- All right. And so here we are again at the VILAS Vision Leadership, and I wanna introduce now our next speaker is Mr. Matt Kures. I wanted the best to talk about demographics in Vilas County, the very best; and so, with UW-Extension, the community development specialist, as you can see, at the Center for Community and Economic Development in Madison, Mr. Matt Kures. Welcome, Matt. It's good to see you, bud. - Thank you, Chris. Good afternoon, everyone. It's a pleasure to be with you all today. I believe this is my third or fourth time speaking to this group, and it's always fun to come up and share with you some of the information we have. As Chris noted, I'm a community development specialist with the University of Wisconsin-Extension, and I work on all sorts of community and economic development issues across the state of Wisconsin, but one of the things I do is spend a lot of time looking at demographic and economic data. 

And I think economic data and demographic data can be challenging a lot of times for people to understand. Sometimes it's like drinking out of a fire hose. For someone who does this on a daily basis, I feel that way myself sometimes. But community data, and economic data, and demographic data is really useful for understanding your community, and we use it in a lot of ways. And, hopefully, one of the things we'll get out of today is that we can use it to stimulate discussion. And later on we'll have an opportunity to discuss all this information and understand what it might mean for Vilas County moving forward. We can also maybe affirm or challenge some perceptions we may have about our community, especially for people that are new to a community or maybe are long-time residents. They may have this perception that a community is different from how it really is. And numbers and graphs and charts and maps can help us maybe challenge some of those perceptions. We can also identify some, perhaps, local strengths and weaknesses we may have, and these may be assets or challenges we may have to face moving forward that can help us grow our economy and improve our quality of life. 

And, importantly, I think one of the big themes that we'll talk about today is that this information can help us recognize and prepare for change, because change is coming. We may not always see it in our communities, but change is always there. And, as we look at this information today, I would challenge you to not get too hung up on precision. We're trying to look at broad patterns in the data that might provide direction for us moving forward, so we might not want to say, "It's .1, or .2," or the decimal may be a bit different, but we're trying to look at overall trends we see in the information.  So, let's start looking at population growth. This is probably one of the most basic ways that we can look at change in our communities. And we can start by looking at population change in the United States and the state of Wisconsin over about a 25-year period, from 1970 to 2014. And here we can see population growth in the United States has been pretty steady over this period. We can also see that the United States has outgrown the state of Wisconsin by a fair amount, and this amount's been greatening, the pace has been greatening over the last 10 to 15 years or so. Here's population change in Vilas County. 

 We can see that Vilas County's population growth on a percentage basis was much faster throughout the 1970s, the 1980s, and the 1990s. More recently, however, we see that population growth has plateaued and has actually declined a bit, really, moving from about 2005 to about 2014. We see a slight uptick recently; but, for the most part, we've plateaued quite a bit in terms of our population change. And I want to focus on this period here from about 2000 to 2014, because I think it shows a big shift in how Vilas County is changing. So, if we look at Vilas County over this period from 2014, or 2000-2014, we can see that it grew by about 2.6%. The state of Wisconsin grew by about 7.3% over this same period, so slightly slower in Vilas County than the state of Wisconsin. I also think it's useful to compare how Vilas grew relative to many of our neighboring counties. And we can actually see that Vilas County, despite the recent dip in population growth, it outgrew all of its neighboring counties and outgrew some counties by a fairly significant amount. If we look at places like Price County and Vilas County, there's dramatic differences there. And, if we look at the bigger picture, we look at percent change by county across the entire continental United States over this same period, we can see that northern Wisconsin in general, most counties lost population over this period, with the exception of places like Vilas, like places like Sawyer, places like Bayfield County. 

But, if we look at this map, we can see a broader pattern of how population changes across the United States. And it may not jump out at you right away, but one of the things we see is that, if we look at those areas that have grown the most on a percentage basis, those areas that tend to be tan to dark red, there's something in common with a lot of those places. For the most part, those places tend to be metropolitan areas or large metropolitan areas, especially in the counties that ring large metropolitan areas. So, we can see the ring around Cook County in Chicago. We can see the ring around the Minneapolis suburbs. We can see the Bay Area in California. We can see areas in Texas around Dallas and San Antonio and Austin and Houston and so up and down the Eastern Seaboard as well. And this has a big implication for how population changes in rural areas, because a lot of the population growth that we're seeing is not in rural areas. In fact, we're seeing depopulation in a lot of rural places, especially throughout the Great Plains and so-called Rust Belt in the Upper Midwest.  So, I think, to make another comparison for Vilas County is to use something called, "rural-urban continuum codes." And what these codes do is break all 3,000-plus counties in the United States into one of nine different codes. 

And these codes look at how urban or rural a county may be and how close they may be to a metropolitan area. So, codes 1-3 are all the counties that are in metropolitan areas in the United States. So, we see codes of 1 are counties in very large metropolitan areas, metropolitan areas of a million people or more. The 2 are mid-sized metro areas and the 3 are smaller, metropolitan areas or those that have fewer than 250,000 people. Codes 4-6, or 4-9, excuse me,  are those that are non-metro in nature, and some may have some sort of urban population in them and some may have very little urban population whatsoever. And, if we look at the state of Wisconsin, we can see the distribution of these different rural and urban continuum codes by county. We see our metro counties, the 1s, 2s, and 3s. We have seven counties in the state of Wisconsin that are in a metropolitan area of a million or more. Those are primarily in the Milwaukee area, as well as those that are adjacent to the Minneapolis St. Paul metro area, as well as Kenosha, which is part of the Chicago metro area. We see our 2s, our mid-size metro areas, which are primarily the counties in and around Dane, as well as those in and around Green Bay. 

