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WISCONSIN’S CONSTRUCTION OUTLOOK. 2013 Winter Convention. Dennis K. Winters Chief, Office of Economic Advisors Wisconsin Department of Workforce Development. February 8, 2013. FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY. THE ECONOMY HAS CHANGED AND SO MUST YOU. - PowerPoint PPT Presentation
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Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
Dennis K. WintersChief, Office of Economic AdvisorsWisconsin Department of Workforce Development
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCTION CONSTRUCTION
OUTLOOKOUTLOOK
2013 Winter Convention
Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
2
FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY
Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
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3
THE ECONOMY
HAS CHANGED
AND SO MUST YOU
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WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
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4
Average Real GDP Growth First 9 Quarters of Recovery
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0Pe
rcent
4
ECONOMIC RECOVERYHOW IS THIS ONE NOT LIKE THE OTHER ONES
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JOBS RECOVERYHOW IS THIS ONE NOT LIKE THE OTHER ONES
Wisconsin is Open for Business
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WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
ECONOMICOUTLOOK
Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
7Source: BEA, OEA
BUSINESS CYCLE SEVEREIT TOOK NINE QUARTERS TO RECOVER
Recovered
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WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
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REAL EARNINGS ARE FLAT
Wisconsin Real Average Annual Wage
$28,000
$30,000
$32,000
$34,000
$36,000
$38,000
Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
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INTEREST INCOME TAKE HIT WITH LOW INTEREST RATES
Personal Interest Income
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
Dec07
Mar08
Jun08
Sep08
Dec08
Mar09
Jun09
Sep09
Dec09
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Billi
ons
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HOME EQUITY WAS USED FOR CONSUMPTIONNOW PART OF DELEVERAGING
Wisconsin is Open for Business
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WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
111111
-100,000
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
100,000Ch
ange
ove
r Pri
or Y
ear $
M
Source: Federal Reserve Board of Governors
REVOLVING CREDIT WAS USED FOR CONSUMPTIONNOW PART OF DELEVERAGING
Wisconsin is Open for Business
February 8, 2013
WISCONSIN’SWISCONSIN’SCONSTRUCITONCONSTRUCITON
OUTLOOKOUTLOOK
121212
Personal Savings, Billions of Dollars
0
100
200
300
400
500
600
700
800
200
0-I
200
0-III
200
1-I
200
1-III
200
2-I
200
2-III
200
3-I
200
3-III
200
4-I
200
4-III
200
5-I
200
5-III
200
6-I
200
6-III
200
7-I
200
7-III
200
8-I
200
8-III
200
9-I
200
9-III
201
0-I
201
0-III
2011
-I
NO SAVINGS – WAS USED FOR CONSUMPTIONNOW PART OF DELEVERAGING
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It is difficult to increase consumptionwhen you:
1. have stagnant income,2. are losing wealth,3. paying down debt,4. increasing savings,5. and are paying more for food and gas.
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February 8, 2013
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CORPORATE PROFITS AT NEW RECORDSMOSTLY DUE TO COST CUTTING
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MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND
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Change In Investment From 2007 4th Qtr
-600
-500
-400
-300
-200
-100
0
100Bil
lions
of 20
05 $
Private investmentResidential
16
CORPORATE PROFITSBUILDING CASH HOARD
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INVESTMENT GROWTH IS IN PRODUCTIVITY, NOT EXPANSION
Source: BEA, OEA
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18Source: Federal Reserve Bank of St. Louis, Economic Research; OEA
EXTENDING CREDITBANKS ARE RETICENT TO LEND FUNDS
Reserves of Depository Institutions(billions of dollars)
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OUTLOOKOUTLOOK
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Wisconsin is Open for Business
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Breach May 2015
JOBS RECOVERYOUR BEST ESTIMATES PUT THE BREACH AT MAY 2015
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VEHICLE SALESCONTINUE STRONG
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HOUSING STARTSTRENDING HIGHER
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0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2004M01 2006M01 2008M01 2010M01 2012M01
Wisconsin Housing Starts (thousands)
Source: U.S. Census
WISCONSIN HOUSING STARTSHOPEFULLY NOT A HEAD FAKE
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ARE THE GOOD DAYSGONE FOREVER?
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ARE THE GOOD DAYS GONE?PROBABLY FOR RESIDENTIAL
Source: U.S. Census
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February 8, 2013
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OUTLOOKOUTLOOK
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2006 2011 $ Change % Change
Wisconsin $12.545 $3.846 $8.698 -69.3
M7 Region $4.572 $1.085 $3.488 -76.3
OUCH !
