and wisbusiness.com approached us to cosponsor these events
because part of the mission of UW Colleges and UW-Extension
is to leverage our statewide reach and to bring information
and knowledge out to different areas of Wisconsin
and it's wonderful to be here in Richland Center today.
This interactive session is designed to provide
insight into entrepreneurship, history
and the business personality of different regions
in our state and to show how we have different ways
of looking at the economy that maybe can help us
and help economic developers
support the economy going forward.
But first to bring us all on the same page,
a few economic facts to start with.
So in terms of unemployment,
we know that it's very, very good news in our state.
The unemployment rate is near 3%.
That is the lowest that it has been in 17 years,
but when you think about unemployment,
it's great that it's low,
but it also creates an additional problem
and that is one of workforce shortages
so we hear from employers time and time again
that they're having trouble hiring the people
that they need or finding people
who are properly educated and trained
for the positions of today.
In fact a recent survey
from Wisconsin Manufacturers and Commerce,
that's the state's largest business association,
found that 77% of its members had difficulty finding workers.
And this is up from 53% reporting the same two years ago
so it's definitely a trend.
Wage gap, another fact.
Wages in general have not kept up with inflation
over the past decade for many non-managerial jobs
according to federal data,
but in Wisconsin we're faring much better
than the majority of states.
We rank 15th in the country in terms of growth
since 2010 and 12th since since 2014 so a positive trend.
Company size, Wisconsin ranks in the top 10,
in fact number eight nationally,
for the percentage of jobs
with second stage businesses at 42.7%.
So second stage companies are those companies
with a size between 10 and 99 employees
and this represents existing companies
who have proven themselves who are right for expansion
and adding more jobs
so that's a great thing for our state.
In terms of locally owned businesses,
Wisconsin ranks in the top 20 nationally
for the percentage of business establishments
that are locally owned, 83.6% for 2016.
National trends indicate that locally owned companies
contribute to a more stable economy.
And right here in Richland County,
there's a higher percentage of business establishments
in the agricultural food production
and food processing industries.
No surprise to those of you who live here I'm sure.
It's nearly four times more when compared
to the average Wisconsin economy.
So anyway, just giving you a little starting point,
some facts to start with,
and now I'd like to ask our panelists
to introduce themselves and their role, their day job
and their interest in this particular panel,
navigating the new economy.
So first, start immediately to my right.
- I'm John Koskinen and I'm the chief economist
for the Wisconsin Department of Revenue.
I've served multiple administrations in that role,
but I would argue my day job
is taking care of my 12-year-old daughter.
(laughing)
- Hi, I'm Mark Lange with the Extension division
for business and entrepreneurship
and so we have five units within that group
really focused on business development
rather than economic development
so we have the Small Business Development Center network
across the state which Brock Waterman
serves in this area
and I don't think Brock is able to be here today.
We have the Center for Technology Commercialization
which is also very active
in this southwest part of the state.
The Food Finance Institute.
We'll talk a little bit more about that
where we look with high potential food companies,
helping them to gain kind of the financial expertise
to be able to gain some new capital investment and loans.
We have the Center for Business Intelligence
which is kinda focused on those second stage companies
trying to figure out how to help get information
into the hands of those CEOs of those companies
whose information is that new currency
of economic development.
How do they take that information and grow their companies?
So we help them with those.
And then we have the Business Dynamics Research Consortium
which is studies 61 million business establishments
across a 20-year history in the U.S.
and by that we can then drill down into local economies
and help economic developers and community leaders
better understand what's really going on
inside the business economy and the business activity
that helps dictate what's happening in that economy
and how they can better serve and be more specialized
at serving their business economy.
- My name is Will Cronin.
I am the community resource development educator
with the Crawford County UW-Extension office
so my office is in Prairie du Chien
so I'm not so far from here.
And as county faculty and UW-Extension,
I do a lot of work in economic community development,
organizational development, leadership development,
nonprofit development, things like that.
But I wanna really communicate today that I think
everything UW-Extension does.
So in addition to community development,
ag and natural resources, family living,
4H youth development, FoodWise,
these are all key parts of building healthy economies
in places like Richland County, southwest Wisconsin
so I'm glad to be here.
- Thanks.
So as you can see we have a great panel
with big picture statewide and down to the very local level
and I think this will be great.
I have a few questions to kick us off here.
John, can you please comment a little bit
on the current economic conditions in the state
and what you might be able to tell us
about this part of Wisconsin as well?
- Right now, I'm arguing the state of Wisconsin is
in the best shape it's been in the last 18 years.
Our September unemployment rate seasonally not adjusted
was 3% as you highlighted.
That's our best since September 1999
and if we go back to 1976 that's the third best on record
so there were 40-some odd years
we're looking at unemployment rates that we rarely see.
That's had the lovely property of yes, you do have
sort of a challenge to get more workers,
but in some respects the workers themselves
are meeting that challenge because we are getting
labor force growth, particularly along
if you're near the Illinois border
we're getting labor force growth.
Labor force here is even growing locally.
In Vernon County in particular you're getting very strong
employment growth as well.
So we've hit the stage where we're past recovery
so we're putting ourselves in a position
and I think Wisconsin's especially putting itself
in a position of it is becoming more competitive nationally.