And, finally, we have our 3s, which tend to be our smaller metro areas: places like LaCrosse, places like Fond du Lac, places like Appleton in the Fox River Valley, places like Janesville in Rock County, and so on and so forth. So, here are non-metro counties.  Here are our 4, 5, 6, and 7s. We actually have no counties that are classified as a 5, so that's why you do not see that on the map. And those tend to be scattered throughout all parts of the state.  Here are our 8s and 9s, and those might be a little bit hard to see, but Vilas County would be classified as a 9, and its neighboring counties, with the exception of Oneida, would be classified as a 9 as well. And this is important because, when we look at a lot of the demographics that we see in Vilas, we certainly see differences between Vilas and our neighboring counties, but we also see a lot of similarities as well.  If we look at how population has changed across the United States in each one of these rural-urban continuum codes from 1 all the way up to 9, we see the strongest population growth rates in our metropolitan areas, especially in our large and mid-sized metropolitan areas. If we look at the average growth in some of our more rural places, places like codes of 7, 8, and 9, which is Vilas, we see very little population growth, but population loss. So, when we compare Vilas to other counties that have a rural-urban continuum code of 9, we can already see that Vilas is doing better over this period. 

It grew by 2.5%, compared to the average loss of -2.5%.  If we look at how Wisconsin grew over this period by each one of these codes, we can see that our mid-sized metro areas grew about at the same pace as the United States average; but, for the most part, with a few exceptions, our other areas tended to lag in terms of their population growth. We can also see that our other counties that have a RUCC of 9 actually declined at a rate faster than Vilas County. So, in some ways, Vilas County is a bit of an outlier, and this distribution that you see here also has implications for the entire state of Wisconsin. If you look at how these population changes come out in terms of how population's distributed across the United States and the state of Wisconsin, we can see that in the United States, 55% of all people live in a metro area of a million people or more; in the state of Wisconsin, only 32.4%.  We have a smaller share in our mid-sized metro areas as well. We have a higher share in our smaller metro areas, but we can also see that we have a slightly higher share in some of our more rural areas as well. And what this means is that, in terms of economic development and community development, our rural areas in some ways are more important to the health and growth of our state's economy than in other places, simply because we do not have that large, dynamic metropolitan component that a lot of other states can rely upon.  So, let's look at this in a little more detail. When we think about population change, we can break it down into two different components. 

We can break it down into what's called "natural increase," which is births minus deaths. If you have more people being born than dying, you have a positive natural increase. If you have more people dying than being born, you have a negative natural increase. We can also break it down into net migration, which is people moving into and out of the county. When you have more people moving into the county than out, you have a positive net migration. When you have more people moving out than in, you have a negative net migration. So, this is basically the same period, 2000-2015 in this instance, which is really January 1, 2015; so, it's really not that different from the period we saw before. Here's the percentage growth rate based on natural increase in each area: 6.6% in the state of Wisconsin, - 5.3% in Vilas County. And, with the exception of Ashland County, we see negative natural growth rates, or natural increases, in our surrounding counties as well. So, if Vilas County grew by 2.5% over this period, but had a negative natural increase of 5.3%, that must mean that people are moving in from other places. 

So, here's our net migration: 8% over this period, more people moving into than out of Vilas County. Oneida County in the state of Wisconsin also had a positive net migration; but, if you look at a lot of the other counties, especially those that have that RUCC of 9, they also have negative net migration as well. So, not only are they losing population to natural increase, or lack thereof, they're also losing people because they're moving out of these places and not being replaced by other members moving in. So, net migration is a huge source of population growth for Vilas County and has been for some time. So, one of the things we noticed, however, is that when we looked at that, that bigger chart of population trends that went all the way back to 1970, we saw that between 2000 and 2014 we saw population increases early on in that part of the decade; but, really, from about 2005, 2006, we saw populations start to stagnate and decline. And this has been reflected in the net migration trends that we see in Vilas County. So, here we're looking at blue bars, which are the number of people moving into Vilas County on a given year, or given two-year period, actually. And you can see that the number of people moving into Vilas County started to increase in the early part of the 2000s, leveled off a bit, and then really started to decline with the start of the Great Recession. We see that dotted line there, starting with 2011 and 2012. There's a change in how this data set is produced, so we can't really compare these apples to apples; but, nonetheless, they can kind of show us some broad trends that are occurring for those periods after 2011. 

Here are the people moving out of Vilas County. So, when you have a difference between in and out, you have positive net migration. The bigger the difference, the more the net migration that you see. And certainly you see in those periods: in 2006-2007, 2007-2008, and so on and so forth, those differences declined quite a bit. So, you had very little net migration occurring here, and that's one of the reasons that you saw population growth start to decline and flatten out over this period. The good news is that we start to see those differences between in-migration and out-migration change quite a bit again; so, we're seeing higher levels of net migration with the recovery going on since the Great Recession.  So, we can look at how population has changed in a broad sense, but it's also interesting to look at how population has changed in terms of the characteristics of the people living here as well. And I think one of the ones that's, the characteristics that's really important for Vilas County is age. If we look at how Vilas County differs from the state of Wisconsin and the United States, we can see some distinct variations in terms of the population here versus the population in other places. First, let's look at the younger population. 

