During Wisconsin’s 15 minutes of fame on last month’s presidential primary election stage, I couldn’t help thinking about how some of the major issues in this strange campaign year will impact Wisconsin and Wisconsin REALTORS®. I was particularly interested in what the candidates had to say about jobs, taxes, public services and regulations — not that I heard much of a public policy debate over all the personal attacks. But I was also interested in the discussion over immigration — not over the part about building a big wall and who will pay for it, but because it rekindled in my mind a particularly poignant issue that we have yet to deal with in Wisconsin: we don’t have enough workers.
This reality begs an interesting question: What comes first: jobs or workers?
It’s kind of an economic “chicken or the egg” type of question. If you have quality workers, employers should want to move or expand their businesses here. On the other hand, though, if you have quality jobs, workers will want to move or stay here. So which comes first? Early punch line: there is no clear or easy answer.
Regarding employment, Wisconsin currently enjoys a really low unemployment rate, just 4.6 percent, which is below the national average. That 4.6 percent translates into 144,809 workers ostensibly looking for work. We also have, according to the Department of Workforce Development, about 54,950 job openings. So, you ask, what’s the problem? Seems like we have more workers than jobs, so we should be good to go right? Wrong. Our problem in Wisconsin is demographic — and as “they” say, demography is destiny.
The Wisconsin Taxpayers Alliance (WTA) compiled some excellent data regarding this problem a few years back. According to the WTA report, the 1.4 percent annual birthrate during the 1950s, which brought us the baby boomer generation, steadily slowed over the ensuing three decades. As the birthrate slowed, we, as a state, got older. Moreover, this trend is expected to get worse — a lot worse. In the 30 years from 2010-2040, Wisconsin’s population will grow just 14.1 percent, the same growth we accomplished in just 18 years from 1992-2010. And by the way, the death rate will climb much faster than the birthrate over those next 30 years as well.
The WTA also looked at trends regarding who’s moving in and out of Wisconsin. The economy, taxes and climate all play a role in this analysis, but Badgers between 60 and 70 years old tend to leave the state more than come in. However, it’s worth noting that Wisconsin is a “net importer” for seniors over 80 who seem to be coming back home to spend time with children and grandchildren. Like those 60- to 70-year-olds, people in their 20s and early 30s tend to move out, for school or better-paying jobs. The upshot of this downbeat news is that our working-age population, which is between 20 and 64 years old, will decline between now and 2040 — ergo my earlier comment that we don’t have enough workers.
What does this portend for our state’s economy and for the housing market? For the economy, it means “job creation” won’t matter if we don’t have workers. As the WTA researchers put it, “employment cannot expand beyond the size of the work-eligible population.”
Getting back to the chicken or the egg theory, there is a strong corollary between growing the working-age population, which is the egg, and job creation, which is the chicken. If that’s true, it doesn’t bode well for us here in Wisconsin. What’s worse is this “no growth” workforce phenomenon will be accompanied by a big increase in retirees. Get this: while the total population is expected to grow by 14 percent over the next 30 years, retirees will almost double at 97.5 percent as baby boomers leave the workforce. Retirees will be the fastest-growing age group during this time.
This demographic reality will have a huge impact on nearly every facet of our life and economy in Wisconsin. Older people buy more services — think health care-related expenditures — than goods compared to young people. This reality will also have a big impact on housing. With boomers downsizing in retirement, demand for smaller homes, condos and apartments will likely increase and with it prices for that type of housing will potentially increase as well. New construction targeting these retirees may have to include a more robust transportation system as well as integrated mixed-use residential, commercial and health-related facilities and services.
And then there’s the impact of these dangerous demographic inevitabilities on state incomes that are declining, state income tax revenues that are also declining, state sales tax revenues that are also declining, as well as a growing reluctance of seniors on fixed incomes to approve school funding referenda, which is the only way schools get more money under the current revenue limits.
As dim as this demographic discussion is, I didn’t raise these points to depress you. I raised them to illustrate that as we listen to and watch our politicians in this strange political year, we shouldn’t tune out because of all the name calling, personal attacks and long-winded verbal duels over insignificant subjects. Economic growth, jobs, wages and workers — or lack thereof — are at the center of our lackluster economy and should be at the center or our public discourse during this election year. Border security and enforcing illegal immigration laws are very important issues, but so too are the related issues of economic growth, job creation and labor needs. Our candidates should be attacking these issues rather than each other.
A thriving real estate market requires a strong economy, a robust middle class, and politicians that engage real issues and debate real solutions. Attracting workers and creating jobs demand no less.