(First published in the October 11, 2018 issue of City Pages)
How local companies like J&D Tube Benders are changing to find and retain people
Workers on the floor at J&D Tube Benders in Weston. The company has expanded and plans to expand again, but hiring is a challenge like it has never been.
J&D Tube Benders, a manufacturer of parts for cars, trucks, tractors and other vehicles, doesn’t have a problem finding business. The Weston-based company is about to add another 50,000 square foot to its building. So when all is said and done, the company’s building will have grown from its original 72,000 square feet to roughly 164,000 square feet in total, all to keep up with rapidly growing orders. Even the current facility is undersized for the business it’s taking in. The company expects a record sales year.
The problem? More business is on the way, but the company doesn’t have enough employees as it is. The operation is about 10-15 employees short right now, says President Tom Felch, and is constantly hiring. And when it adds the new 50,000 square foot facility in April, it will be another 10-15 employees short.
“As we grow as a company and technology changes, the most valuable asset we have are the individuals who come in every day and punch the clock,” Felch says.
JD Tube Benders isn’t alone. Employers across the state are searching for employees during a talent crisis that’s only projected to get worse.
Consider Executive Cleaning in Wausau. Owner Bob Schneider says he’s had to turn down $500,000 in sales so far this year alone, including a deal with a major franchise, solely because he doesn’t have enough employees.
So a number from a recent Wisconsin jobs report raised some eyebrows among area business leaders and economists. According to a recent study from the Center on Wisconsin Strategy (COWS), the state is lagging behind the national average in job creation. If state job creation followed national trends, Wisconsin should have created 130,700 more jobs between January 2011 and March 2018. Instead of the 233,300 new jobs created in that time period, the state should have seen 364,000 new jobs if it kept up with the national average. The report also highlights income inequality and wage stagnation.
But economic experts say the report doesn’t necessarily tell the whole picture. The first question: Considering area employers can’t fill all the jobs currently open (estimated to be around 100,000 statewide) who would fill them?
And wages, considered stagnant as of early 2017, are now starting to grow, and expected to increase into 2019, according to Wisconsin Department of Workforce Development’s Derek Heikkenen.
Both Schneider and Felch say they’ve had to increase wages. And employers have had to think outside the box in order to attract and retain employees.
A transformation of employment might be underfoot.
Missing jobs or missing employees?
Schneider started Executive Cleaning in January 2012, and hired the company’s first employee in July of that year. The cleaning business grew to 50 employees, growing about 40% each year.
But something shifted about a year ago, Schneider says. The company once received three to four employment applications per week. That’s now slowed to less than one per month, Schneider says. Interviewees often tell them they have several other interviews lined up that same week. Potential employees not showing up for the interview, or even not showing up for the job once hired, isn’t uncommon. Felch says J&D Tube Benders sees that a lot now too.
Executive Cleaning once saw an employee turnover ratio of about 25% a year. That’s now closer to 80-100%. Their turnover is still better than the 300% standard in their industry, Schneider says, but enough to leave them scrambling for people. “It gets to be very frustrating at times,” Schneider says. “What do we do now? Because we don’t know who we’re going to find.”
The pool for the company to draw from is further limited by the nature of the work. Because they’re working in other company’s buildings, Executive Cleaning employees can’t have a record, must have reliable transportation, and able to work on their own. Those qualifications narrow the candidate pool even in a “normal” employment environment.
Schneider says they’ve raised starting wages and given raises to keep employees. But with so many options, it’s an uphill battle.
There’s a reason for that, Heikkenen says. Businesses that employ skilled labor have been forced to consider training unskilled workers. Those skilled jobs typically paying more, leaving an even smaller candidate pool for unskilled labor. What the Wisconsin job market is now seeing is workers moving into higher positions they might not have been considered for before, leaving fewer workers to fill those unskilled positions.
J&D Tube Benders is considering potential employees it might not have considered in the past. The company also has embraced flexible work hours — not just coming in when you feel like it, Felch is careful to explain, but allowing employees to submit a schedule to work around or setting up an unusual shift structure.
The company uses temp agencies to fill gaps and has developed an internship program that leads to new full-time employees. Felch is a founder of the Central Wisconsin Metal Manufacturing Alliance, which among other things hosts the heavy metal tour that brings local students into manufacturing companies to show them that factory jobs are cleaner and more high tech than they once were.
“I tell people the solution is in the 6th grade, in school right now,” Felch says. “We have to get that 6th grade student to come into manufacturing and entertain this as an option.”