- Great and I often note that Wisconsin ranks very low
on these indices of entrepreneurship
and I'm wondering if you can comment on that?
I know we've discussed it before and you have a much different take on it.
- I definitely have a much different take on it.
The Kauffman Foundation actually does two indices,
the first of which is what is your startup rate
and we rank pretty low.
Depending on how you wanna measure it,
dead last or right next to it.
But they also do another metric
which is the main street index
and we rank number two in that.
If we take past those composite index
and look at the U.S. Census business dynamic series,
yes, we are pretty low on startups,
but we do really well on retention,
so we might not have the culture of fail early and often.
We might have the culture of plan carefully and succeed.
The net result is ultimately how does the business dynamic
work for us in terms of what's the survival rate.
We do very well with that and in particularly
toward the observation on the second stage.
What does it mean for employment?
Well we rank like 18th in the country on that metric.
There's a strong correlation
between if you have high startups,
you're going to have high failures.
For us I think in Wisconsin ultimately our second stage
succeeds and that builds our employment.
- Thank you and that allows me to segue very nicely
into my next question of Mark, can you talk a little bit
more about your work with second stage companies
and why you believe that this is really
a spotlight or a hotspot for us to focus on?
- I'm gonna start though by adding to the answer
because we talked about this at the last one and I think I got a perfect opportunity.
I have colleagues in the room who the statistics came from them so Greg and Kristin
are with the Center for Community and Economic Development.
A lot of you know them.
They do a lot of wonderful work around the state.
They're an EDA center.
And they do a lot of broader economic development
and workforce development stuff,
but one of the they talked about was
and if I get this wrong, you guys can--
But the migration rate of people in and out of the state
and this goes back to why entrepreneurship
isn't quite what we think it should be.
We think there's actually a lot more going on.
And that is that Wisconsin ranks
in the bottom five or 10 states
in terms of the migration into the state
so we just don't have a lot of people moving into the state.
Turns out I think we have 70% of the people
that are here were born here.
But the other part of that is that we are at the bottom
of five or 10 bottom states of people who move out
so we have this very stable economy
and if you look at the states that do really well
in entrepreneurship,
they're the ones that have the very high rates
so Colorado for instance.
Wins at the top all the time and the number of people
who move to Colorado, but a number of people, same number of people leave
so it's that dynamic churn of people
that also has an impact on entrepreneurship.
So what we do for second stage companies,
we try to kind of cross blend our work
with companies by different size.
What we're really trying to do within our division
is focus on helping communities be more specialized
about interacting with their company
so the world of just having a counselor,
Those entrepreneurs and companies have access to a lot of information.
What they need is specialized help.
They need to know a better understanding of their market, their competitors.
They need to have much better sense of putting their finances together
to be able to qualify for investment or for loans.
They need to have--
So what we try to do is help communities better understand
what types of companies they have
so those communities can better treat that and the second stage category,
what we do is we work together to create
a business intelligence team.
So we've actually hired independent contractors
and trained them to go in and we attach them to a company
and that company, we actually lend them to the CEO
and they go in and work with the CEO of over about--
They have 40 hours between all of them to do this.
This happens very quickly, kinda like the speed of business
and there's a strategist in there that kinda leads the team.
There's a GIS specialist, a market research specialist
and then a digital marketing specialist
and they go in and kind of talk to the company and break down what that
CEO and what that company really needs to know about markets, competitors,
those types of things in order to succeed.
And they go and bring that information back to them
and then to kind of help them think differently
about their business and it turns out,
that's a really important push for companies of that nature.
But we pass those along so as a lot of those companies
move from Food Finance Institute and kind of work from there.
We work with the Center for Technology Commercialization.
Some really interesting launch and grow through there.
So we move companies around through our different units
based on their size and their needs,
but the whole idea is specialization
and finding out what they need.
So one of the things we do is we break down your community
by companies who trade locally, companies who trade externally
and companies who are in the non-trade.
In that group we put the government, healthcare and education.
We kinda lump those and we say what's your mix of that,
what's your personality of establishments
and where are your jobs as they look into that
because those types of companies
and those who have those trade areas
need different types of services
and so we really pay attention to that
and help economic developers better understand
what's their mix of types of companies
and what kind of resources do they need
to be able to apply to help that.
And that's where we discovered Richland County
was 3.53% higher in a location quotient
or the percent higher that compared to all other counties
just in Wisconsin and so you think yeah, that's ag and that dairy.
Well every county in Wisconsin has ag and dairy
or for the most part.
Richland is 3.5 times higher in the percentage
of businesses and jobs in that category
and so we can sit down and talk with people
about let's start learning more about that.
We know that's some big employers here,
but there's probably a lot of other interesting activity
that's happening in smaller batches around
that we need to start understanding.
- Well we'll come back to that in more detail later,
but Will, maybe you can talk a little bit
about from your perspective what you're seeing
in this region of Wisconsin.
What are some of the economic challenges
and what are you doing to help address those?
- Sure.
I think at least in Extension when we talk
about some major challenges
that southwest Wisconsin is facing,
one of the first ones we always come to
is an aging population.
And this is not abnormal across the country in rural areas.