If we start with people age under five and going up to people age 25-34, we can see that for each of these age groups, Vilas County had a smaller share of the population of its residents than the state and national averages. And I'm using the year 2010 here because it's a census year and it's a good place to do a benchmark.  If we move forward, we also see that if we look at people age 45-54 and 55-64, we have a higher share of residents of that age group as well, compared to the state and national average. But some of the biggest differences we see are among the population age 65 and older. This probably isn't a surprise to anyone in this room, but I think it's important to point out because this distribution that we see in terms of age 65 and over, as well as the distribution we see in the 45-54 age group and 55-64 age group, will have huge implications moving forward.  So, if we look at the distribution of that population age 65 and over, the darker the red, the higher the share, the lighter the pink, the lower the share, we see that throughout Vilas County most census tracts have about one-quarter of their population age 65 and over. And we see this across the entire northern tier of counties in the state of Wisconsin. And this distribution also contributes to Vilas County being in the top 20% for median age among all US counties, in the top quintile of all counties in the United States in terms of its median age. So, a lot of the information that we're looking at today in terms of age will certainly have implications here, but will also have implications in other places that will provide challenges because a lot of these other counties are going to be in competition for many of the same assets and opportunities that you're trying to build here.  So, we know Vilas County's a bit older, and we've known it's always been a little bit older, but what does this mean going forward? Let's look at how the 2010 census numbers compare to 2030 projections from the Wisconsin Department of Administration. 

So, here we can look at those differences again. And we saw in 2010 that Vilas County had a lower share of residents of these age groups. Well, that share will become even smaller in the next 15 years, or it's projected to, anyway. These are, again, just projections; they're not necessarily set in stone.  We can also see that the share of the population age 65 and over is expected to increase fairly significantly as well: age 65-74 jumping from 14.6% to 19.7%; age 75-84 going from 8.4% to 12.7%; and then age 85 or more going from 2.9% to 4.4%.  So, this has all sorts of implications for our communities. It has implications for things like healthcare. It has implications for things like transportation, school funding, school enrollment, how we build our homes, how we make sure that we have elderly-friendly homes for people to reside in. But one of the biggest implications it may have is on our workforce. So, if you look at these two age groups here at the top, the age 25-54 and age 15-64, these tend to be working age populations, so these tend to be populations that have the highest propensity for being in the labor force. 

And we can see that in 2010, the prime working age population of 25-54 was at 34.1%. That's expected to drop to 27.8%. Age 15-64, which is the broader working age population, from about 60% down to 50%. So, the challenge is, how do employers find employees that they're gonna need moving forward to fill positions as well as grow?  One way to look at that is to project the number of people entering the labor force and exiting the labor force. And, by proxy, we're using age 18 and age 65, age 18 as entry to labor force and age 65 as exit to the labor force. We can certainly have people that work a lot longer than age 65 or have people that enter the labor force early on, but this is just one easy way to look at it.  So, this is the number of people turning age 18 in any given five-year period, starting from 2010 going out to the year 2040. This is the number of people turning age 65. So, we can see that the number of people turning age 18 is projected to remain fairly level; but, by about 2025 or so, even by 2020, the number of people entering the labor force is about half that of people potentially exiting the labor force. And, again, this is not unique to Vilas County, and this is important, because we'll talk about the importance of working regionally later on. 

But, if we look at northern Wisconsin, right now we see a higher percentage of people age 65 and over in the year 2010; if we go out to the year 2040, there will be 27 counties in the state of Wisconsin, 27 of the state's 72 counties, that have 30% of their population age 65 and over, and most of those are here in northern Wisconsin and are your neighboring counties.  One final way to look at this is to look at the number of people age 65 and over for every 100 residents of working age population, and this is broken down by the state's rural-urban continuum codes.  So, in 2010, we can see that, certainly the more rural counties tend to have a higher share of people age 65 and over for their 100 working age population residents; but, again, that difference is gonna get even bigger. And, again, because you're classified as a 9, and most of your neighboring counties are classified as a 9, they're in the same boat in a lot of ways.  The reality, though, is that if we look at the population that's approaching retirement, it's not going to affect all counties, or all, excuse me, all industries quite the same. This looks at the share of population age 55 and over within different industry sectors in Vilas County and compares it to the state average. So, we can see that for almost every single industry sector that we have here in Vilas County, there's a higher share of workers age 55 and over than the state average. But, some are even more pronounced. We see industries like information, trade/transportation/utilities, which includes retail, has a higher share than the state average, manufacturing, education, and so on down the line. But some industries are bigger than others. 

They employ more people than in trade/transportation/utilities, for instance, than we see in information, which tends to be a smaller industry sector here. So, here we can also look at the raw number of workers, or the gross number of workers, that are age 55 and over and are, perhaps, approaching retirement in the next 10 years or so. And, again, we see the greatest number in trade/transportation/utilities, leisure and hospitality, public administration, and education. We also see a fairly notable number in healthcare, and that's going to be very important, because moving forward, that's gonna be an industry that's probably going to have even greater demands placed upon it because of the aging population.  And there's a lot of things that we can do as a community and as a region to help address some of these issues, but a lot of it depends upon economic development organizations and workforce development organizations working hand-in-hand. And traditionally, those two groups have not always worked very well together, and there's many reasons for that: they have different funding sources; they have different goals; they tend to be housed in different places. But, more and more, these types of groups are working hand-in-hand because when you ask a lot of economic development professionals what their number one issue is, it's workforce. And that's only going to continue to grow over the coming decades. So, a lot of organizations and stakeholders can be a part of this process and help find solutions to that. And there's all sorts of solutions that we can come up with: working on things like flexible schedules, things like capital improvement funds, which may help an industry or an establishment buy new equipment that may make it more efficient. 

