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Monday, April 30, 2012

Tom Still: Amidst latest job loss figures, startup numbers offer reason for hope

By Tom Still
The latest job loss figures from the U.S. Bureau of Labor Statistics may have been just a snapshot in time, but it wasn't a pretty picture.

The feds reported this month that Wisconsin was the only state in the nation with "statistically significant" job losses between March 2011 and March 2012, a time span in which the state lost 6,100 private-sector jobs.

Yes, much of that loss took place in 2011. Yes, there was a noticeable uptick in private job creation in the first few months of 2012. Indeed, the state's unemployment rate is actually lower than it has been since 2008. All that aside, it's hard to paper over the news that Wisconsin had lost more jobs than 49 other states – at least for that particular stretch of time.

If there's a rainbow behind this cloud, it's that Wisconsin may be finally getting better at starting and retaining young companies. That's a trend that could turn job losses into gains in the coming years.

A string of recent reports suggest Wisconsin may be shedding its historic bottom-dweller status when it comes to company creation.

Wisconsin ranked 40th among the 50 states in the latest business startup index published by the Ewing Marion Kauffman Foundation, a national group that encourages entrepreneurial activity and education.

Kauffman's figures for 2011 showed 232 of every 100,000 Wisconsin adults started new businesses in each month of the year, compared with 180 out of 100,000 each month in 2010. The increase moved Wisconsin up from a second-to-last place tie with Pennsylvania that year.

While national rates of business start-ups were higher – led, as usual, by California and other West Coast states – Wisconsin's performance pulled it even with the Midwest average for the first time. In fact, Wisconsin was one of only two states in the region to show an increase in startups while bucking the national trend of an overall decrease of 5.9 percent.

State government figures show the number of new businesses formed in Wisconsin in the first quarter of 2012 increased by more than 12 percent compared to the same period in 2011. In fact, according to the state Department of Financial Institutions, business startups in Wisconsin have increased in 10 of the last 12 months.

An annual study by Boston's Suffolk University ranked Wisconsin 29th among the 50 states for its ability to incubate businesses, up from 43rd the previous year. Its overall competitiveness study ranked Wisconsin 22nd.

For a state that has bounced along the 50-state bottom for years, that's progress – even if it must be followed by more of the same.

The reasons for the uptick begin with people creating their own jobs rather than waiting for someone else to hire them. That's a byproduct of the recession and nagging unemployment. There are signs that women, who have historically been a major part of Wisconsin's hourly and salaried workforce, are now starting their own businesses at higher rates.

Another factor is less tangible but no less important: The rebirth of an entrepreneurial culture.

Only after the state began losing manufacturing jobs in the early 2000s did efforts get under way to build support and information systems for entrepreneurs – people who want to build new companies and opportunities for themselves and others. That corresponded with a rise in angel investing, from a reported $1.7 million in 2003 to $61.1 million last year.

That work is beginning to pay off. Some recent examples of success stories include Spill, a Madison online company that earned the $25,000 top prize in the Global Social Venture Competition in Boston, where it competed against about 600 other entries. Study Blue, also a Madison digital company, was featured in a recent Forbes story on seven startups that are changing how people learn. Offermation, a Milwaukee startup that offers an online advertising platform, became the first Wisconsin company selected for the SXSW Festival's Accelerator for Innovation in Austin, Texas.

A number of those innovative companies have been on display recently through events such as Startup Weekend Madison and the Wisconsin Innovation Network, or through recent business plan competitions on college campuses in Madison, Milwaukee and beyond. Some of the best of those contests will join the Governor's Business Plan Contest, which culminates June 5-6 at the 10th annual Wisconsin Entrepreneurs' Conference in Milwaukee.

As older companies shed jobs or fade away, newer firms and industries rise up to take their place. It won't fill the gap overnight, but those companies and the jobs they create can help put Wisconsin back on track.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Comments: 3

At April 30, 2012 at 10:19 AM, Anonymous Anonymous said...

You know when you can't find a job starting a new business becomes a good alternative. And since Wisconsin is the only State in the nation with significant job loss in the last 12 months this report shouldn't be surprising. A question for Mr. Still because I truly don't know, what tax breaks that Walker passed help start ups? And I mean really help them since I've heard in other places that the hoops to be jumped through are prohibitive.

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