Wisconsin economy moving toward head of the class

By TOM HEFTY | March 10, 2015

The new year brought new signs of momentum for the Wisconsin economy.

In 2010, the Be Bold Wisconsin report set a goal of making Wisconsin a top 10 state for starting or expanding a business. That seemed like a distant goal for a state that regularly had ranked in the bottom half of the class — sometimes in the bottom handful of states.

Two of the best new grades came in independent reports, one done by the Gallup organization and the other done by Paychex | IHS. Wisconsin is moving toward the head of the class.

In January, Gallup published its list of “10 Best (and Worst) States to Find a Job,” using its survey data from 2014. It surveyed 4,297 workers in Wisconsin.

The survey question was simple: “Based on what you know or have seen, would you say that, in general, your company or employer is hiring new people and expanding the size of its workforce, not changing the size of its workforce (or), letting people go and reducing the size of its workforce?”

The Badger State ranked fourth best in the country for finding a job, after North Dakota, Texas and Nebraska. Good company.

The Paychex | IHS Small Business Jobs Index also brought good news. Wisconsin again ranked fourth best, after Indiana, Texas and Washington. The small business data is particularly good news because Wisconsin has long ranked near the bottom in other indices of entrepreneurial activity.

In the March 2015 Manpower report released this week, Wisconsin had the third brightest job outlook in the nation, lagging only Idaho and North Dakota.

Other data pointed in the same positive direction. The year-end 2014 MoneyTree venture capital report produced by the National Venture Capital Association and PriceWaterhouseCooper showed the number of Wisconsin companies receiving venture capital at the “best level in two decades.”

The small business and venture capital grades are a result of a number of policy changes and program expansions. Wisconsin expanded tax credits for venture and angel investments. There are new venture capital programs. Even the neighboring states are noticing. A December report by national consultant Battelle for the State of Iowa notes: “Iowa should consider revamping (venture capital) along the lines of Wisconsin’s successful program.”

Economic statistics are frequently complex, confusing and sometimes contradictory.  Partisans cherry-pick statistics to make their points. University of Wisconsin economists are most frequently negative about their home state. One UW-Milwaukee professor last month criticized Wisconsin as “surfing on the national recovery” — a difficult task in the cold Wisconsin winter.

Economists frequently are criticized for being indecisive, saying “on the one hand and on the other hand.” UW apparently has solved that problem by hiring only one-handed economists: left-handed.

There are three sets of jobs statistics — the monthly Bureau of Labor Statistics employer report of job counts; the Current Population Survey, which generates the unemployment rate; and the Quarterly Census of Employment and Wages report. There are seasonally adjusted numbers and raw statistics. To complicate matters, federal agencies issue revised jobs numbers each month and after the end of each year. 

One of the best ways to look at the state business climate is to look at the simple statistical rankings over a long period of time.

The national economy does set the environment for local economies. But there are major differences in state performance. Some reflect natural resources, historic industry mix, demographic changes and that important intangible — business climate. State policy does make a difference.

In 2009, John Torinus and I looked at Wisconsin’s economic record during the Doyle administration. “Wisconsin Flunks its Economics Test” was the conclusion. The state’s ranking for job growth was 32nd, hitting a low of 46th in 2006.  By 2008, the state ranked 47th in five-year personal income growth. 

At the end of 2013, we again looked at the report card. “A Passing Grade” was the conclusion. Wisconsin had improved in every national ranking of business climate, but work remained to be done.

The preliminary full-year jobs data for 2014 shows another step forward. The ranking for monthly job growth moved up 16 spots — to 19th from 35th in 2011. The latest quarterly growth rankings showed similar improvement.

Although the trends are positive, challenges remain for Wisconsin. The aging of the workforce and historic brain drain of college graduates are long-term problems. Nearly 10,000 college graduates leave the state every year, reflecting in part a mismatch between UW programs and workforce needs.

Wisconsin is moving toward the head of the class. What seemed like an improbable goal of becoming a top 10 state is already true on some measures. It is within reach on others. Forward!

Tom Hefty is the retired head of Blue Cross-Blue Shield United of Wisconsin. This column represents his personal opinion.

 

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