They may reduce the need for workers. In a lot of ways that sounds kind of ridiculous, that we're trying to replace workers, but in some ways it's better to help that industry find ways to stay in business and stay local than moving somewhere else where they can find the labor that they need. Telecommuting and a lot of other things we can look into. One of the things I want to focus on today, though, is talent attraction and retention. How can we bring more residents and more workers to our community?  And we talked a little bit about net migration, or people moving into or out of Vilas County, but we can break this down a little bit more and look at how people are moving into the county and out of the county by different ages. So, here we have age groups on the bottom of the graph, and here we're using a net migration rate. So, if you're above this black line, you have a higher share of residents of that age group moving into Vilas County than out. And, if you're below the black line, you have a higher share of residents of that age group moving out of Vilas County than into Vilas County. So, here the migration signature for the most recent decade, 2000-2010, that we have information for, and you see a distinct pattern here. You see positive migration rates among young residents. 

You see negative migration rates among teenagers and people in their early 20s. Then, again, you see positive net migration rates through most of the older age groups going across the board, so people in their early 30s, mid-30s, 40s, 50s, until we get to the oldest age group we have data for, age 75 and over.  Here are the 1990s and the 1980s, and one thing you'll notice is that these patterns are very similar over time. The rates may differ a little bit, but the overall signature is very, very similar across these three decades. And that's important because it's hard to change migration patterns. They're often rooted in place and there's not a lot that we can do to influence these in some ways. And a lot of people look at this migration signature and they get pretty beat up by the fact that we're losing young people: the 15-19-year-olds, the 20-24-year-olds, the 25-29-year-olds, but in some ways, I don't think that's necessarily always a bad thing. These are folks that might be going off and going to college, going getting job training, going getting life experiences. So, essentially you're paying, or someone else is paying, for them to do that workforce development. The hope is, is that when they're done with that, they come back. 

And you do see those positive net migration rates among those older age groups that tend to be in the family formation years, their early 30s, tend to be finding a place that they're less likely to move from. And you also see that with those positive net migration rates of young residents, they might be bringing their children with them. So, when you think about what brings people of that age group to a community, you have to think about what's important to those folks, and you have to build upon those assets, because those are one of the drivers, one of the factors, the quality of life, that bring people to a community. We also see that, we see net in-migration with these older age groups, and a lot of these are, obviously, retirees, so they're also coming here for one reason or another. They're coming here because natural beauty, lake access, other types of natural amenities that they have access to. So, again, that's an important component for future population growth as well.  And, when we look at what brings people to a community, of all age groups, a lot of it has to do with quality of life. Quality of life, I think, is becoming more and more important as a driver of where people decide where they want to live. As we see our state grow older and the Midwest grow older, there's gonna be higher demand for labor across all sorts of portions of our economy, and more and more people may be able to be choosy in terms of where they want to live. And they may be able to look at some of these factors in terms of what makes one community more desirable than another. 

And we can look at how housing stock might influence that. And we can look at leisure, other types of amenities that might be important to a resident, the school system, and higher educational system, and so on and so forth. What's life at home for children and families? Is there childcare available? Is there healthcare available?  We can also think about other things, like access to natural environment and the quality of the natural environment. And we look at retiree migration. That's a big component here. Life Together and Civics and Diversity. So, do we have diversity? Do we have volunteerism? What's our civic culture like? Public safety? Life on the road? And so on and so forth. All these things matter to people. They may matter differently to different people, but they're all important to people deciding where they want to live.  And when, I think, you look at some of the assets that you have in Vilas County, probably one of the biggest assets that you all know, and it's not a surprise to you, is your natural amenities that you have here: the lakes, the trees, the other types of recreational opportunities you have here. 

And one proxy for measuring that is to look at seasonal and recreational housing units. And here you'll see that these dark red areas have at least 40% of their housing units designated as seasonal and recreational. And you can see that, no big surprise, those tend to be concentrated in places like the northern part of Wisconsin, and northern Minnesota, the UP, the upper part of the Lower Peninsula of Michigan, and then in high amenity areas in the West like the Colorado Front Range, places around Grand Teton National Park, and on and on and on across the country. But, again, these are qualities that bring people to communities.  And here in Vilas County you can see, if we look at the census track level, very highly concentrated in terms of seasonal and recreational homes. And, in fact, Vilas County is in the top 100 counties in the entire country in terms of the number of seasonal and recreational homes it has. That also creates tensions in some ways; but, at the same time, it is an asset that's here in northern Wisconsin.  The other thing to think about is generational differences. If we look at the Millennials, those that are individuals that are basically born after about 1980, we're seeing some potential differences in terms of what they want at a certain life stage versus what the Gen Xers wanted before them, what the Baby Boomers wanted before them, and what the Greatest or Silent Generation, whatever term you want to use, wanted before them at this life stage. It's hard to differentiate in terms of what the Millennials actually want because we're seeing challenges related to the economic recovery based on the recession. 

So, we don't know if some of these differences that we're seeing now in terms of housing preference, in terms of working preferences, are due to the economy or due to broader differences in terms of what this generation wants, but I think it's worth considering some of the ways that this generation is different from previous generations. And I think when you do these types of leadership groups and other types of community meetings, this is an important age group to be engaging as well.  Finally, let's talk a little bit about geography and cultural ties as well.  This looks at the percent of the population age 25 and over with a college degree. And one of the things you'll notice is that, if you look at the areas that have the highest share of residents with a college degree, they look a lot like that map I showed you of population change early on. The areas that tend to have the highest concentrations of college graduates are also those areas that tend to be large metropolitan area that are growing. So, we see places like the Minneapolis-St. Paul metro area. We see the Chicago metro area. We see the Denver metro area, Seattle, Bay Area. We can go all the way across the country and see where these concentrations are. 