Our counties are--
We're seeing out migration of young people
and our populations are aging and so we have these questions
about how are we gonna remain vital and active community
so a lot of what we do is focus on--
Well we begin with an understanding
that we don't wanna put up a checkpoint at the border
and not let the kids leave.
We understand that yeah, you're gonna go to college,
you wanna move to Chicago or New York
or Portland or Austin or whatever
and maybe start a family.
And what we wanna do then is help the community be vital
and an attractive place for those folks to move back to
because we find again and again especially
as we're talking about, we have a stable population.
People like Wisconsin.
People are from here, this is where they live
and they're from and they wanna come back
and so we have to make our communities a place for them to come back to.
And we do that in a lot of ways, but I think one thing I'd like to highlight
is the work that some of our educators
in this region are doing around youth and government.
Helping our young people feel engaged
in the community processes, in their local areas,
such that they feel like they have a voice,
they feel like they're valued, they feel like they matter.
And yeah, so they move away,
they go to school, they get married, but then they come
back because they feel like they're invested in a place like that
so that's an example of the kind of view
we take on trying to keep our communities
as healthy as possible and economically
and from a community development standpoint.
- A follow up for you, Will.
One of the things that we're hearing,
we're doing various round tables and community conversations
throughout Wisconsin and especially in the north
and rural areas like southwest,
the issue of broadband access has come up.
So what are you seeing on that
and anything we're doing to move things forward?
- Sure, yeah.
Broadband is a really tough one, especially around here,
we have a lot of topography and so it's just really hard
to get the fiber in the ground and get folks served.
It's a rural area, there's not a huge density of customers
and this is what we hear time and time again. This is a really good example of the work
that Extension does with our partners,
not only in local government and community organizations,
but with the private sector.
Our providers are mainly private companies.
Of course we have some co-ops as well,
but what we try to do and of course we have the
and I'm sorry I can never remember--
the Center for Broadband.
They changed their name and yeah.
The Center for Broadband is one of our key supports here.
They are out of--
Well Greg runs it now.
Sorry.
And so they support us with that,
but again the key part is we see ourselves as conveners.
Let's get our local governments, our community organizations
and our private partners in the room
and begin to try to figure out how we can
get some more fiber in the ground
or find other solutions so that's a very--
I don't have a great answer for that
because it's a tough one especially out here,
but it's something we continue to work on.
- Thank you. Circling back to John,
I know there's one word probably on the minds of many people
in the audience here today and that is Foxconn
and I'm sure as one of our state economists,
we'd love to hear your take on it,
both for the whole state and what might be the positive
ripple effects to a community like this in Richland Center.
- Well let me answer the latter one first.
Foxconn will be a major purchaser
during the construction phase,
certainly after that.
There is now a register for firms to be identified
as suppliers to Foxconn.
Already 200 and some odd firms have registered for it.
As I saw some of the regional analysis,
there will be employment opportunities
on the construction side
whether or not you are an employer on the construction side
or a construction employee.
That's going to be a major undertaking beginning next year.
So you have both short term opportunities
on the construction side that'll last
roughly through the two to four year build out
and then supplier for continuing operations.
That facility will be the largest display
manufacturing facility certainly outside of Asia
and possibly in the world.
It will be one of the largest undertakings for employment
and at 13,000 a pop it's one
of the largest manufacturing facilities
in the United States.
That's comparable to Boeing.
So you cannot confine all of those economic impacts
to Racine County.
It's gonna reverberate throughout the entire region.
- Great, thank you so much.
Mark, now can you drill down a little bit
into this business personality and youreconomy.org
and the data that we have passed out.
- Sure.
We've launched a new data source
since we've been working at it for a couple of years now
to kinda get it working and we've--
It's a matter of using different data
that isn't typically government data
and we're using commercial data
used to sell back and forth businesses
to learn about each other by so we use info group,
but we took historical data for 19 years
and put it into a filtering system
that allowed us to watch change and then track that change
business by business across 20 years
across the entire U.S. economy.
And so we're now making that available
to really look at business and employment at the local level
so you have to consider that a lot
of the economic statistics you see
are like 30,000 foot view and good views.
We wanna get to a street view.
We want you to be able to look down the street
and understand more about every single business
that you see there or who owns it,
where's it owned, is it external, those types of things.
So we've filtered that out.
If you've got this handout,
I'm gonna talk a little bit about this one if you wanna look at that.
If you wanna kinda compare the three counties we're doing.
They're all listed there.
We can come back and look at that overall comparison,
but you can kinda look at Wisconsin in general as a state
at 413,000 establishments.
When you kind of look at the population,
it's about 14 establishments for every 100 people
and I haven't actually run that at a national level
to kinda see where we sit on that,
but that might be another interesting indicator
of entrepreneurial activity that we don't get credit for
and so you can see kinda where that sits
in some of those communities there.
The resident companies is a brand new category
that we created because we can actually follow--
We know where the headquarters, either it's stand-alone company
or we know the headquarters is of a company
and this tells us whether or not
when we're looking at county level,
whether that headquarters that that company reports to
is in that county or outside.
If they report to a headquarters outside,
they're considered a non-resident company
just for our purposes so we like to keep track
of the number of resident companies that you have
in your community.
The reason that's important is when the economy takes a dive
and at certain ways, those companies pull back
and more at where their headquarters are
and then those places that have those
non-resident establishments kind of suffer
in the job category.
