News of the Day

While the lack of available talent has been a common complaint amongst businesses over the past several years, data from the U.S. Bureau of Labor Statistics suggest average wages for private sector employees in Wisconsin have increased faster than the United States as a whole over roughly the past two years.

In May, for example, the average weekly private sector wage in Wisconsin increased 6.4 percent from the same time in 2017, to $869.66. Nationwide, the increase was 3.1 percent, to $923.98. Account for inflation, and Wisconsin’s average wage was up $29.36 per week while the country’s was up just $2.27 per week.

Wage gains outpacing the national average are not a one-month phenomena for the state, either. Wisconsin averaged a year-over-year increase of 5.7 percent in the first five months of 2018, compared to 2.7 percent for the U.S. For all of 2017, the state averaged an increase of 3.6 percent, while the country averaged 2.8 percent.

The wage growth roughly coincides with when the state’s unemployment rate dipped below 4.5 percent. It has continued to trend downward, reaching a seasonally-adjusted 2.8 percent in April and May.

The largest increase statewide has been in financial activities, up an average of 8.1 percent. Professional and business activities wages increased an average of 3.8 percent, education and health services averaged a 3.1 percent increase, leisure and hospitality improved 2.1 percent, and construction averaged just a 1.9 percent increase.

Statewide, wages in the manufacturing sector increased an average of 4.7 percent, but pay for production workers was up just 2.9 percent.

On Friday, Governor Walker  sent a letter to President Donald Trump requesting a federal disaster declaration for six northwestern Wisconsin counties that sustained flood damage in June. The request is for federal assistance to help local governments recover from the disaster in Ashland, Bayfield, Burnett, Clark, Douglas and Iron counties.

“Federal damage assessments showed more than $13.1 million in damage to public infrastructure in northwestern Wisconsin. This is an area that is still recovering from major flooding that occurred in 2016,” said Governor Walker. “We are hopeful that officials with the Federal Emergency Management Agency (FEMA) will understand how important it is for our state and these communities to receive federal disaster assistance to help recover from this disaster.”

Earlier this week, FEMA, Wisconsin Department of Transportation, Wisconsin Department of Natural Resources and Wisconsin Emergency Management conducted damage assessments across the impacted area with local officials. They viewed damaged roads, bridges and washed out culverts. FEMA estimated $13.1 million in debris clearance, emergency protective measures and damage to roads, bridges and other infrastructure.

If approved, FEMA’s Public Assistance Program would help communities recover some of the costs incurred through responding to the floods, protecting citizens, removing debris, and repairing roads and other infrastructure. FEMA provides 75 percent of eligible costs. The State of Wisconsin and local communities impacted share the remaining 25 percent.

The program is not for businesses or homeowners as the level of damage in these areas, unfortunately, does not currently meet requirements for federal relief. Those with personal property or businesses that were damaged due to the flooding, should contact 2-1-1 for possible resources.

Continuing efforts to improve how the Endangered Species Act (ESA) is implemented, the U.S. Fish and Wildlife Service and National Oceanic Atmospheric Administration (NOAA) Fisheries today proposed revisions to certain regulations to ensure clarity and consistency. The changes incorporate public input, best science and best practices to improve reliability, regulatory efficiency and environmental stewardship.

First, the agencies propose to revise the procedures for designating critical habitat by reinstating the requirement that they will first evaluate areas currently occupied by the species before considering unoccupied areas. Second, the agencies propose to clarify when they may determine unoccupied areas are essential to the conservation of the species.

While the agencies recognize the value of critical habitat as a conservation tool, in some cases, designation of critical habitat is not prudent. Accordingly, they are proposing a non-exhaustive list of circumstances where they may find that designation for a particular species would not be prudent. The agencies anticipate that such not-prudent determinations will continue to be rare and expect to designate critical habitat in most cases.

The ESA defines a threatened species as one that is likely to become in danger of extinction within the “foreseeable future.” For the first time, the agencies are proposing an interpretation of “foreseeable future” to make it clear that it extends only as far as they can reasonably determine that both the future threats and the species’ responses to those threats are probable.

The agencies are also clarifying that decisions to delist a species are made using the same standard as decisions to list species. In both cases, that standard is whether a species meets the established ESA definition of an endangered species or threatened species.

The U.S. Fish and Wildlife Service is separately proposing to rescind its blanket rule under section 4(d) of the ESA, which automatically conveyed the same protections for threatened species as for endangered species unless otherwise specified. This brings its regulatory approach to threatened species protections in line with NOAA Fisheries, which has not employed such a blanket rule.

