accounting work, those were considered manufacturing jobs because they were with manufacturing companies,” he said. “And as the service things went, you third-partied a lot of that out. Your payroll, some of your back-office accounting, things like that. So that’s part of the contribution to the declining manufacturing jobs.”
Looking ahead, Winters highlighted a recent trend of companies “reshoring” certain operations, though he added “time will tell how much that happens.”
See the latest DWD report on employment trends in the state: https://dwd.wisconsin.gov/press/unemployment/2022/220915-august-state.pdf
–By Alex Moe