 But, one of the things you'll notice is that, when you look at the share of residents in each of these areas that were also born in that state, if you look at a lot of those metropolitan areas, you see a very low share of residents that were also born in their current state of residence that have a college degree. So, in the Bay Area, you see a low share of college graduates that are also from California. In places like Seattle, you see a very low share of college graduates that are also from the state of Washington and so on across the country. One of the things you do see in the Midwest is that we have a high, very high share of our college graduates that were also born in the state where they currently live. And in Wisconsin we have one of the highest share of our residents overall, regardless of college degrees, that were also born here, which means they either stayed here or they went somewhere else and came back. And it's also true with our college graduates. So, for one reason or another, we tend to be what's called a "sticky" state. We tend to either retain people or we tend to bring them back somehow. So, if you're trying to attract folks to your community, instead of trying to attract them from some other place in the country, you're probably gonna have a better chance of attracting them if they have some sort of tie or some sort of connection here early on. And I think when you look at things like the tourism economy, this is particularly important for making this connection with people, because whether or not they were born in Vilas County or northern Wisconsin, if you could bring them here and build that connection, that's gonna last a lifetime. 

 So, certainly, quality of life and all these other factors are important to attracting and retaining individuals to a community, but we also have to have economic opportunity. That's a given. So, right now we can look at the share of different industries in terms of their employment and how they contribute to the overall employment base in Vilas County, and we compare that to the state of Wisconsin. So, the highest share of jobs that we see in Vilas County are in accommodation and food services; they're in public administration, retail trades, arts, entertainment, and recreation, and healthcare and social assistance. If we compare that to the state average, we can see we have much higher share of jobs in those top three industries, especially accommodation/food services, retail trade, and arts/entertainment/recreation, very, very tied to the tourism economy, obviously. We see much lower shares in things like manufacturing, like subsectors like professional business services, finance/insurance, transportation/warehousing, and so on and so forth.  And one of the, the things that we see because of this distribution of employment, especially in those tourism-related industries, is that we see much more variability in terms of our unemployment. So, here are our monthly unemployment rates, going back to January 1990, going forward to the end of 2014, and we can certainly see how unemployment tends to spike in the later parts of the year and the early parts of the year. It comes down in the second quarter; really comes down in the third quarter, then tends to go back up. Here's the state of Wisconsin. 

 And the United States average. So, we certainly see that variability in other places as well, but we do not see those big spikes that we see here. So, in terms of economic opportunity, that certainly creates opportunities during the peak seasons of the year, but creates a lot of challenges during the off-seasons of the year as well. We can also see the overall trend in terms of how unemployment rates have changed. Starting in the 1990s, going up to 2014, we see that big increase around 2007-2008. Obviously, that's the impact of the Great Recession. We've seen it come down a bit, but we haven't seen it come down quite as fast as the state and national average.  The other influence we see of the seasonal recreational economy is in terms of its impact on average wages. So, this is annual average wage and salary from 1970-2014. This has been adjusted so all the dollars are in the year 2014 dollars. 

We can see Vilas County is about $30,000 per year, and that's been somewhat stagnant over the last decade or so in terms of average annual wages. We do see that it's lower than the state average and the US average, but we also see that wages have stagnated in those two places a bit as well.  And, while this is certainly a big contributor to income in the economy, we'll see that this is not the only source of income as well, and that's an important consideration.  So, as I mentioned, we saw unemployment rates start to decline since the end of the Great Recession, but they've not come down quite as bit as the state average and the national average. This looks at change in wage and salary employment from 1990 to 2014. This is the percent change from 1990, much like we looked at the percent change for population on one of the very first charts we looked at. We can see that employment has come down quite a bit since the start of the Great Recession, has rebounded somewhat, but is still well below the peak employment that we had in about 2005, whereas the state of Wisconsin and the United States have pretty much recovered in terms of their total employment since the Great Recession. And, if you look at employment change, if you look a bit closer at that 2000-2014 period, one of the things that I would argue is that northern Wisconsin actually entered the recession a bit before other parts of the state. It was probably more around 2005 and 2006 than 2007 and 2008. So, this looks at percent change in employment in 2000-2014, breaking it into the period before the start of the recession, 2000-2007, and looking at the period after, the official end of the recession, which was in 2009. 

So, if we look at the state of Wisconsin from 2000-2007, we can see employment grew by about 1.5% over that period. Forest County and Ashland County actually had decent growth, as did Vilas County over this period. So, here's the period after 2007.  Here's where we see Vilas County lost 12.8% of its jobs over this period, which was quite a bit more than any of the other surrounding counties with the exception of Price and Iron County was also much greater than the state average. Why this is is a variety of reasons, but the fact is that Vilas County has not recovered from the recessionary period much like other places have.  So, when we look at employment change, one of the things to keep in mind is that it's not always about net employment increases and decreases. Despite the fact that employment has not come back to where it was at pre-recessionary levels, we're still hearing a lot of demand from employers for new workers. They simply can't find the number of workers that they need. And, when you think about this, how can this possibly be, if we're still continuing to be flat in employment or have lost jobs over this period? Let's look at this a little bit differently. This looks at change in total employment from quarter to quarter as well as the number of new hires that occur in each quarter. 

