Wisconsin’s Unemployment RatesActual and Projected

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

4.3%

5.3%5.2%

4.5%4.3%

3.7% 3.6% 3.5%3.3%

3.1%3.4%

4.4%

5.3%5.6%

5.0%4.8% 4.7%

4.9% 5.0%

0.0830000000000001

0.0890000000000001

0.075

0.062

0.0510.047

0.042

Some Things You May Not Wish To Know About Wisconsin

• Wisconsin is a low wage state.

• Wisconsin has low productivity per worker.

• Wisconsin has a low post secondary educational attainment level.

• Wisconsin is growing slowly compared to U.S.

• Wisconsin is one of fastest aging states.

Wisconsin is a Low Wage State

• Our average wage is about $38,100 per job, per year.

• We rank 32nd in wages per job.

• The national average is about $44,600.

• Minnesota ranks 14th, at $44,400, Illinois ranks 8th at $47,700.– In the late 1970s we had higher wages than Minnesota.

Wisconsin is a Low Productivity State

• Gross State Product (GSP) per job was $80,731 in 2006.

• National average GSP was $98,032.• Connecticut with the highest was $141,144.• Wisconsin ranked 42nd in productivity per job.• If Wisconsin was at the national average, we would

increase our Gross State Product by $50 billion. That’s $9,300 per person in the state!

Wisconsin’s Post-Secondary Educational Level Is Not High

• We rank 31st in post secondary educational attainment.

• We rank 30th in baccalaureate level degrees.• We rank 36th in masters or higher attainment.• We rank 9th in associate’s degrees.• We rank 11th in students majoring in science and

engineering per population. 44th in science and engineering majors in work force.

Wisconsin is a Slow Growing State

• We rank 30th in growth.

• Natural growth is particularly slow, in migration growth is not fast.

• Our growth is about 60 percent as fast as the United States, at large.

• Our present growth is likely to slow.

Wisconsin is Aging Rapidly

• The state’s baby-boom cohort is unusually large.

• Almost 31 percent of Wisconsin’s population are baby-boomers, decreasing, but slowly.

• Nationally, about 27 percent of population are baby-boomers, but decreasing rapidly.

The Demand SideOf the Labor Equation

• Three factors affecting the demand for workers:

1. The number of jobs has continued to grow, until now;

2. The demand for replacement workers is expanding;

3. The aging population needs more and more services.

Wisconsin Nonfarm Wage and Salary Jobs Until Now Have

Continued to GrowNonfarm Jobs

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

2008 -

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Wisconsin Nonfarm Wage & Salary Jobs

• Although we have been adding an average of 36,000 jobs per year, that growth will stop for the next few years. There will likely be a loss in total jobs in 2009 and again in 2010.

• There will be a few industries that will not be hit as hard as others, particularly health care.

• “Smart companies” will find ways to hold on to “smart workers”.

• Watch the economic recovery plans!

Wisconsin ResidentsTurning 65 Years Old

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

20202021

20222023

20242025

20262027

20282029

20300

10000

20000

30000

40000

50000

60000

70000

80000

90000

Wisconsin ResidentsTurning 65 Years Old

• We don’t know how the wealth effect will play out in retirement plans.

• Workers have been retiring earlier than 65, but plans will change somewhat.

• Older workers who lose their jobs may not return to the job market, but older workers who don’t lose their jobs will likely stay on longer.

Demand Is StrongestWhere Supply Is Weakest

1. Much of the older population lives in more remote areas.

2. Much of the tourist industry is in remote areas.

3. Manufacturing in Wisconsin tends to be in rural areas.

The Supply SideOf the Labor Equation

Five Factors Affecting Supply of Workers:

1. The number of entry level workers is diminishing;

2. There will be little increase from increased female participation;

3. There is a sizeable commuting net loss;

4. The brain drain is real;

5. Wisconsin is low in net gain from migration.

Wisconsin Births1940 to Present

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

55000

82300

97200

7720072500 72300

69289

United States Births1940 to Present

1940

1942

1944

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2559000

3632000

4257850

37313863612258

4179000

4058814

Female Labor Force Participation

• Wisconsin is at the top or very nearly at the top of states per female labor force participation rates.

• Approximately 72% of females 16 years old and older participate in the labor force in Wisconsin.

• Approximately 65% of females 16 years old and older participate in the labor force in U.S.

Wisconsin has a strongly negative state-to-state commuting ratio

• Approximately 120,000 workers along Wisconsin borders cross state lines to work.

• 100,000 or those workers live in Wisconsin and leave the state to work. About 20,000 live in neighboring states and come into Wisconsin for work.

• Wisconsin borders Illinois, Iowa, Michigan and Minnesota. The ratio is positive only for Iowa.

The Legendary Brain Drain is RealIndiana Fiscal Policy Institute

Net Migration

Indiana Illinois Michigan Ohio Wisconsin Kentucky North Carolina U. S. Average

67.3%

122.4%

99.4%

85.9%

75.9%

112.0%

103.1%98.2%

The Legendary Brain Drain is RealIndiana Fiscal Policy Institute

Retention

Indiana Illinois Michigan Ohio Wisconsin Kentucky North Carolina U. S. Average

57.8%

81.6%79.6%

74.8%

61.6%

80.2%

69.1%71.3%

The Legendary Brain Drain is RealMinneapolis Federal Reserve

States 1989 College Graduates

1999 College Graduates

Ad’l College Graduates 1989 to 1999

Additional Graduates From State

Gain/Loss

Minnesota 577,920 953,920 376,000 234,945 141,055

Montana 106,977 134,160 27,183 42,976 (15,793)

North Dakota 89,244 89,200 (44) 45,072 (45,116)

South Dakota 79,672 110,848 31,176 40,669 (9,493)

Wisconsin 571,725 790,600 218,875 269,647 (50,772)

Minn Fed Res District

1,425,538 2,078,728 653,190 633,309 19,881

MSAs That Attract College Graduates

City City

1. Atlanta 9. San Diego

2. Denver 10.Houston

3. San Francisco 11.Chicago

4. Seattle 12. Los Angeles

5. Dallas 13.Tampa

6. Phoenix 14.Miami

7. Minneapolis 15. New York

8. Washington, D.C. 16.Boston

Migration Into Wisconsin Has Lagged

• Approximately 12 percent of United States resident population is foreign-born. Highest level since 1920s.