So understanding your mix of that
and see where you kind of rank
in the state or within the counties for that.
Then we took those three categories,
local trade companies, external trade companies
and then non-trade and started looking at--
Well, what's the percentage of business establishments
you have in each of those.
And so you can see in Wisconsin,
53% of all the businesses focus all their energy
and all their sales in their local economies.
22% of the establishments do external trade and then 26.
But if you drop straight down to the chart below that,
now we're looking at jobs, not establishments.
So now you can see it's a much different blend.
So now 42% of our jobs in the state
are in those local economies at least in Wisconsin,
29% of our external jobs are in that external category
and then 29%.
If you shift over there and look at Richland in that category,
that 34, 31, 35 is actually a very nice blend.
It's kind of a nice diverse economy in some ways
that you think about that it's got a good blend
of all those and 31% in that external trade
might be representative of some of that
food processing and food business.
So this is just another way for us
to kind of begin measuring and let you compare yourself.
You'll be able to rank yourself.
There's other ways we have to look at this information,
but this is part of, the beginning part of that
business personality.
In my next segment I'll kind of talk about
how we break that down because we now look at
the difference about what this data is.
We can look at micro-- It's called micro data.
We can follow individual business establishments
whereas government data cannot give you information
and cannot follow individual establishments.
It follows them by groups.
So we can actually get down to individual companies
and watch what's happening within those
and drill down on those.
So on the next part on the back of this,
you'll see we break that down and see
where are jobs, how are jobs gained,
how are jobs lost, by a number of different categories
that are again unique to a very specific community.
- Thanks and Will, looking at these data,
especially for Richland County and the breakdown
of types of establishments,
does that ring true to you in your work
in southwestern Wisconsin?
- Oh I think without question.
I mean yeah, yes, I agree in general.
I think what you see in Richland is relatively consistent
over the entire area of southwest Wisconsin
and we really do focus on those local trade companies
as much as we can to understand
that that's where we're gonna get our jobs.
We build on those companies that are already there
that are working in our local area
and so I think we find
that our community economic development organizations
tend to agree with that so we partner with them
to a great extent on that as well.
- I would add none of those groups
are more important than the other.
So local trade companies really are critical
for creating the culture in which those other companies
wanna exist and other people wanna have jobs.
The reason we divide them out is that those companies
in a local economy,
what they need to compete is completely different
than those companies who are competing outside.
They have a whole different set of needs
to grow and to be stable and to be sustainable
than those companies that have big markets.
They're competing in international markets.
They have to have more competitive information,
market information and all that type of stuff.
And then of course those non-trade,
that's more about infrastructure.
The education, government, healthcare,
what's going on in those markets and how do you work with those.
So separating them out is like taking a magnifying glass
and kinda running it over the economy
and getting a better sense of that's who's here.
So this is how we should be
kind of using some of our resources to apply to those,
but none of them is any more important than the other.
They're all part of the mix.
It's just interesting to see how they differ
from place to place.
- Thanks.
John, can you help us understand a little more
about education attainment in the state of Wisconsin?
I think we get a bad rap on that too,
that we have low bachelor completion rates
and we're hearing about the skills gap
for employers and that sort of thing.
Can you drill down a little bit
and help us understand that more?
- I think that is probably what a more superficial
but erroneous cites is frequently you'll hear
Wisconsin's got a below average
bachelor's plus degree attainment.
Well if you can parse the data a little bit,
the picture emerges considerably differently.
First of all our high school education attainment
which is sorta step one, have you completed high school.
We're well above the national average.
Do you have an associate of arts degree?
We are well above the average so that's for two steps.
And then when you consider
the bachelor's degree education attainment,
frequently it is cited as those over 25,
do they have a BA,
what percentage of the population are they?
Well if you break it down by age cohort,
the only group that we lag significantly
is that group over 65.
Well those are not exactly prime work material anymore.
If we start parsing it by other groups,
the younger the population is in the workforce,
the more likely we are to be close to the U.S. average
and as a matter of fact we're practically there
in the 35 to 45 category.
We're actually above in the 25 to 35 category.
And as you break it further down,
the only distinction is really whether or not
you have the professional degree.
That seems to be the only location.
If you were to map the data by county,
sort of do you have an associate of arts degree,
that is to say a technical degree or better,
our profile looks very much like New York
or California or Washington.
So if we consider what are the skills available
to the economy and to the individuals
to have a successful career,
we actually match quite nicely.
- Thanks, appreciate that clarification.
Mark, before you talk a little bit
about the other side of your handout there,
can you talk a little bit about how
employment patterns are changing?
We've talked before about single employer
or single, sole proprietor companies and that sort of thing.
- Right, thanks for reminding me about that.
So the other way that data is different
is that we track jobs different than employment.
So jobs happen to be self-reported
by these companies in this database,
but that includes a lot of times,
if John and I own a company together,
but we're partners, we're sole proprietors, partners,
we don't have any employees.
Government data and employment data would say
we have zero employees.
Our data says well we zero employees,
but we have two jobs.
And as soon as we hire Will to join our company,
the government data will say they have one employee
and the job we have, three jobs.
So it picks up all of people
and it might pick up some part time workers
that aren't included and even some contract workers
that actually work on the facility
so we're seeing a shift in how companies distribute jobs.
