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EXECUTIVE SUMMARY

WHAT IS WORKFORCE HOUSING?

Workforce housing is the supply of housing in a community (a variety of housing types, sizes, locations and prices) that meets the needs of the workforce in that community. Specifically, in this report, workforce housing is housing that is “affordable” for renting families earning up to 60 percent of the area’s median income and for owning families earning up to 120 percent of the area’s median income.

Wisconsin has a workforce housing shortage. While the Wisconsin economy has returned to growth since the end of the Great Recession, our housing stock is falling behind. We are not building enough housing to keep up with demand for our growing workforce. Our existing housing stock is aging, and construction prices and housing costs are rising faster than inflation and incomes. This state has seen declining homeownership, particularly among younger families, first-time homebuyers, and African American and Hispanic families. Housing costs and rents are rising faster than incomes, too. Compared to our neighboring states, we have the highest rate of extreme rental cost burden for lower-income families and the second highest rate of extreme cost burden for lower-income homeowners.

The purpose of this report is to document the significant workforce housing shortage in Wisconsin, and to explain the main causes (lack of supply, rising construction costs and outdated regulations) and main results (rising prices, decreasing homeownership and decreased affordability).

This report also outlines a roadmap to reform to meet our workforce housing challenges. Reforms and policies are focused on five key goals: building more housing, increasing housing choice through a diverse housing stock, rebuilding and strengthening homeownership, reinvesting in older housing and older neighborhoods, and making housing a priority. These reforms and policies can help Wisconsin address our workforce housing shortage; modernize our housing system; and ensure a more prosperous, equitable and sustainable future for all our residents.

by Dale Knapp, Executive Director, Forward Analytics

Executive Summary

With unemployment at record lows, Wisconsin businesses are facing a worker shortage that could persist for decades. The reason? The state does not have a enough young people to replace retiring baby boomers over the next 10 to 15 years and migration patterns have not shifted for the better.

The ability of a state to naturally grow its workforce over time can be measured by comparing the number of residents under 16 years of age to the number who are 50 to 64 years of age. Many in this older group will likely leave the workforce over the ensuing 15 years and be replaced by those in the younger group. The larger the ratio, the greater the state’s ability to grow the labor force.

For example, Wisconsin had 1.75 residents under 16 for each resident 50 to 64 years of age in 1990, and the state’s workforce expanded almost 17% over the next 15 years. By 2000, this ratio had fallen to 1.42 young people per resident near retirement, and the labor force expanded just 4.1% during 2000-2015. At 0.87 in 2017, this long-term indicator points to a shrinking labor pool over the next 15 years.

To grow its labor force, Wisconsin will need to attract workers from other states. However, the state has not fared well in attracting key population groups since 2010. In fact, the state’s migration patterns began shifting after 2000 and have only worsened among key age groups since.

Since at least 1990, Wisconsin has lost young people as they age from their early twenties into their late twenties. That pattern continued during 2010-2015 with the state losing almost 30,000 of these young people, many recent college graduates.

The state has typically recouped those losses by attracting people in their thirties, forties, and even fifties. For example, during 2000-2005, the state experienced a net outflow of about 25,000 young adults, but added over 40,000 residents in the older groups. However, during 2010-2015, the state not only lost 30,000 young adults to other states, it also lost population among those in the older groups. This partly explains the state’s current labor shortage.

The recent net loss of residents in their “family formation” years creates a second, long-term problem for the state. Those moving into the state who are in their late twenties to early fifties often bring with them children, who will be part of the future workforce. Indeed, during both 2000-2005 and 2005-2010, the state added more than 40,000 children from migration.

However, during 2010-2015, net migration of children to the state totaled fewer than 10,000. This large drop in the net migration of children portends trouble for long term workforce growth in Wisconsin.

Read the full report here.

Falling Fertility Rates, Fewer Babies

by Dale Knapp, Director, Forward Analytics

Executive Summary

During 2007-2018, the number of babies born in Wisconsin declined more than 12% to just over 64,000, the fewest since 1973. The general fertility rate, or the rate at which women ages 15 to 44 give birth, has declined to its lowest level since 2002. If this pattern were to continue, the number of deaths could exceed births sometime over the next decade. A natural decrease in population is unprecedented in Wisconsin.

While these patterns are troubling for a state with significant demographic challenges, a deeper dive into the numbers shows some positive trends. Much of the decline in both births and birth rates is due to a large drop in teen pregnancy. During 2007-2017, the number of babies born to teen mothers declined from 6,320 to under 2,600. The decline in teen fertility after 2007 accounted for more than 40% of the drop in births and three quarters of the fall in general fertility.

For decades, policy makers have focused on reducing teen pregnancy because teen mothers are often unprepared for parenthood and are more likely to be single parents. Children born to teen mothers are more likely to live in poverty, struggle to acquire basic literary skills, and underperform in school. They are also more likely to continue that cycle by becoming teen mothers themselves.

A second factor in Wisconsin’s “birth dearth” appears to be a delay in childbirth. Since 2007, birth rates among women 20 to 24 years old have declined precipitously, while rates for women in their 30s have climbed. During 2007-2017, the median age of a mother having her first born child increased almost two years, from 24.3 to 26.2. While much of the increase was driven by reductions in teen births, the median age of first birth among women 20 or older also rose.

A third factor, the inability to retain millennials, portends long term challenges for the state. As the oldest millennials – those who were 15 to 19 years old in 2000 – aged into their late 20s and early 30s when fertility rates are highest, their numbers in Wisconsin declined nearly 8%. Among women five years younger, those who were 15 to 19 in 2005, declines were significantly larger. As the state loses these young women, and possibly those in Generation Z behind them, it can expect fewer babies in the future.

The decline in births and birth rates facing Wisconsin are also occurring across the country. Failure to reverse this decline could have significant consequences for economic growth and for the funding of major federal programs such as Social Security and Medicare.

There are no easy answers, but we only have to look to Japan to see some of the consequences of declining fertility and births, including a rapidly aging population and a shrinking workforce.

Read the full report here.