Lack of skilled workers, health care costs could slow growth

La Crosse Tribune (WI)

Nov. 05--The regional economy continues to show signs of recovery, and businesses have a shiny outlook on the year ahead, but a lack of qualified workers could hamper long-term growth, according to a panel of experts who spoke Wednesday as part of a panel on regional cooperation.

Area business leaders have generally positive expectations, according to results of a new survey of 125 companies in 10 counties.

"Things are looking up," Chris Malone, director of the Statistical Consulting Center at Winona State University, told a meeting of the 7 Rivers Alliance focused on the state of the region.

Eight out of 10 businesses expect sales to grow in the coming year, 40 percent plan to introduce new products, and only 15 percent plan to discontinue an existing product line.

"There is growth on the horizon," Malone said.

But three-quarters of the respondents to a local business survey reported problems finding qualified workers, which was also the No. 1 cited barrier to growth.

"That's true across all segments of the economy, skilled and unskilled," Malone said. "Educational institutions are going to have to make some changes."

La Crosse's labor force has not grown dramatically over the past 15 years and has actually shrunk since 2009, said Ron Wirtz, director of outreach for the Federal Reserve Bank of Minneapolis.

"If unemployment is already low, that's not a great sign for job growth," Wirtz said.

Even hospitals are struggling to recruit physicians to fill the ranks as baby boomers retire and an aging population bubble puts new strains on the system, said Kim Byas, regional executive for the American Hospital Association.

Younger doctors expect to spend time with their families and may not work as many hours as those they replace, and many medical school graduates take their University of Wisconsin degrees elsewhere.

"Even though we do a good job of training them, too many leave Wisconsin," Byas said.

Byas provided a snapshot of the health care industry, the largest employment sector in La Crosse County and the second largest in the state but one of the two biggest cost drivers in the federal budget.

"It is an economic growth engine" -- providing jobs and a healthy workforce -- Byas said, "yet still it is expensive."

Per capita costs leveled off after the passage of the Affordable Care Act in 2010 but have since started to rise again, Byas said, "not as steep as before, but continuing to go up."

And while Obamacare increased the percentage of people with health insurance, there are still 42 million Americans without coverage, which Byas said will continue to shift costs onto others.

"This is the hidden cost to employers and employees," he said.

The first-time state of the region event included presentations by the Midwest Manufacturing Association, which represents about 475 member companies primarily in Minnesota, and Organic Valley, the nation's largest organic food cooperative, based in La Farge, Wis.

Founded in 1999, the 7 Rivers Alliance is an economic development organization promoting collaboration in a 14-county area of Wisconsin, Minnesota and Iowa.

"We are a true economic basin," board president Lee Rasch said. "Not a political region, but a true economic basin. ... Things that happen in parts of our region truly affect all of us."

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