Wisconsin’s economic development can be enhanced by bipartisan approach

Some issues addressed by state government are unavoidably partisan, but the economic vitality of Wisconsin need not be one of them.

Everyone in government should have a stake in ensuring that people are employed, earn a decent wage, pay taxes, start companies, create products and services people want to buy, and otherwise contribute to prosperity in their communities.

The hard part is agreeing how best to accomplish that, especially as Wisconsin enters an era in which one political party (Democratic) holds the governor’s office and the other (Republican) controls the state Senate and Assembly.

Here are a few economic measures that will command the attention and, it can be hoped, cooperation of Wisconsin’s divided state government in the months and years to come:

Unemployment: Wisconsin may be nearing what economists call “full employment,” meaning just about everyone who could work is working. The rate is hovering about 3 percent with a labor force participation rate of 68.6 percent, six points higher than the U.S. average. With full employment, however, comes difficulties finding workers — a threat to virtually every state business.

Net migration: Wisconsin has suffered for years from what is often described as “brain drain.” Over time, Wisconsin hasn’t lost more young people than other Midwest states, but it has failed to attract enough newcomers to make up the difference. The challenge is more about “brain gain.” That changed in 2017, according to the U.S. Census Bureau. Wisconsin gained 6,200 more people than it lost, a metric called “net migration.” One year is far from a trend, however, so continued attraction efforts are needed as competition for workers intensifies.

Personal income: What people earn in Wisconsin continues to rise, but not as fast as the rest of the nation. The U.S. Bureau of Economic Analysis in September placed Wisconsin just below the midpoint of the 50 states (31st) for the growth in personal income during the first two quarters of 2018. Over time, the gap between Wisconsin incomes and the U.S. average has closed, but that appears to be more of an urban phenomenon than a rural trend.

Poverty rate: A report in June 2018 by the UW–Madison’s Institute for Research on Poverty showed the overall state poverty rate climbed to 10.8 percent in 2016, with some wide geographic fluctuations. Milwaukee County stood out as much higher than the state average while 45 counties hovered at the average and 26 were better than average. Better than average is relative, however, when a family’s refrigerator is empty.  

Exports: Wisconsin is an export-dependent state, from agriculture to manufacturing to technology products. The recent agreement between the United States, Canada, and Mexico led to a minor sigh of relief in some sectors, but the unresolved nature of the trade war with China is making manufactures and tech leaders increasingly nervous. Trade rules can’t be decided by the 50 states, but it’s nonetheless a major issue in a state that charts about $23 billion in annual exports.

(Continued)

 

Economic dynamism: How an economy performs in creating and retaining new companies and jobs matters. That’s because young companies account for a disproportionate share of net new jobs, especially as older companies stop growing or vanish. Wisconsin has not fared well in some studies in terms of startups, but others suggest the survival rate for companies five years old or younger in among the best in the nation. Again, it’s most likely a question of cities outperforming rural areas.

Angel and venture capital investment: The second quarter of 2018 was the strongest on record for Wisconsin in terms of how much money was invested by venture capitalists in young companies — about $102 million. Other signs suggest 2018 might be a record year following two years in which more than $500 billion was invested by angels and VCs. That’s progress, but Wisconsin has a long way to go to catch peer states such as Colorado and Minnesota.

Infrastructure: Most people think of roads and bridges when that word is used, but just as important are air connections, broadband, sensible regulations, education, quality health care, and partnerships among economic development entities across the state.

Wisconsin has made progress on most fronts; bipartisanship can build the base. Lack of cooperation will most likely hurt.

Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.