They aren't all going to full time equivalent jobs anymore
so they're hiring other people
who may work 20 hours over there and 20 hours over there
and they have their own business
and so we see that in the increase in establishments
and then in the increase in jobs.
And so that's part of that idea of the new economy,
how do you track the job.
You may not see companies adding employees,
but we can follow when companies spin off
and create another company or when they add more partners
because a lot of companies may end up--
I do know some companies where there are,
not in Wisconsin, but I know there are I think 300 partners
in this company.
They have five employees.
So we report that as 305
because we're watching that activity to see how that works.
So understanding that, then understanding the difference
between jobs and employment and then
because when we show--
And John mentioned this last time.
I said well I'm showing we have 4.2 million jobs
in Wisconsin.
How much higher is that than employment?
And I think you said oh, it's about 1.2 million more.
So jobs generally run 20% to 30% higher than employment,
but watching jobs now kind of under the surface
and coming and going and where they're going
gives us probably a little better idea of what's happening
in the new economy.
- Right, the gig economy,
the people who are Lyft or Uber drivers
in addition to writing screenplays or whatever it may be.
It's interesting.
So we'll come to this other chart in a minute.
And Will, one of the hallmarks of Cooperative Extension
I know in the economic area is facilitating partnerships
and collaborations and can you give us an example or two
of some that you've done?
- Yeah, we in Co-op Extension,
I think a lot of us see ourselves
as sort of the connective tissue
amongst our community organizations,
our local government groups
to be that convener, to bring our organizations together.
Work out a more efficient way to do things
and implement solution.
So an example of this that we've done in Crawford County
that I consider some very grass roots
economic development stuff is the work that we have done
over the last couple of years with our farmer's markets.
We have three small farmer's markets in Crawford County.
We secured in partnership
with our Economic Development Corporation,
a USDA grant that we used to hire staff,
we used to implement electronic benefits transfer
or food stamps and credit and debit.
We are able to track some data to watch our numbers grow,
do marketing, things like that,
and we have seen from our vendors
who are very small business people.
It's not their living, but in general,
but it's important to them.
And we're using that to build our community food system
from the ground up and as you know,
in southwest Wisconsin ag is so important
so I wanna talk briefly about our colleagues in ag.
Right over there, Adam Haiti, is working--
He's the Richland County ag agent
and he's working right now with hog farmers
in three counties to create a cooperative marketing,
a marketing co-op for their hogs.
And that's not maybe a, forgive me,
the most flashy thing in the world,
but that is absolutely grass roots economic development
with some of our absolutely key small business people.
- Great, thank you.
John, another issue that comes up.
I'm just bouncing these things off of you
that I hear that I wonder what's behind them.
The standard of living in Wisconsin,
that's another thing that I'd like to understand
a little bit more because again we hear
our standard of living is,
cost of living, standard of living
is lower than other states.
- Well there is a big problem which economists
call money allusion.
We all understand that a dollar in Richland Center
is not the same as a dollar in New York City.
New York City you'd probably need twice as much,
but there are measures that can adjust for cost of living
and Wisconsin's about 34st in terms of cost of living
so relative to other states if you wanna do the comparison
on how well off you are,
you have to adjust for the cost of living standards.
New York itself is like 20%,
not New York City, but the state of New York
is about 20% of the U.S. average.
We're about 95% of the U.S. average statewide.
So if you were to take what is our median household income
which is already above the U.S. average
and adjust for cost of living,
our overall ranking goes to like--
We're 15th in the country.
So when you realize what we can purchase for what we earn,
we earn decently and then our cost of living is low
so we're relatively well off compared to most states.
Our overall median household income
if you adjust for cost of living
is better than California's.
- Okay, that's good news. Right?
- It's better than New York, too.
- Yeah, yeah, okay.
Well, Mark, now I'm really interested in these
additional charts that you have on your handout.
How do we interpret those, what are we learning from that?
- Sure, thanks for letting me explain those.
What we're looking at first
is the trade area sector influence.
That's that local, external, non-trade
and what influence do each of those groups have on
job creation and we're just looking at 2016.
The reason I like this chart is because the green
kinda shows what we gain because this is turbulence.
They're all the time in the economy
and we gain a lot of jobs,
but we lose a lot of jobs every year.
That churn kind of happens all the time
and people don't realize that.
If I just told you that Richland County
in their local trade economy lost 80 jobs,
you'd go well that's too bad and that's unfortunate
that that's been going that way, but I can show you that
well no, they actually had gained 500 jobs, right,
but they lost 580 jobs.
So you see that. This chart shows that.
So you can see the difference then
in between the local trade, the external trade
and what they each contribute to the economy.
The only one that had a plus of those was the non-trade.
I'm guessing that's probably in the healthcare group
of that category.
Then we move down to the next one is business size influence.
What size businesses are contributing
and we kinda use five categories.
We use those in our database that report one,
we call them self-employed.
Really small, one person. Then we take two to nine.
Anything less than 10 kinda falls
in that category two to nine.
Then we take that second stage group 10 to 99
and then 100 to 499 and then over 500.
And you can see the influence of job creation here.
That self-employed actually picked up a little bit
and you can see that there were some jobs gained.