• Approximately 4.2 percent of Wisconsin resident population is foreign-born.

• Some in migration from neighboring states, i.e. Illinois and Minnesota. (Kenosha and Walworth, and St. Croix and Pierce counties)

A Word of Caution• The economy is transitioning from traditional to

new.

• Recessions speed transitions

• Economies will continue to be transformed!

• It is a major mistake when economic development officials ignore or dismiss the structural changes that are being generated by the New Economy.

What is the New Economy?

• The New Economy is knowledge driven.• The New Economy is global.• The New Economy is entrepreneurial.• The New Economy is rooted in information

technology.• The New Economy is defined by innovation.• The New Economy is volatile.

What is Knowledge Activity?

• The intangible ability to use existing facts and understandings to generate new ideas.

• Knowledge is embedded in the education, experience, and ingenuity of the wielder of knowledge.

• Knowledge is the ability to use what you have learned.

• Knowledge is the value-added component of the market.

New and Old EconomiesIssue Old New

Markets Stable Dynamic

Scope of competition National Global

Organizational form Hierarchical Networked

Production system Mass production Flexible production

Key factor of production Capital/labor Innovation/ideas

Key technology driver Mechanization Digitization

Competitive advantage Economies of scale Innovation/quality

Relations between firms Go it alone Collaborative

Skills Job-specific Broad and changing

Workforce Organization Man “Intrapreneur”

Nature of employment Secure Risky

State New Economy Index Kauffman Foundation

Knowledge, Productivity, & Income

• Although education is the great predictor of wages and income, the real cause is productivity.

• Knowledge, by enabling innovation and creativity, provides the mystic value-added to the product or service. Knowledge supercharges goods and services.

• Find states with high educational attainment and you’ll usually find high productivity and high wages.

Wages, Education, KnowledgeKnowledge Rich Economies Wage Rich Economies Education Rich States

Alaska

California California California

Colorado Colorado Colorado

Connecticut Connecticut Connecticut

Delaware Delaware

District of Columbia District of Columbia District of Columbia

Illinois Illinois

Kansas

Maryland Maryland Maryland

Massachusetts Massachusetts Massachusetts

Michigan

Minnesota Minnesota Minnesota

New Hampshire New Hampshire New Hampshire

New Jersey New Jersey New Jersey

New York New York New York

Rhode Island

Utah

Vermont

Virginia Virginia Virginia

Washington Washington Washington

Productivity Comparisons

• The top 12 states averaged $118,530 in GSP per job in 2006.

• The bottom 20 states averaged $80,254. That’s a difference of $38,276 per job!

• Had the bottom 20 states matched the national average, they would have generated an additional $17,777 per job.

• That’s $29.4 billion per state!

MSAs That Attract College Graduates

City City

Atlanta San Diego

Denver Houston

San Francisco Chicago

Seattle Los Angeles

Dallas Tampa

Phoenix Miami

Minneapolis New York

Washington, D.C. Boston

Super MetrosMetroArea

2007Population

Percent Growth

Las Vegas, NV 1,836,333 31.8%

Raleigh, NC 1,047,629 30.2%

Phoenix, AZ 4,179,427 27.5%

Austin, TX 1,598,161 26.3%

Riverside, CA 4,081,371 24.5%

Atlanta, GA 5,278,904 23.3%

Charlotte, NC 1,651,568 23.2%

Orlando, FL 2,032,496 22.7%

Houston, TX 5,628,101 18.7%

Dallas, TX 6,145,037 18.2%

Mid-size Dynamic MetrosMetroArea

2007Population

Percent Change

Greeley, CO 243,750 33.2%

Cape Coral, FL 590,564 33.0%

Provo, UT 493,306 29.8%

Myrtle Beach, SC 249,925 22.1%

Boise City, ID 587,689 25.3%

Ocala, FL 324,857 24.8%

Port Lucie, FL 400,121 24.8%

Fayetteville, AK 435,714 24.6%

Naples, FL 315,839 24.3%

McAllen, TX 710,514 23.9%

Wilmington, NC 339,511 23.1%

Laredo, TX 233,152 19.8%

Bakersfield, CA 790,710 19.2%

Smaller Dynamic MetrosMetroArea

2007 Population Percent Change

Palm Coast, FL 88,397 74.8%

St. George, UT 133,791 46.6%

Bend, OR 154,028 32.1%

Gainesville, GA 180,715 27.9%

Prescott, AZ 212,635 25.9%

Lake Havasu City, AZ 194,944 24.8%

Coeur d’Alene, ID 134,442 22.7%

Sioux Falls, SD 227,171 20.6%

A Transition,Economic to Demographic

• A global economy, where markets transcend and ignore national borders, diminishes and erodes the power and influence of the nation state.

• Nations and states have two choices;1. A broad distribution of education and wealth, or2. A broad distribution of ignorance and poverty.

• Minority populations, which are not wholly participating in the New Economy, will cost states somewhere down the line.

The “New Economy”Characterized by:• Knowledge activity;

1. Innovative2. Creative3. Adaptive4. Collaborative5. Technology based

• Global markets;• Instant communication;• Volatility;• Lessened government influence.