WED AM News: State economist outlines solutions to workforce shortage; MMAC report highlights slow economic activity

— Wisconsin will need to boost immigration, reduce barriers to jobs and lean on new technologies to improve the workforce shortage, a top state economist says. 

Dennis Winters, the chief economist for the state Department of Workforce Development, spoke yesterday at an in-person event in Madison hosted by the Madison International Trade Association. 

In his overview of the state economy, he noted that while Wisconsin’s population is expected to continue to grow in the coming decade, the labor force is projected to stay flat or “maybe even go negative” by 2035. Winters highlighted some of the ripple effects of this unprecedented situation. 

“If you have a flat workforce, and you don’t raise the productivity of that workforce, you can’t pay them more. If you don’t pay them more, they’re not going to buy more … This is a change in the whole structural economy,” he said. “It’s not going away.” 

In discussing potential fixes, he explained the practice of offshoring operations is “not going to be the solution in its entirety” given that much of the world is experiencing the same demographic pressures driving Wisconsin’s labor problems. 

Instead, he called for a shift in immigration policy to enable more foreign workers to contribute to the state economy. 

“That’s probably one of the biggest ones, and people still want to come to the U.S., right? That’s a good thing we’ve got going for us,” he said. 

He also said the state should work to eliminate barriers to “the chronically unemployed,” pointing to a lack of transportation, housing, drug addiction and other factors. He referenced a “Wheels to Work” program in Wausau that has helped hundreds of people secure reliable transportation. 

Plus, he said the role of automation and artificial intelligence will become increasingly important across a wide array of industries. He argued training programs for workers should align with the technologies needed to compete in the global talent market. 

“If you have the technology and not the talent, that job goes away,” he said. “If you’ve got the talent and not the technology, the talent goes away. So they’ve got to be matched up, they’ve got to be focused and they’ve got to be working together.” 

— More than half of the indicators tracked by the Metropolitan Milwaukee Association of Commerce showed the region’s economy slowing in November. 

In the group’s latest economic trends report, 10 of the 23 economic indicators showed improvement over the prior year. That’s down from 12 positive indicators in the MMAC report for October. 

Bret Mayborne, the organization’s vice president of economic research, says figures for 2022 as a whole shows a second consecutive year of “solid economic improvement” for Milwaukee following the COVID-19 pandemic. But he adds it’s uncertain whether that will continue into 2023. 

“A slow pace of economic activity has been evident in recent months, particularly in nonfarm employment, unemployment and housing & real estate indicators,” he said in the report.

Among the region’s major industries, five sectors had year-over-year job growth in November while five saw job numbers fall over the year. The strongest growth was seen in professional and business services, with a 5.3 percent increase, while financial activities jobs fell 5.4 percent over the same period. 

See the full report: 

— GOP lawmakers are again circulating legislation that would repeal the personal property tax after Dem Gov. Tony Evers vetoed their last attempt nearly two years ago.

The bill, though, doesn’t yet address concerns Evers raised in his veto message that the language the Legislature approved in June 2021 could have unintended consequences, including for utility taxes.

Evers wrote in his veto message while there were efforts to address his concerns in 2021, a “more comprehensive approach” was needed.

State Rep. Dan Knodl, R-Germantown, a lead author along with state Sen. Duey Stroebel, R-Saukville, said the new bill will go through the committee process and he is open to amendments to address any remaining concerns, including those the guv raised about utility taxes. He noted Evers and some Dem lawmakers have indicated their desire to eliminate the tax. After Evers vetoed the bill in 2021, Dems introduced their own version of the legislation, though it didn’t go anywhere.

“I think we’re starting off from a good position. It’s the details,” Knodl said.

The bill now circulating also doesn’t include any money to backfill the lost revenues local governments would lose if they no longer imposed the property tax on business equipment. In their co-sponsorship memo, the co-authors noted money was put aside in the 2021-23 budget to backfill the lost local property tax revenue that could be tapped to help pay for the new repeal effort.

Stroebel’s office said it has not yet asked the Legislative Fiscal Bureau for an updated cost for the new repeal effort, which would end the tax retroactive to Jan. 1 of this year. To backfill the lost revenue, the state would need to make payments to local governments next year, and Stroebel’s office said it expects the new cost estimate to come in above the $202 million that has already been set aside.

That money is part of the projected $6.9 billion surplus the state has for the fiscal year that ends June 30.

Knodl noted keeping the funding for the repeal separate also prevents Evers from using his line-item veto in the language of the legislation.

Starting in 2018, the state exempted business property such as machinery, tools and patterns from the local tax. The new bill would eliminate the other items it still applies to such as restaurant ovens.

During the 2021 effort, backers added amendments during the floor debate in an attempt to address concerns raised by Evers’ Department of Revenue. That includes language seeking to ensure the repeal wouldn’t unintentionally expand a separate tax break for manufacturers. That language sought to ensure manufacturers headquartered outside of Wisconsin wouldn’t be able to reduce their state tax bill due to holdings elsewhere. That language was included in the new version.

Asked for comment, an Evers spokesperson pointed to the September 2021 announcement from the guv backing a Dem version of the legislation.

Read the co-sponsorship memo:

See the bill draft:

<br><b><i>Top headlines from the Health Care Report … </b></i> 

— An assistant professor at Marquette University is getting a $636,680 federal grant to develop and assess a physical therapy program for addressing chronic knee pain.  

And liberal state Supreme Court candidates say the U.S. Supreme Court’s decision to overturn abortion protections in Roe v. Wade was the worst decision the high court has made in the last 30 years.

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