 So, here's the change in total employment from the prior quarters. So, here we see decreasing employment in the first and second quarters of the year, which makes sense, 'cause those are the non-tourism seasons. We see a spike, a little bit of a spike of employment growth in the second quarter, which is April to June, and then a huge spike of employment growth in the third quarter, which is July, August, and September. We see this pattern over and over and over again. I want you to concentrate on some of those years where we see, or some of those quarters where we see net employment loss.  And here are the number of new hires. So, even in times where we have declining employment, employers are still hiring a significant number of new people. And the reality is that most employment demand does not come from net employment growth; it comes from churn, from people leaving a job for one reason or another. So, even if you've never had any employment growth, people are going to lose, leave jobs because they're going out to get an education; they may have childcare needs; they may be retiring. There's all sorts of reasons why people switch jobs. 

So, even in times of limited employment growth, employers are always looking for employees.  One final chart on the economy, and that's looking at per capita personal income. Per capita personal income is all the income in the community, regardless of where it comes from, divided by the population there. And here we're comparing the Vilas County per capita personal income to the state of Wisconsin and the United States as well. And one of the things you'll notice is that the overall patterns are pretty similar, but the gap has come down a little bit. In fact, the per capita personal income in Vilas County is somewhat similar to that what we see in the United States and the state of Wisconsin. And, when you consider that average wage chart that you saw earlier, we saw quite a bit of difference in terms of those average wages in Vilas County and the state and the United States. Well, how can that be? How can we have per capita incomes that are starting to converge a bit as well as that are pretty similar and have this big wage gap? The answer is that, when we look at income, it doesn't all come from earnings. It doesn't all come from wages and salaries. Income also comes from investment income, things like dividends, interest, and rent, and income also comes from what's called "personal current transfer receipts," which could be unemployment insurance; it could be Social Security; it could be Medicare. 

It could be all sorts of different sources of government assistance. And when we look at the share of income in Vilas County that's accounted for by each of these components, we see that net earnings, so earnings in the form of business owner income as well as wage and salary income, makes up about 42% of the county's total income, but we do see a very high share of income that comes from investment income as well as personal current transfer receipts. And, again, a lot of this has to do with retirees. Retirees are bringing their money into the county. They may not be earning it the same way as people that aren't retired; but, nonetheless, they are bringing significant income into Vilas County.  So, we looked at a lot of different aspects of Vilas County, and I think, looking at some of those numbers and some of those challenges, you're probably asking yourself, "Well, what do we do going forward? "What are some of our options "in terms of economic development?" And there's actually a lot of different strategies and initiatives that you can consider. And when you think about economic development, it is kind of this intersection of all these different disciplines. It's not just finance. It's not just real estate. It's planning. 

It's sociology. It's your geographic position and what's around you and some of those assets that your geographic location brings. And, really, when you think about economic development, it is about the process of retaining, expanding, and attracting jobs, but also income and wealth, and not just in any manner.  It's also in the manner that improves the quality of life in the community, because what you'll see is that quality of life is becoming more and more important to where businesses decide to locate as well as where labor and people decide to locate as well.  When we look at economic development, we can approach it in about three different waves. And, when I say "wave," it doesn't mean that, because we're looking at the first wave of economic development, that people are no longer doing this or somehow we've pushed it by the wayside. It just means that economic development profession and disciplines have evolved over time.  When we look at the first wave of economic development, it was really about industrial recruitment: How can we go out and entice other businesses that may be located somewhere to come here and set up shop? And that's where we started in the 1930s in the state of Mississippi. One of the things that they tried to do was to offset some of the challenges that they were seeing with the agricultural industry there at the time with other types of industrial opportunities; so, they gave all sorts of land, loans, and other types of incentives to companies to try and get them to come to Mississippi. There's a lot of criticisms of industrial recruitment. It tends to have a lower return on investment. 

If you look at it on a broad, national sense, it's kind of a zero sum game. You're just shifting the deck chairs, so to speak; you're not really creating new economic growth. And a lot of times it pits businesses between communities; so, one community will be competing for that business, and the business will actually try and work each community to try and get the best deal for them, even though they're probably going to locate in one of those two places regardless.  And one of the reasons that you see a lot of people criticizing industrial recruitment is that, if you look at bang-for-the-buck, it doesn't always provide the biggest source of employment growth. We can break employment growth down into three different components. We can break it down into net expansion, so jobs that come from that expansion, so the number of jobs that come from existing companies that are expanding their employment base. We can break it down into what are called "net startups," the employment that comes from new businesses that are starting versus those that may be closing. We can also break it down into net relocations, businesses that may be moving into an area versus those moving out of an area. These are the 15 states that grew the fastest between 1995 and 2013. Depending on the data set, these states' rankings may change a little bit; but, for the most part, they will be in the top 15. 

I've also included the state of Wisconsin as a comparison. This is also a good period to look at because it encompasses a period of very rapid economic expansion in the United States, a recessionary period where we saw limited job recovery, and then we also see the Great Recession. So, here's the share of employment growth in each of these states that came from net expansions. There's the share that came from net expansions. Here's the share that come from net startups. Here's the share that come from net relocations. Everybody see that?  So, very few jobs on a state basis are created through relocations of companies moving from one state to another. The vast majority of jobs come from existing businesses and a very large share of jobs also comes from new startups, new company formation. Here's a comparison for Vilas and some other counties throughout northern and central Wisconsin, not quite the same, but a very similar pattern. Most jobs come from existing firms or from net expansions. 