Wages have been increased at J&D Tube Benders, and the company makes ample use of production bonuses. Matching vacation for employees coming from other companies has become common too, Felch says. And they’re finding themselves overlooking issues that in the past would have resulted in termination, such as late or even absent attendance. “It takes a lot more to let an employee go,” Felch says.
Still, J&D Tube Benders sees plenty of “ghosting” — someone not showing up for an interview, or even being hired and not showing up for the first day of work. “In today’s market, you could quit your job right now and have another job by Monday,” Felch says. “About 75% of the businesses have help wanted signs up.”
Meanwhile, national retailers are increasing wages to attract workers. Walmart announced in January it would phase in an $11 minimum hourly wage across the board. Target has pledged to up its pay to $15 per hour by 2020; the store chain is currently starting all team members at $12 per hour. Amazon this week announced it would raise its minimum wage to $15 per hour for all U.S. based workers.
Workforce shortage getting worse
Tom Felch, president of J&D Tube Benders: To keep employees, the company has embraced changes such as flexible work hours and unusual shift schedules
Wausau Chamber of Commerce CEO David Eckmann has been following the development of downtown Wausau closely. To anyone wondering what connection downtown has with the area’s workforce, they’re missing the big picture.
The chamber is in the middle of building its economic development strategy, and that includes attracting and retaining the next generation of talent. Part of attracting that talent is creating a vibrant community where young people want to live. And what creates that vibrancy? Strong and active downtowns.
So a major expansion planned for the YMCA paired with a new Aspirus clinic on the north side of downtown Wausau is big news. So are new housing projects such as the town houses on Third Street and the Riverlife development area. These are signs of major growth. Couple that with efforts to reposition the mall and its surrounding corridor, and people can expect downtown Wausau to look quite different in ten years, Eckmann says. And different in ways that will encourage people to relocate to the Wausau area—because the state’s workforce shortage is more pronounced in its northern half.
Building that community will be vital because birth rates won’t fill those workforce gaps alone. College enrollments here continue to decline—UW-Stevens Point this semester hit its lowest enrollment in decades, down from a peak of 10,000 in 2011, while UW-Madison sees its largest freshmen enrollment in history. Birth rates and elementary school enrollments are also low.
Eckmann confirms that, in the short term, employers are increasing wages and trying to restructure themselves in order to better attract employees.
It’s also important to note that the COWS report was looking at total employment — but a more salient figure is measuring job growth by occupation, says economist Jerome Segura III, who analyzed job growth by occupation. According to his data analysis, the region has seen poor job growth in all occupations compared to the national average, some worse than others. “That’s a challenge,” Segura says. “I didn’t expect to see that.”
Jobs will start becoming more skilled, Segura says. Foxconn is a good example of that. Though they are factory jobs, the vast majority of those jobs will be highly skilled, high-paid jobs. They’re not going to replace the manufacturing jobs of old. Public policy will need to keep pace with the job market if Wisconsin is going to thrive, Segura says.
That means a needed fresh look at rural areas. According to the COWS report, rural counties — defined as not containing a major metropolitan area — are doing far worse than their urban counter parts.
That bears out here too, Eckmann says. One major employer in Marathon City also has a plant in Taylor County. The Taylor County facility is having a much more difficult time attracting employees than its Marathon City counterpart.
According to Hiekkenen, the counties north of Highway 8 are expected to age the most. In 20 years, as many as 40% of their population will be over the age of 65. But even in Marathon County the population is expected to continue aging. “The people problem will not get better, it will only get worse,” Heikkenen says.
One thing the state has going for it; Wisconsinites are hard workers. According to the COWS study, Wisconsin’s labor force participation rate is 69% — six points higher than the national average.
Key findings from the COWS report
The Center on Wisconsin Strategy’s State of Working Wisconsin report highlighted a few key areas that are worth noting about the current state of employment:
• Wage stagnation:Wages in Wisconsin have been stagnant since the 1970s — or at least as of 2017. Local and national evidence indicates wages are now starting to rise in response to the crisis and that is expected to continue, experts say.
• Job stagnation:It might have ended up being a blessing in disguise, but Wisconsin stopped keeping pace with the national average around 2010. If it had kept up with the national average, the state would have 130,000 more jobs than it does now—meaning even more unfilled positions.
• High participation:Wisconsin blows the national labor participations rate out of the water, with a participation rate of 69% compared to the national rate of 63%.
• Income inequality:Women in Wisconsin earn about 84¢ per dollar compared to men. Black workers earn 19% less than white workers on median; and Hispanic earn about 43% less.
• Poverty wages prevalent:One in every five workers in Wisconsin earns a “poverty wage” or lower, defined as any job that pays $11.95 or less.