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WCCF: To most casual observers, it would look like Wisconsin’s economy is doing okay. And yet there are some troubling trends you have talked about. For instance, the workforce is aging; younger, educated people have been fleeing the state, often to neighboring states where wages are higher; and consequently we don’t have an adequate supply of workers with the skills to do some of the most important jobs that are being created. How scared should we be about this?
We have an extraordinarily high number of people aging in the state of Wisconsin. Our population is around 30 percent baby boomers moving into retirement age, while the national average is about 26 percent. So we have a sizable portion of older residents. And we are a more white population than many places in the US, and birth rates are lower among Whites than minorities. So while these trends are not the kind of thing that make you want to jump off a wall, they make you want to look at what’s going on. We continue to generally be a commodity economy in the state, not a high-tech economy, and that’s been hurting us considerably, particularly with wages. WCCF: In addition to those problems you’ve just identified, we rank pretty far down among the states, something like 33rd in the nation, in terms of educational attainment past high school. What’s behind that fact? Is that a statewide phenomenon, or is it driven primarily by certain areas of the state? TL: Wisconsin actually ranks fairly high for high school graduation, but we do pretty poorly when it comes to degrees beyond high school. We rank about 29th in bachelor’s degrees and we rank about 36th in professional degrees. And a good deal of the reason doesn’t seem to be that we’re not graduating enough people from college, but rather that they seem to be drifting off to cities like Chicago and Minneapolis, where wages are higher and where the economy is more high-tech service oriented, the kind of things that are attractive to young college graduates. So that’s certainly an issue for us, and I think another issue that falls in line with that is that in general the productivity is found in the higher tech jobs, so our productivity in the state per worker is fairly low too. Productivity has to do with the output of product on a per dollar basis, and the fact is that high-tech things are more highly valued than low-tech commodities. So there are a number of those kinds of things that are creating a—well, the term “perfect storm” has been overused—but certainly making some issues that are facing Wisconsin fairly difficult, and we have to address them fairly soon. WCCF: So we’ve got this growing shortage of skilled, educated workers, and then meanwhile we’ve got this vast army of adults with an education of high school or less. From a public policy perspective, how do we address that disconnect between the good jobs and the people who need those good jobs? TL: The issue is not a supply side issue; in other words, it’s not a matter of making more college graduates. It’s making the state’s economy more attractive to college graduates. There seem to be a number of things that help states become more knowledge oriented, or technology oriented, if you will. Usually the states that have a high-tech kind of economy have a real dynamic metropolitan area. We don’t have a large, dynamic metropolitan area at this point in time. We used to have one in the Milwaukee area, but it’s been 50 or 60 years since that area has been dynamic. It hasn’t really grown for almost 50 years. Minneapolis-St. Paul, on the other hand, has got that kind of dynamic metro marketplace. So one of the things I think is important is to help ourselves identify an area that we want to push as our high-tech metro area, and it has to be big enough to carry the state. So that’s one issue. A couple other issues…it seems to me that Wisconsin doesn’t have the same kinds of availability of internet access for its population that they have in many other areas of the United States, and I think part of that again has to do with that dynamic metro area. Minneapolis-St. Paul happens to be the best-wired community in the United States. So those things kind of backfire on us. I think a third thing that has happened in Wisconsin over the last 50 years is that we’ve lost many of our corporate entities to other large places. The investment market has not favored Wisconsin; it’s favored those high-tech centers, and so some of the venture capital, the investment money has flown to those communities, and that’s where many of the corporate offices are now, not in the Wisconsin towns they used to be in. I think some of those issues are things that we could address, and I think we have to put those on the agenda. How do we make a dynamic metro? How to we increase the technology levels and internet use? Because that’s where commerce is being conducted today. How do we make ourselves a good marketplace for corporate structure? Some people would say that’s a tax issue, but it doesn’t appear to me to be a tax issue; it appears to be more a matter of having a really attractive metropolitan area. WCCF: So if I’m understanding you correctly, what you seem to be saying is that rather than thinking about how we churn out more bachelor degrees, we need to think about the kinds of economic development in some key metropolitan area or areas that would be attractive enough to get those young people who do have the skills and education to stay, which would in turn—meaning the presence of those individuals—make Wisconsin more attractive to the companies who are looking for a supply of those highly-skilled young workers. TL: That’s an excellent way to put it. I think that’s exactly it. And then on the other hand, the economy itself would make more of our young people flock to higher education, in my opinion. For instance, we have a tremendous disconnect in wage structure between females and males in Wisconsin. Females make very low wages compared to males. Part of that is our female population is higher educated and so they’re part of that group that’s leaving. Somehow we have to find a way to increase the education level of our male population, in particular our minority population. We do very poorly in our minority population education-wise in Wisconsin. WCCF: So how do we get this cycle going, getting the firms that remain in Wisconsin to pay an attractive wage, which will in turn get people to stay, which will in turn get more businesses to open shop here? What needs to change in terms of public policy? TL: First we have to identify a place in Wisconsin where this is likely to happen… WCCF: Can that realistically be anywhere other than Milwaukee, or maybe Madison? TL: Can’t even probably be Madison, unless Madison gets the kind of population density that large metros have. It would probably have to be the southeastern Wisconsin area, Racine-Kenosha-Milwaukee. That metro area, if you put it all together, that would be big enough to drive the kind of economy Minneapolis-St. Paul has. I don’t like to get into this, but let me mention one thing while we’re talking about it. Madison seems to be the favored community in Wisconsin. They get the university, they get the state workforce, they get all the things that make it a high-education workforce area, but it isn’t large enough to carry the rest of the state. In the Minnesota marketplace, Minneapolis-St. Paul is the site of the university and the capital and so forth, and it’s also the largest metro area, so they’ve got the perfect balance to make that happen. We don’t have that in a single community in Wisconsin. WCCF: What’s gonna happen? Where’s all this headed? It’s hard to tell. Economies find levels, and they move toward levels almost like hydraulics to some extent. I suspect one of the things that’s going to happen unless we get out of our commodity market is we’re going to continue to fall behind the rest of the United States in wage structure. That will be attractive to lower-skilled workers. And once we’re attractive to lower-skilled workers, we’ll be attractive to lower-skilled companies. So I think we have to bite the bullet and make our economy more knowledge-based. If we don’t, I think we’re in a downward spiral compared to other more dynamic places. That’s concerning to me, because Wisconsin has historically been one of the lead states, not a following states, and over the last 40 years or so we’ve been a following state. Unless we see a turnaround, I think that’s going to continue.
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