One of the things you'll see, however, though, is we see a much smaller share of jobs that come from net openings in a lot of these counties than the national average. Most of the jobs come from existing expansion of companies.  The other challenge with industry recruitment is it also tends to focus on large companies for the most part. When we look at businesses, we can break them down into a number of different categories using different criteria. We have self-employed establishments, which is a business with just one person that's operating the business. We have what are called stage one companies, which tend to be two to nine, have two to nine employees; stage two companies, which tend to have 10-99 employees; stage three and stage four companies, which tend to be much larger firms. Most industrial recruitment efforts tend to focus on these types of businesses. They're trying to hit that home run: How do we bring that very large employer into our community? Let's look at how these different business stages, though, contribute to employment growth on a national average. Here's the United States employment from 1995-2013 again, and here's the total employment that's represented in each one of these stages. Here's self-employed. 

We can see that the number of people in self-employed businesses grew a bit. We saw a dip with the recession;  it came back a little bit and has been on a bit of a decline since then. Here's the number of people working in stage one companies. We see steady growth. Again, we see the dip with the recession, but we see it leveling off, and it has grown significantly since 1995. Here's stage two firms. Far and away, stage two firms employ the most people in the United States and have also been a steady source of growth coming out of the Great Recession. Here's stage three, so those companies that employ 100-499 individuals. It's been relatively flat. And here's stage four firms, or companies with 500 or more. 

 It has been a source of employment loss in the United States (clears throat) over the last 15 years or so.  The reason for that is that, when companies get to a certain size, they don't necessarily need to grow by adding employees; they can outsource things. They can have capital investments which improve their efficiencies. So, a lot of ways these companies aren't going to add additional employees in a lot of instances to a community. It doesn't mean they're not important employers in a lot of places. They are. They employ a lot of people and provide a lot of income to regions; but, in terms of employment growth, if that's what we're trying to do, most of the growth is probably gonna occur with those stage two firms and those stage one firms.  The second wave of economic development that we see is what's called "business retention and expansion." And this focuses, again, on existing firms, rather than trying to attract new firms to our community. And this really started in the 1970s, and it was a response to a lot of different factors. You saw the decline of manufacturing in the United States. 

We saw a lot of failures of urban renewal projects that occurred throughout central cities in large metro areas. We also saw the rise of globalism, so we saw the competitive field change in a way that it had not changed before, or in a long time, for that matter. So, here we see a lot of strategies that involve small business development organizations, incubation, revolving loan funds, tif districts, things like that. And we see a lot of people that are still using these, and these are very, very effective economic development strategies in a lot of ways. One of the challenges, however, with a lot of these strategies is they do not always reflect structural changes that we see in our economies. I think this is very indicative of what we see in the manufacturing sector in the state of Wisconsin. This looks at the percent change of manufacturing, 1970-2014; the state of Wisconsin, the blue line; the United States, the red line. We can see that employment grew in the manufacturing sector quite a bit throughout the later part of the 1980s and throughout the 1990s; but, really, with the start of the '01 recession, we saw a big dip in manufacturing. Again, we saw a big dip in manufacturing with the start of the Great Recession. We've seen it rebound somewhat. 

But, I think that when you look at some of the structural changes we've seen in manufacturing in terms of the number of workers needed as well as global competition, we're probably not going to get back to where we were in 2000. So, business and retention/expansion can really help those existing firms, and they can help maintain our base; but, again, it's gonna be challenging to probably get back to where we were before.  The third wave of economic development is one that really started in the 1990s and is one that has really yet to be fully adopted by a lot of economic development organizations. The third wave really focuses on what types of competitive advantages a region may have relative to other places. And we'll come back to what some of these factors of competition may be or what makes one region more competitive than another. But, really, what the third wave recognizes is that every area has an asset, or multiple assets, that can provide some sort of base for economic growth, and it's recognizing those assets and building upon them. Third wave initiatives also focus on quality of life and the reduction of inequality a lot of times. And the third wave recognizes the fact that quality of life is increasingly important to economic growth for a whole host of reasons. The third wave also has a declining emphasis on direct financial incentives. Instead, it focuses on things like investments in workforce development, which we're seeing a lot of in the state of Wisconsin right now, focus on infrastructure, and focusing on things like business intelligence to help existing businesses grow rapidly. 

 What the third wave of economic development also does is that it kind of flips the traditional model on its ear a bit. In the past we saw a lot of places that placed a huge emphasis on industrial recruitment, placed a lesser emphasis on expansion of businesses, existing businesses, and had a very small focus on small business development or startups. With the new model in the third wave, we're seeing attraction still being important. Most places still should and will focus on industry attraction, focuses less so on retention and expansion, but has its foundation on entrepreneurship, helping new businesses start and helping existing businesses grow. And we see this emphasis on entrepreneurs, certainly because of the charts we looked at before. When we look at most of the employment growth that occurs, did it come from existing businesses or new businesses starting? But entrepreneurs also are present in every single community. Entrepreneurs are really a source of human capital. Every place has residents that are entrepreneurial, so it's an asset that every place has in place that they can focus on, and they don't have to necessarily go out and try and bring that resource back to the community.  I think the other challenge that we see with entrepreneurship and why we're focusing on it here is that a lot of times we look at entrepreneurship and people think small business development; but, in reality, every entrepreneur is different and not every entrepreneur is small. Entrepreneurs have different goals. 

Some are survival entrepreneurs. They simply start a business because they have no other source of creating economic opportunity for themselves; so, they go out and create their own. Other businesses are lifestyle entrepreneurs. They wanna live somewhere where they can not only run a business, but also live in a place that affords a certain type of lifestyle that may be available there and not in other places. I think, in northern Wisconsin, you see a lot of individuals that come here because they want to be here and then start a business. We also see individuals that are high-growth entrepreneurs. These are individuals that are profit-driven. They may want to create new jobs over and over and over again. They may spin off companies. And we also see what are called "intrapreneurs," which also do a lot of spin-offs as well. 

