If Foxconn builds it, will workers come? Wis. bets yes

Michelle Jamrisko
Bloomberg News

With U.S. unemployment near a 16-year low, it’s hard to imagine recruiting as many as 13,000 workers in any single area of the country would be easy. Wisconsinites say it can be done.

President Donald Trump’s announcement Wednesday that Apple supplier Foxconn Technology Group plans to construct a new factory in southeastern Wisconsin and add between 3,000 and 13,000 jobs raised some eyebrows among national economists, who have heard employers complain for years about the lack of skilled workers. Waves of retiring baby boomers and reports of job candidates failing drug tests exacerbate the scarcity amid a 4.4 percent jobless rate and near-record high openings.

Wisconsin’s unemployment rate was 3.1 percent in June, matching the lowest since 1999, and Kenosha and Racine counties, which are contenders to host the new plant, have similar levels — revealing an even tighter market than the national figures show.

Some local economists, however, are confident that Foxconn will have no trouble recruiting thousands to their new staff: Unemployment in neighboring Illinois, just over the border from those counties, is 4.7 percent. And manufacturing jobs are likely to offer more attractive wages and benefits, since they’re substantially higher-output roles than the average gig.

“You can always attract workers if you raise the wage enough,” said David Clark, an economics professor at Marquette University in Milwaukee. “The beauty of manufacturing is, the productivity of those workers is so high that you can afford to pay them higher wages than if you’re looking at something less capital-intensive.”

The increase in demand for labor in the region probably will drive up wages in other local industries, Clark added.

The compensation offered for the new roles is the critical part of Foxconn’s ambitious hiring plan, said Ryan Sweet, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.

Workers who are out of the labor force but need a job often are weighing the pay and benefits against new costs: a car to buy for commuting, fresh work clothes and arrangements for childcare, he said.

“If they offer a high enough wage, they’ll be able to attract workers that either are sitting on the sidelines, or they’ll be able to poach from competitors,” Sweet said. Recruiting thousands of workers is possible, “but it’s not going to be easy given that the job market is very tight nationally but also in that region,” and that kind of hiring could take longer than many expect, he said.

The Foxconn jobs will have an average salary of almost $54,000, according to the Wisconsin Economic Development Corp. That’s higher than the average annual pay of about $47,000 for privately-employed Americans, based on June weekly earnings data from the Labor Department.

What also helps in this case, Clark said, is that Kenosha County already is home to two robust distribution centers built by Amazon.com Inc. and by shipping-material firm Uline Inc.

A third site with similar jobs will form a sort of “agglomeration economy” — as in Silicon Valley, a cluster of same-sector firms that will persuade Americans to move to the area with the confidence that in case of job loss, other opportunities will be available.

If successful, the state also should expect to see knock-on effects of another big employer in the area, with suppliers to Foxconn cropping up as well as an array of services jobs to cater to the new residents.

Kurt Bauer, president of the trade group Wisconsin Manufacturers & Commerce, has taken to referring to the state this week as “Wis-Foxconn-sin” and said the free publicity is sure to boost the hiring prospects. What’s more, pay from a Foxconn job will go further for those workers in Wisconsin than it would in neighboring Lake County, Illinois, he said.

“This could be for Wisconsin what the Bakken did for North Dakota — we could see a jobs gold rush driven by Foxconn” and the ripple effect that prompts more work in other industries, Bauer said.

It won’t all be smooth sailing, though. If the state is able to solve on a local level what the national labor market hasn’t — overcoming a worker shortage — it’ll still have to contend with another tight market. Adding thousands of new workers will require construction of thousands of new homes, and already-depleted housing inventory in Wisconsin, like much of the country, makes that a bigger challenge.