Source: Wisconsin Department of Revenue, Real Estate Value Data
Total New Construction Spending( $ billions )
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27Source: BEA, OEA
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Peak Trough % Change
Total Jobs 2,889,300 2,713,700 - 6.1
Construction 130,100 83,200 - 36.0
Milw MSA 33,900 17,200 - 49.2
* Peak Wisconsin construction employment in July 2004, trough in March 2012
OUCH !AGAIN
Source: U.S. Bureau of Labor Statistics, QCEW
Wisconsin Employment Through Recession
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Wisconsin is Open for Business
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Peak Trough % Change
Residential 4,088 3,125 - 23.4
Non-residential 811 655 - 19.2
Heavy Cnstructn 967 800 - 13.3
Trades 12,119 9,705 - 18.5
* Peak Wisconsin construction establishment in 2003, trough yet uncertain
OUCH !YET AGAIN
Source: U.S. Bureau of Labor Statistics, QCEW
Wisconsin Construction Establishments Through Recession
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Shar
e Union v. Non-Union Shares
Union YesUnion No
Source: U.S. Census; CPS-MORG
CHANGE IN REPRESENTATIONUNION v. MERIT SHOPS
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So, what will be the biggest socio-economic
policy challenge in the next 20 years?
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ELDERLY NUMBERS WILL SWELLWIDEN THE SIDEWALKS WILL YA !?
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OR PERHAPS THE MORE INTERGENERATIONAL VERSION
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QUANTITY
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WISCONSIN’S WORKFORCE GROWTHBECOMES FLAT
Source: Bureau of Labor Statistics, OEA
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1960 1970 1980 1990 2000 2010 2020 2030
Thou
sand
s
Population
Civilian Labor Force
Wisconsin Population and Labor Force
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OUTLOOKOUTLOOK
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BLS RAISED LFPR FOR THE FUTUREPARTICULARLY FOR OLDER COHORTS
Source: Bureau of Labor Statistics, Bureau of the Census, OEA
Changes in LFPR by Age Cohort
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
16-19 20-24 25-34 35-44 45-54 55-59 60-64 65-69 70-74 75+
Constant2000201020202030
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WISCONSIN’S WORKFORCE HIGHER LFPRs OFFER LIMITED GAINS
Source: Bureau of Labor Statistics, OEA
(30,000)
(10,000)
10,000
30,000
50,000
70,000
90,000
110,000
2010 2010 2020 2020 2030 2030
New BLS Plus 3% New BLS Plus 3% New BLS Plus 3%
Worker Difference from Census 2000
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LITTLE CHANGES EVEN WITH HIGHER LFPRRETIREMENTS SWAMP PARTICIPATION
Source: Bureau of the Census, DOA, OEA
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1960 1970 1980 1990 2000 2010 2020 2030
Thou
sand
s PopulationLabor force base caseBLS prj. changeElevated LFPR of 3 percentage points
Wisconsin Population and Labor Force
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NURSING WORKFORCE IN WISCONSIN DEMOGRAPHICS AT WORK
Source: Office of Economic Advisors
Wisconsin Nurses by Age
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
< 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75 +
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POPULATION PARTICIPATION FUNCTION OF RECESSION SEVERITY
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WORKFORCE PARTICIPATION TRENDS DWARF FLUCUATION
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IT’S THE YOUNG THAT ARE DELAYING ENTERING THE WORKFORCE
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CHANGING LFPR GREATLY ALTERS WORKER AGE MIX
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QUALITY
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"The days are over when you could walk into a paper mill with a high school diploma and run one of the machines."
– Patrick Schillinger, former Wisconsin Paper Council President, Center will teach paper-industry technology, Milwaukee Journal Sentinel, JS Online, October 21, 2004.
NEW ECONOMY NEED FOR SKILLS
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TURN YOU LOOSE ON THIS BABYI DON’T THINK SO
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48
NEW ECONOMYSCARCITY OF SKILLED WORKERS
Former Federal Reserve Chairman Alan Greenspan voiced his concern about a growing earnings gap between highly skilled and unskilled workers.
"It's a problem caused basically by our skill mix not keeping up with the technology that our capital stock requires," the Fed chairman said. . . .
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WORKFORCE TRENDSARE:
Unprecedented – we have never faced a declining workforce before;
Assured – demographics will change little;
Largely unalterable – demographics and migration patterns do not change abruptly.
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RAMIFICATIONS OF WORKFORCE TRENDS ARE:
Potentially devastating – without sufficient productivity gains the state’s economy will stagnate;
Necessitating a focus on talent – large investments in education and training are needed;
Requiring match – talent supply and industry demand must be matched or you lose both.
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Questions ?
Wisconsin is Open for Business
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Dennis Winters
Phone: 608-267-3262
Email: [email protected]
Website: www.dwd.wisconsin.gov
OEA website: www.dwd.wisconsin.gov/oea
CONTACT INFORMATION