Under section 7 of the ESA, other federal agencies consult with the U.S. Fish and Wildlife Service and NOAA Fisheries to ensure their actions are not likely to jeopardize the continued existence of any endangered or threatened species or result in “destruction or adverse modification” of critical habitat. The proposed rule simplifies and clarifies the definition of “destruction or adverse modification” by removing redundant and confusing language.

Additional proposed revisions to the consultation regulations will clarify whether and how the U.S. Fish and Wildlife Service and NOAA Fisheries consider proposed measures to avoid, minimize or offset adverse effects to listed species or their critical habitat when conducting interagency consultations and will improve the consultation process by clarifying how biological opinions and interagency submissions should be formulated.

The Wisconsin Elections Commission is moving ahead with plans to use a $7 million federal grant to update its security software, fill six new technology positions and train clerks throughout the state about best security practices during elections.

Approved by the Department of Administration in June, the commission’s plans call for software upgrades that will allow the commission to monitor the elections system, which has come under scrutiny recently after news surfaced that Russia had meddled in the U.S. presidential election in 2016.

The state aid is part of $380 million that Congress approved in March under the Help America Vote Act, which in part will help improve election security.

Reid Magney, a public information officer for the Elections Commission, said it’s not clear yet how all the money will be spent in Wisconsin, but the commission will seek advice from election officials and the public about other ideas to ensure security with the primary election less than a month away.

An estimated maximum of $2.4 million will be spent on six information technology positions with contracts through 2022.

Technical upgrades will make it harder for malicious or inadvertent activity the sabotage the system, Magney said. One of these upgrades is multi-factor authentication, which means clerks need to use more than a username and password to log into the system.

Oftentimes that comes in the form of a code that users have to punch in to log on, but Magney said the commission is exploring other options because not all clerks have cell phones.

Magney said the funds also will attempt to train about 3,000 election officials and their staff members who use the WisVote system, which is the software for election administration. Another effort will allow the state Division of Enterprise Technology to get advanced spam email protection, a service which is already available to commission staff.

Dairy farmers who want the terms “soy milk” and “almond milk” banished from our lexicon may soon get their way as a federal agency plans to enforce the definition of “milk” as something that comes from a cow, not a plant.

U.S. Food and Drug Administration Commissioner Scott Gottlieb said Tuesday that he intends to implement the change over the next year or so.  The agency has long had a definition of milk as being an animal-based product, but it hasn’t been enforced.

“This has been a little bit of a bugaboo to the dairy industry,” Gottlieb said during a Politico event in Washington, D.C. “But we do have a standard of identity, and I intend to enforce that,” he said.

Before the FDA can implement the change, Gottlieb said, there will have to be public hearings to gather comments.

“It will probably take close to a year to go through that process. But that’s what we intend to do,” he said.

Gottlieb’s comments Tuesday were similar to testimony he presented this spring to the Senate, when he acknowledged the FDA has “exercised enforcement discretion” in not holding food marketers to federal standards limiting the use of standardized food terms.

Sales of milk as a beverage have been in decline for many years, while sales of plant-based beverages are up more than 60 percent during the past five years, according to industry figures.

Yesterday, Foxconn Technology Group announced plans to establish a technology hub in Eau Claire, by acquiring an historic office building and creating innovation and test centers in that city’s downtown.

The company said the plans are “part of its initiative to spur innovation, attract talent and connect with supply chain partners,” and will “foster entrepreneurship.”

The new centers, to be named Foxconn Place Chippewa Valley, will create at least 150 high-tech jobs in Eau Claire, the company said. The employees will work with companies that will become part of Foxconn’s supply chain and contribute to the development of the AI 8K+5G ecosystem that Foxconn says it is building across the state.

Foxconn Place Chippewa Valley will include two properties. The company has entered into an agreement to acquire ‘The Grand,’ a six-story, 89-year-old building at 204 E. Grand Ave. in downtown Eau Claire. The building will be updated and converted into an incubator and laboratory for next-generation technological solutions.

Foxconn said it has also purchased over 15,000 square feet of co-working space at 200 Eau Claire St., in Haymarket Landing, which is a part of the Confluence Project a public-private partnership aimed at redeveloping the center of downtown Eau Claire and its riverfront. Foxconn will use this space as an innovation center that will be part of a talent and innovation network for the AI 8K+5G ecosystem that Foxconn is creating.

Foxconn said it plans to close on the Eau Claire properties later this year and have its operations there open in early 2019.