The data kind of is blended here,
but there was a plus 10 jobs
in that self-employment category.
And 130 jobs lost in that early stage,
but a lot of times that's because those companies
move up to the next stage, but there's a lot of volatility.
And that's where a lot of the startup activity is
so a lot of lot of times and the startup rate
and the survival rate of startups is probably
30% survive after 10 years
so there is a lot of that going on there.
And then so you can see in second stage
did have a position impact even in this region
of 50 plus jobs.
But that's why it's important to see the plus and the minus
because of that churn.
Finally down below you kinda look and see
well now what difference do existing companies make
versus startup companies and versus moving companies
and that's what this chart shows.
So the first one is actually all jobs that created
when new companies opened
versus jobs that were lost when companies closed.
Now you may think it's not fair to just take all startups
and subtract everybody who closed,
but a vast majority of those that are closing
started in the last five years so we just kinda put that as a group.
Opens minus closes is a category that we use
to come up with net jobs
and you can see that startups in this case--
There were plenty of startups.
There was 800 startups,
800 jobs that went to startup companies.
New establishments that were created this last year,
but there was 1,000 jobs that were lost
to companies that closed so that's that difference there.
The next category, that expand-contract,
is of existing companies.
Did they add more employees
or did they contract and take away, lose employees?
And there's usually a net gain there
so there was a gain there of 80 jobs by those companies.
And, so when you take the net difference between those two,
it's a lot more even when you consider
that sure we get a lot of jobs from new companies,
but you can track that on this data.
But we lose a lot of jobs every year
so you gotta keep that pipeline going.
What you really wanna do is continue to focus
on second stage companies or the companies
that are in that existing group
and how can we help them to grow.
And then the moves and it's always interesting
to see what's the influence of moving companies.
It's always very small.
Irregardless of whether they were recruited or not,
we don't create jobs in our economies by moving companies.
Now we can hit a home run every once in awhile
like we talk about with Foxconn
and we'll see whether that gets over the fence,
but the swing is there.
- Well in the Q&A I'll follow up on that one a little bit.
- But the point is, yeah, sure,
regions have to kind of recruit, states have to recruit.
Local economies, that's nearly not in our game.
You're doing a little bit. You're always asked to do a little bit.
Your communities ask you to keep working on that,
but really what's happening is let's keep making
our existing companies increase their performance rate.
- I think when I look at that, that's the take home message.
If you're in a county
and you're working in economic development
and you have limited resources,
where do you put your time.
And recruiting companies to come in
probably isn't the place to go.
The place to go is try to expand those existing companies that have the potential.
- Right and now we can dig into those
and I met with an economic developer from Richland County
last week and sat down with her, had coffee
and showed her some of this information.
She said well then I wanna know--
She wanted to know the group in the middle in the green.
Who are those companies, where are they?
I wanna know where they are and I wanna learn more about them.
And I said great, we can get you the names.
- Right, okay, John, now here's your chance to talk more
about the company improvement.
- Oh, my follow-up? - Yeah.
- It's not necessarily recruitment.
I'm just highlighting sort of the activity you're seeing
along the Illinois border right now,
that you are seeing firms that when they
have the chance to--
We're at a stage and we have to expand.
Are we going to expand in McHenry County
or are we going to choose Kenosha County
or Walworth County or Jo Daviess County versus Grant County.
More and more are deciding that it's only 10 miles north
and the conditions to expand are more favorable there
and we really don't abandon our workforce.
So we are seeing gains consistently now
along the Illinois border where the number
of establishments in Wisconsin are going up significantly,
particularly in Kenosha County's case
versus on the other side of the Illinois border,
the number of establishments are actually decreasing.
- And the reasons for that is we have a better--
- How long do we have?
(laughing)
- Give us the short answer.
So is it we're an attractive business environment?
Relatively? - Right now, face it,
we have a more stable government structure.
We probably have a favorable wage structure.
We have favorable cost of living structure.
We have the availability of technical education.
There's variety of circumstances under that standpoint.
A lot of those things.
To me if you were to compare what has happened
to Winnebago County, Illinois versus Rock County, Wisconsin,
that is night and day different.
Those two looked almost identical six years ago.
Now, not comparable at all.
Kenosha County in terms of job growth
compared to Lake County.
Kenosha's labor force is growing significantly,
Lake County's have been flat.
Lake County is the classic two counties.
If we're talking Highland Park versus Waukegan,
different stories.
But Waukegan is closer to Kenosha so a lot of those firms
that would be in Kenosha or in Gurnee
have decided that no, Pleasant Prairie or Kenosha itself
is a better location.
- Well that's great news.
Now I'd love to open it up to our audience
for any burning questions that you have
and what I'll do is I'll repeat the question
before you guys answer it.
- [Audience Member] On the issue
of focusing on business retention,
versus recruiting new businesses,
where does the analysis of a gap spin in there?
- The question is about how do you work
with industry diversity.
Where does that variable come into this
so that you're not just dominated by one industry?
- Good, interesting.
Yeah, I think one of the things we do is when we've got--
I'm going up to talk to economy developers next week
and I've got a spreadsheet so all those three categories
I talk about,
there's seven that feed into the local,
nine sub-categories and we can now look at trends across the years.
We can then see what's happening,
which ones are going up and which ones are going down and you can do both.
