• WisBusiness

Monday, September 30, 2013

Tom Still: Creating more jobs in Wisconsin is more than a political flap; it's hard work


By Tom Still
As much as some Wisconsin politicians would like to blame their partisan opponents, the reasons why the state continues to lag the nation in job creation don't begin or end with the last election.

Trends set years and even decades ago have much more to do with why Wisconsin under-performs in the latest jobs count by the U.S. Bureau of Labor Statistics. That means the path to more job creation won't be traversed in a day-long hike, either.

Wisconsin gained 24,305 private-sector jobs in the 12 months from March 2012 to March 2013, according to the federal jobs count. That's a 1.1 percent increase that ranks Wisconsin 34th among the 50 states in the pace of job creation over that period. Wisconsin's latest ranking is little changed from the previous comparison (36th), which covered the period ending December 2012.

Wisconsin's job growth was higher in percentage terms than in Midwest states Ohio and Illinois, but lower than growth rates in Michigan (2.78 percent), Minnesota (2.13 percent), Indiana (1.44 percent) and Iowa (1.19 percent).

Assuming national issues such as interest rates, the advent of health-care reform and uncertainty in Washington and abroad affect all states more or less evenly, what are the factors holding Wisconsin back? Here are four possibilities:

* We're heavily invested in some low-growth sectors. The decline in manufacturing jobs in Wisconsin began in early 2000, when the state peaked out at 600,000 jobs, and stands at roughly 450,000 today. While the decline has been stemmed, and today's manufacturers are far more tech-savvy, it will take a while to regain lost ground. Agriculture is growing slowly for the time being, especially in jobs growth, although emerging world markets could change that. Tourism creates jobs – but most don't pay much.

* We're not heavily invested in all high-growth sectors. Federal predictions for job growth through 2018 are led by sectors such as health care; professional, scientific and technical services; software, Internet publishing and telecom; computer and information technology; life, physical and social science; business and financial operations; finance and insurance; arts and design; and architecture and engineering. Wisconsin has some distinct advantages in some of those sectors – but you wouldn't always know it by which ones get public policy attention.

* Demographics work against us. Wisconsin is aging slightly faster than most states, our proportion of adults with four-year degrees trails the U.S. average, and our workforce participation rate has declined. Employers need skilled workers, and it should be easier to find, train and retain them.

* We're not as "global" as some other states. Although export rates and foreign direct investment are increasing, many Wisconsin businesses have yet to seize the advantage of doing business in other countries, where consumption patterns and incomes are on the rise.

Given that mega-trends cannot be changed overnight, what are possible ways forward?

* Invest in Wisconsin's future. In many cases, that future is still embodied by manufacturing and agriculture, but it also includes other emerging clusters – information technology, health care technologies, water technologies and more. Wisconsin got off to an important but small start with the creation of a $25-million, privately matched "fund of funds" to invest in emerging companies, and there are other ideas emerging on how to push the growth of the state's "knowledge economy."

* Invest in people. One study after another links jobs and income growth to the availability of skilled workers. Not everyone needs to be a four-year college graduate, of course, but some kind of post-secondary education is vital today. Finding novel ways to commercialize academic research is critical, as company creation rates around major R&D campuses nationally has demonstrated.

* Think globally, act locally. Wisconsin companies offer products and intellectual property with enormous appeal in emerging economies and to foreign investors, but only if they know about them. Recent efforts by the Wisconsin Economic Development Corp. to increase the state's global footprint should be encouraged and expanded. (By the way, the state's dairy industry has long been a leader in globalization, as the upcoming World Dairy Expo in Madison attests.)

* Become more entrepreneurial. It's been slow coming, but the state's business culture is much more accepting today of entrepreneurs and startup companies. The critical mass of such companies and people in Madison, Milwaukee, the Chippewa Valley and elsewhere should be nurtured.

Trends that began long ago have crimped Wisconsin's ability to create companies and jobs, and other movements underway will help improve the state's standing. Just don't expect it to be resolved tomorrow by a shouting match between political opposites.

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

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