“We are excited to expand our Wisconn Valley footprint to the Chippewa Valley and West Central Wisconsin. Our goal in establishing Foxconn Place here is to help inspire innovative ideas, attract talent and catalyze cutting-edge solutions in this part of the state,” said Alan Yeung, Foxconn’s director of U.S. strategic initiatives and president of FEWI Development Corp. “Foxconn Place Chippewa Valley will play a key role in building a vibrant AI 8K+5G ecosystem in the U.S., with Wisconsin at the center of this vision.”

Sen. Ron Johnson (R-Wis.) warned on Sunday that President Trump’s policies on trade are starting to do “permanent damage.”

Johnson said during an interview with New York AM 970 radio host John Catsimatidis that his state of Wisconsin has “been particularly targeted” by China’s recently imposed tariffs, which came in response to Trump’s trade measure against the country.

Johnson told Catsimatidis that the steel tariffs are “hitting us pretty hard,” adding that he’s heard of price increases of 30 to 40 percent.

“The problem with that is it raises the cost of American-manufactured products, Wisconsin-manufactured products, which makes them less competitive on the global trade market,” Johnson said.

The senator said Trump is “absolutely right” to demand reciprocal trade, but that he hopes Trump will quickly resolve the escalating trade dispute because “right now there is some permanent damage being done.”

Trump imposed 25 percent tariffs on $34 billion worth of Chinese goods earlier this month, prompting reciprocal tariffs from China on American products.

China also accused Trump of launching “the biggest trade war in economic history.”

The Trump administration later announced that it would impose a 10 percent tariff on $200 billion worth of Chinese imports. The country has also promised to retaliate for those tariffs.

With the recent announcement of retaliatory tariffs by neighboring countries in response to President Donald Trump’s duties on steel and aluminum, companies closer to home are looking for creative ways to spare relationships with importers that could be in jeopardy.

Jeff Schwager, president of the Plymouth-based cheese producer Sartori, said the company has negotiated with Mexican customers and importers to split the 25-percent tariff increases in half to help minimize cost for Mexican consumers. Mexico is one of Sartori’s top buyers, comprising about a quarter of the company’s export market.

“That means that business that was profitable to us is now break-even at best,” Schwager said.

Although the company is splitting the tariffs in half with their Mexican brokers and distributors, Sartori’s vice president of marketing, Blair Wilson, said it’s more prudent to lose money now than to sever relationships that the company has built over time.

“In the short-term perspective, it might be better to lose now so in the long-term we can stay viable,” Wilson said.

While a few cheese producers statewide have adopted plans to split tariff costs, executive director of the Wisconsin Cheese Makers Association John Umhoefer said he’s heard of other cheese companies lowering the price of their products so that the final cost with the tariffs represents the former cost for the markets they’re selling into.

Umhoefer said losing established partnerships is a bigger concern for his organization’s members, which number around 500 members from 100 companies in 19 states. That’s because other nations such as New Zealand, Australia and the European Union and poised to jump in on troubled markets, he said.

“Once you shift distribution patterns and set up the complexity of importing, it’s easier to continue to do what you’re doing,” he said, noting that importers might not return to U.S. producers after establishing relationships elsewhere.

That loss of partnerships could prove costly, even if these tariffs only last for a short period of time, said Mark Stephenson, a University of Wisconsin-Madison expert of dairy policy analysis.

“If they’ve spent time building relationships in Mexico, there’s been trust and you’re very hesitant to give that up quickly and easily,” Stephenson said. “You might be willing to sell the product at a loss if you think this is a relatively short-term phenomenon. It’s a means of expressing good will to each other, too.”

According to a news release from the Wisconsin Cheese Makers Association, about $50 million worth of Wisconsin cheese reached Mexican consumers last year. That’s more than one-third of all the exported cheese for the state in 2017.

The WCMA is one of 60 companies that wrote to the Trump administration urging it to rescind the tariffs on steel and aluminum, the association joined the call in hopes of ending retaliatory tariffs from the EU, Mexico, Canada and China that are now impacting the dairy industry.

Yesterday, Governor Walker announced the members of the Wisconsin Dairy Task Force 2.0 at Wisconsin Farm Technology Days.

The Governor directed Department of Agriculture, Trade and Consumer Protection (DATCP) Secretary Sheila Harsdorf and University of Wisconsin System (UW System) President Ray Cross to establish the Task Force in early June. The Task Force will focus on making recommendations on actions needed to maintain a viable and profitable dairy industry in our state.