You can pick the ones are going up, kinda find out what's happening here,
what is the synergy that's creating that growth that's happening for that.
But you can also go to the ones you say why aren't these ones.
Why are these going down in terms of the number
of establishments and then go talk to them
and try to figure out what can we do to kinda stimulate that.
But diversity that I was referring to was that kinda,
both diversity of the nice blend of those things
and sometimes you just may have just--
There may be the environment and the atmosphere
working well that have a certain industry really thriving,
And you wanna do both.
You wanna kinda find why the ones are growing
that are growing and keep that happening and keep adding to that.
But then you might wanna look and see why aren't we doing this and so that--
And economic developers are actually better
at the second one, because they, when they do retention,
it's more about how do I keep my companies rather than how do
I grow my companies and they need to get better at how do I grow rather than just keep.
And so they need to kind of have
that diversity of mindset as well.
- [Audience Member] The changes that are underway in the public sector,
be it Extension or the UW Colleges or public schools,
how do you look at that as it affects the economy locally?
- I'm gonna turn to John first to see-- - Of course.
- So this is a question about various reorganizations
and restructuring both in state government
and also a recently announced proposal
for restructuring UW Colleges and UW-Extension.
- Would you care to comment on that? (laughing)
- How will it affect the economy?
Well since I'm the chancellor of UW Colleges
and UW-Extension,
and again this is a proposal that at this point in time,
has not been approved by the board.
It's basically distributing these various units,
keeping them open and intact and distributing them
under administration of other units.
So I'm not sure we're gonna see a large amount of change
in terms of program and service delivery.
It will still be there.
It will just be administered a little bit differently
so maybe some of the changes in state government.
I know that there's consolidations of departments
and things like that.
Maybe, John, you wanna comment on that?
- Let me speak to it first from an employment standpoint.
Employment in state government has been basically flat
for six years for which that probably describes
almost all states in the union.
Government as a sector has been relatively flat.
The growth that you're seeing in the economy
is all on the private side
and with respect to--
Because I did go look at this question yesterday
because I wondered the same thing.
And what growth there is in government employment
tends to be on the university side.
It is not in the state agency side.
The challenge of course from a university standpoint
is I believe your enrollment pattern is such
that you add that lovely stage in the age profile
where it's starting to decline a little bit.
So you have to adapt for your clientele.
That's not any different than any business would.
The key is from a larger perspective from 40,000 feet
is do you want to find yourself in a position
you're flexible enough to adjust
which I think is the thrust to the university's case.
It is certainly true on the state government side
because you don't wanna have stranded costs
that basically mean you're going to compromise
your ability to provide services.
So while it's scary if you're in the business longer term,
I don't think it's a disadvantage.
- Did you get your answer that you're looking for?
- [Audience Member] I'm interested in your thoughts too.
- Right, well I look at that mix of that third category,
that government, healthcare and I think
as we put that out more, it's brand new.
That study was done really to break down
local versus external and these researchers
spent a lot of time figuring that all out.
We then just pulled those three out and said
from a business development standpoint,
what that group needs and that's really not
what our strengths are
in terms of how we help companies to grow.
Those three groups aren't in our category,
but we also thought it was important to know
what impact they have on jobs and on number of establishments
and how that looks different.
I can tell you that in Richland County,
there was a little bit of an increase in the government.
We noticed that.
And maybe it's just because the numbers are so small
that when you add a few employees in a certain category,
it might go up there.
So I'm guessing we're gonna have to break that category
down more often for people because to me
seeing that category rise rapidly
means healthcare not government.
But it's the first time people have actually
ever looked at their economy that way
so we've got a lot to learn about that.
- Will, any comments on this?
- Well yeah, I guess I would just say
that I think from a local perspective,
the work that I do in Extension,
it's important to know that local government
is a piece of--
Government is a piece of a constellation of organizations
that delivers a lot of services
so you have your county government,
you've got Extension, the university,
various community action programs,
the Planning Commissions, other regional organizations.
There's this constellation of organizations
that deliver a lot of services that are very important
and so I know there's a little bit of--
It's a turbulent time, but I think I can speak to--
I'm fairly confident when I say that all of those of us
working in that are, we're riding it out
and we are continuing to try to hold
on to those partnerships and build them
to deliver the best services that we can as time goes on.
- Thanks, back to Greg.
You had your hand up. - [Audience Member] Sure.
Well this is a question for you,
but John had talked about the difference
between Illinois and Wisconsin
being a lot of quality of life factors.
That's a summary I'll take.
- This is a question about some of the quality of life
work that you focus on in Cooperative Extension.
- Sure and I wanna--
I think I'll go back to broadband on that
because the chancellor I know mentioned
the gig economy as well.
What we in southwest Wisconsin,
we see it every day when we walk out our front door,
is tremendous natural gifts.
We've got, if you hunt and fish or if you kayak
or mountain bike or hike, whatever,
it's all right here.
And so what I think where the quality of life piece
really comes in from an economic development standpoint
going forward is understanding
that there's more and more people part of that gig economy
who can pick where they wanna live.
They can say I wanna be able to walk out my back door
and go canoeing this morning
and then go write a bunch of code
and I can buy that house with a little bit of lake frontage
way cheaper in the Driftless than I can someplace else.
