Navigating the New Economy | Wisconsin Public Television

Navigating the New Economy

Navigating the New Economy

Record date: Oct 24, 2017

Cathy Sandeen, Chancellor of UW Colleges & UW-Extension, moderates a panel discussion with state and local experts about how to develop local economic resources. Panel members include: John Koskinen, Chief Economist at the Wisconsin Department of Revenue, Mark Lange, Executive Director of UW-Extension Division for Business & Entrepreneurship, and Will Cronin, Community Resource Development Educato

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Episode Transcript

- We're really happy

that wispolitics.com

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)

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