“As Wisconsin’s dairy industry continues to face challenges, it is more important than ever that the industry as a whole works together to find ways to maintain our status as a leading dairy state,” said DATCP Secretary Harsdorf. “The diverse and wide-ranging Task Force membership will allow for an important conversation, and I look forward to their recommendations.”

The economic impact of the dairy industry in Wisconsin is significant, employing nearly 80,000 jobs and generating $43.4 billion in state-wide economic impact every year – nearly half of agriculture’s total economic impact.

“The partnership between the dairy industry and the University of Wisconsin goes back a long time, and it has played a vital part in Wisconsin becoming America’s Dairyland,” said President Cross. “The UW System looks forward to continuing to work with farmers and dairy producers to develop and implement innovative and forward-thinking solutions for the Wisconsin dairy industry.”

The Wisconsin Dairy Task Force 2.0 members include:

Farmers:

• Moriah Brey, Brey Cycle Farm LLC, Sturgeon Bay
• Andy Buttles, Stone-Front Farm, Lancaster
• Janet Clark, Vision Aire Farms, LLC, Rosendale
• Tom Crosby, Crosby’s River Valley Dairy, Shell Lake
• Dave Daniels, Mighty Grand Dairy, Union Grove
• Patty Edelburg, Front-Page Holsteins, Scandinavia
• Don Hamm, Sandy Loam Farm, Fredonia
• Ryan Klussendorf, Broadland Grass Farm, Medford
• Shelly Mayer, Mayer Farm, Slinger
• Dan Pearson, Pearson Farm, River Falls
• Amy Penterman, Dutch Dairy, Thorp
• Brody Stapel, Double Dutch Dairy, Cedar Grove
• Charles Untz, Untz Farm, Lake Mills
• Darin Von Ruden, Von Ruden Farm, Westby

Milk Processors and Marketers:

• Steve Bechel, Eau Galle Cheese Factory, Durand
• Dave Buholzer, Klondike Cheese Company, Monroe
• Rob Byrne, Schreiber Foods, Green Bay
• Ted Galloway, Galloway Company, Neenah
• Paul Scharfman, Specialty Cheese Company, Reeseville
• Jerry Schroeder, Schroeder Milk Transit, Oconto Falls
• Jeff Schwager, Sartori Cheese, Plymouth
• David Ward, Cooperative Network, Madison
• Elizabeth Wells, Organic Valley, La Farge

Allied Organizations:

• John Accola, Premier Cooperative, Prairie du Sac
• Dennis Bangart, AgCountry Farm Credit Services, Marshfield
• Michael DeLong, First Bank of Baldwin, Baldwin
• Bradley Guse, BMO Harris Bank, Arpin
• Melissa Haag, Lodi Veterinary Hospital, Lodi
• Rene Johnson, Union Bank and Trust Co., Evansville
• John Schmidt, Landmark Services Cooperative, Appleton
• Chad Vincent, Dairy Farmers of Wisconsin, Madison

Dr. Mark Stephenson, Director of Dairy Policy Analysis at UW-Madison, will chair the Wisconsin Dairy Task Force 2.0. The Task Force is working to schedule their first meeting in August.

The Wisconsin Commissioner of Insurance Monday approved an overall 6.03% rate decrease for Worker’s Compensation premiums for businesses, effective October  1, 2018.

This is the third consecutive year Worker’s Compensation rates have declined, following an 8.46% decline in 2017, and a 3.19% decline in 2016. The latest reduction in premiums is expected to result in an annual savings of about $134 million for Wisconsin employers.

“This is just another indicator that Wisconsin’s investments in its employees’ occupational safety is paying off,” Governor Scott Walker said. “Not only are employers seeing reduced premiums, but efforts to reduce workplace injuries help achieve a healthy labor force, resulting in a decline in rates for the third consecutive year.”

Worker’s Compensation rates are adjusted yearly by a committee of actuaries from the Wisconsin Compensation Rating Bureau. The committee studies the prior losses (claims) of hundreds of categories and professions throughout the state’s employment pool and submits a rate recommendation to the Office of the Commissioner of Insurance, which has final approval over the rates.

“A safe workplace results in a more productive and profitable one for employers,” Commissioner of Insurance Ted Nickel said. “Employers are recognizing the relation between their employees’ safety and the savings that ensue as premiums continue to decline.”

These savings will allow Wisconsin businesses to continue to strengthen their profitability while at the same time ensuring a safe work environment, according to Department of Workforce Development Secretary Ray Allen.