And so we look and I know for a fact
there are in Crawford County where I am
up on around Gays Mills and Soldiers Grove,
we have a lot of folks who are in that,
who are in that kind of knowledge economy place.
But the key to that is you have to have broadband.
You have to have, they have to be able
to make the connections they need
with their business partners when they need to
to get their work done so they can be here
and so that's again something we work on.
So that's an example of the kind of strategies
that are a little more focused on attracting
that human capital as opposed to more smokestacks.
Not that smokestacks are bad. Smokestacks are good.
- I would like to add just a comment
about low cost of living and low cost of doing business
is not a strategy that's in it for the long term.
That's a spiral goes down, so that doesn't--
Long term I think what we have to do is how do you figure out
how to innovate and export whatever you innovate
and it doesn't in rural communities, it can be a plethora of things.
It doesn't have to be technology.
It's gonna be in ag, it's gonna be in services,
it's gonna be in transportation, it's gonna be in logistics.
It's gonna be in a lot of different things,
but the future is not to continue to be
the low-cost solution because you're never,
there's always gonna be another low-cost competitor.
The key for that is to figure out
how do you create innovation in your communities
and then how do you export that innovation
and bring in people who wanna be a part of that.
And now that's the softer side.
That's the dream.
But it's kinda like how you have to build the idea so
and how do you create companies that not only start there,
but they grow there and they keep their employees there
and it's important for them to what they do
in that community and recognizing and honoring
and really treating those companies special
because those are such a key part of that.
So I just wanted to bring that up.
Right now we're taking advantage of that and I think that'll
happen over time and it's gonna go up and down,
but I don't think you put your hat on
being a low-cost solution.
That's not where you wanna be long term.
Well, let's ask the economist here what he thinks.
- Well I see your point,
but I was thinking just from a regional standpoint,
Wisconsin right now is relatively well positioned in my mind
in that we are both a high quality of living alternative
and lower cost compared to Illinois and it's a short hop.
It's also becoming true that we're
the better alternative for Minnesota.
Much of what I described is going on
along the Illinois border is also going along,
true on the Minnesota border.
When you can just sort of change your commuting pattern
by 15 minutes that matters a lot
and that it does create enough inertia
so yes, you don't follow necessarily the race to the bottom,
but that's not what we're speaking of.
We're speaking of this is just our advantage right now.
- Right, yeah, agreed.
- Sir?
- [Audience Member] Will was talking about the choices
that millennials are making and how we're seeing
a resurgence of urban areas.
- We have a question here about migration to urban areas,
especially with the millennial generation.
- Understand first of all that if the--
The most mobile labor group is 20 to 29.
You also have a situation that millennials
have delayed marriage.
Would they be drawn to urban areas
under those two circumstances?
Yes.
If you were to follow the migration data
for the state of Wisconsin,
you will find that yes, we do lose that group.
We also gain the group that are in their 30s with children.
- We call that the boomerangers, right?
- Yes. So yes, they would migrate.
Would they decide that
no, it's better to raise the kids at home?
I'm confident there will be some millennials
that will be happy to raise four children
in downtown Chicago.
I wouldn't count on a long list.
(laughing)
So I would take that as a wait and see.
There is--
A lot of that data when they focus like that,
lose sight of what I would call sort of your stage of life.
Yes, 20 to 29, that's the time you experiment all of that.
30s, 40s, you're raising children,
you have a different set of priorities
and part of those priorities is if we were to follow--
'Cause I've done this-- Sort of what happens
to our zero to five children population?
Presumably if we have stability five years from now,
we will look at them in the five to 10 population
and the number should be the same.
But the numbers have gone up
and there's only one way for those numbers to go up
and that is parents moved here with them.
- That's a good point.
I think you're looking at a national trend,
but it differs region by region and state to state.
We discussed earlier that Wisconsin is a sticky state,
meaning people tend to stay here or come back home,
so I think that is a trend, a worrisome national trend,
but maybe not so much here in this state.
I'd love to just go down the line in a lightning round
and have you each say what is the one thing
that you're gonna focus on that you think will help
spur the new economy and I'll start with Will.
- Okay well, I think like I mentioned earlier,
we in Extension, we're that connective tissue.
We're out there to try to make those connections
between our community organizations.
Help them be more effective, be more efficient
and compete for that scarce funding.
So we're gonna continue
to do that organizational development.
We're gonna continue to help our local governments
be more efficient and it's a long process.
I think some of the gentleman's comments are well taken.
This is a challenging economy for rural areas
and so we have to continue to be flexible, adaptable
and be willing to embrace change when it presents itself
and think critically and think flexibly going forward
and that's what we're gonna try to do in Extension.
- Great. Mark, lightning round.
- I wanna help local economic developers
better understand their economy
so they can increase the performance
of their new businesses and increase the success rate
of their existing businesses.
If they focus on that,
that's how they increase the vitality of their community.
- Thanks. John?
- And from a 40,000-foot view,
just try to establish the conditions
that we can grow successful businesses in Wisconsin
and take the second step to improve and grow
the labor force even if it includes
making it well known that Wisconsin is a good place to live
and therefore move here.
- Excellent.
Please join me in thanking our panelists
as well as our sponsors.
Thank you for being here as well.
(applause)