But the point here is that every entrepreneur is different, and just to equate entrepreneurial development with small business development is a mistake.  We also have to realize that entrepreneurship is about creating a culture.  In a lot of places, we will see a lot of individuals, I think, almost take pleasure in other people's failures. They'll say, "You went out and started a business. "It failed. You deserve that. "Why were you doing that to begin with?" But, to be honest, we have to create places that embrace failure, because people learn from failure. They get new opportunities from failure. And, I think, for us to really recognize this, embrace this, we have to change how we think about entrepreneurship in our communities. We have to welcome fresh voices and embrace diversity. 

A lot of times, when you'll see somebody come up with an idea, they'll think, "Well, that's ridiculous. "Why were you gonna start a business based on that?" But, in reality, because it's a new idea and a fresh voice, it may provide an opportunity that people have not recognized in other places. A lot of times we need to focus on the assets we have in our community, rather than the deficits that we perceive. A lot of times I'll work in communities, and they'll say, "Well, we could only survive if we had this," or "We could only grow if we had this," instead of focusing on, "We can build around these assets "that we already have instead of trying to focus on "what we don't have."  There's also a lot of things that regional economic development organizations can do to support entrepreneurs. They can help develop infrastructure; so, things like broadband is going to be increasingly important. You all know that already, but I don't think all of our leaders necessarily recognize how important broadband is to not just an entrepreneurial development, but also attracting and retaining talent. How do we connect entrepreneurs with services in the region? How can we provide workforce development opportunities for entrepreneurs? A lot of times small business owners or startup firms simply do not have the resources to do workforce development or get plugged into the workforce development conduit or pipeline. So, regional economic development organizations can really help with a lot of those efforts that are needed.  The other area that I want to end on is, when you think about the third wave, you see a lot of emphasis on regional cooperation, working not just in a single community, not just in a single county, but across a broader geographic area. One of the reasons for that is that, when we look at how people commute, often a very large share of our workforce doesn't come from within our county or within our community; it comes from outside our boundaries. 

Here, we're looking at the share of people that work in Vilas County versus what county they actually reside in. If you look at people that work in Vilas County, only about 57% of them also live in Vilas County, which also means just under half of the workforce comes from someplace else. So, when you think about workforce development or other economic development initiatives, it's not just about the people that live here. It's about the people that live around you as well. On the flip side, we can look at the people that reside in Vilas County versus where they work. Here we see a very similar pattern. Of the Vilas County residents that had a job in the second quarter of 2013, about half of 'em were employed here. More than half were employed in another county. So, again, economic opportunities and workforce does not stop at political jurisdictions.  The other thing you have to recognize is that when we look at economic assets that may exist, not every community's gonna have every asset it needs. 

Not every community's gonna have the workforce it needs. As I mentioned, it's regional. Not every community's gonna have the educational institutions it needs. Not every industry or region's gonna have the infrastructure it needs. So, again, we have to think about not what's just here in our community or in our county, but also what's in our surrounding counties and in our broader region that might provide opportunities for collaboration.  That said, it's nice to talk about these third wave economic development initiatives, and talk about things like entrepreneurship, and talk about things like regional cooperation, but there's a lot of challenges to those as well. Not surprisingly, communities have self-interests, and then that's a given. That's not a surprise and it shouldn't be unexpected, but a lot of communities will recognize or think that for them to win that also means that someone else needs to lose. And a lot of times that can be our surrounding communities. But, in reality, if a new business is choosing a neighboring community versus us, that's kind of a win for us in some ways, too, because people that have lived in our community can be employed in those new business opportunities in other communities as well. 

Election versus economic cycles. I think that economic development practitioners are under a lot of pressure to respond on four-year cycles, because they need to show results. But we all know, looking at a lot of those charts, that the economy doesn't operate on election cycles. The economy operates on all sorts of other factors that go beyond four years in a lot of instances. Not all communities have the same types of available resources, and, as I just mentioned, there's a lot of conditions outside our economy that we simply can't influence: trends in the national economy, trends in the international economy. I would bet people in Vilas County 10 years ago had no idea the housing bubble was coming and how it might affect them; but, again, that's something that happened on a national level that impacted us. And I think one of the biggest challenges, and that's just human nature, and that's just fear of change, especially if we've lived in a community our entire lives. We see it changing. We don't want it to change. And sometimes change isn't always good. 

But a lot of times change can be good; so, how do we overcome that fear and work towards a common goal that benefits all of us?  And, finally, I think if we're gonna work across our political boundaries, work across our self-interests, we have to have these conditions in place. We have to want change. We have to have a group of people that can institute change. We have to have some sort of shared political or cultural identity or territorial identity, things that we have in common. So, there are things that we may not have in common. Our football teams may play against one another on Friday nights. But there are things that we also all have in common together in every part of the state and every part of the country. And I think one of the biggest conditions that forces a lot of people to work regionally and change how they approach economic development is some sort of crisis. A lot of times people are reactive instead of proactive. So, are there things that might spur people to work more effectively together and address some of the challenges that may occur in a community, but also build upon some of the opportunities that exist as well and build upon some of those assets? So, one of the things I challenge you to think about as you leave here today are, what are some of the compelling reasons that Vilas County may have to work together, as well as all of northern Wisconsin, to work together on a regional basis?  Finally, I know that's a lot to throw at you, but here's my contact information (laughs). 

And with that, I'd be happy to answer any questions you may have. (applause)