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Tom Still

Tom Still is president of the Wisconsin Technology Council.

For reasons rooted more in politics than economics, much of the debate over Wisconsin’s relative economic standing has revolved around job creation: Is the state on track (or not) to create the 250,000 jobs set as a four-year goal by Gov. Scott Walker during his 2010 campaign for governor?

While no one can deny that raw job creation is one vital sign for Wisconsin’s health, the debate shouldn’t overlook other measures that help quantify and qualify how the state is doing.

Here are a few examples of other economic indicators that can assist policymakers — and citizens — in taking the state’s economic pulse:

Quality of jobs: The latest monthly estimates from the state Department of Workforce Development shows the unemployment rate at 6.6 percent, the lowest mark since late 2008, and 4,500 private-sector jobs were added to the workforce in December 2012. That’s good news, but what also matters over time is the type of jobs being created — and what they pay. Despite some upward movement in recent years, Wisconsin per capita income is about $700 behind the U.S. average, according to the Census Bureau, and total household income lags by roughly $400. That would indicate Wisconsin needs to create more jobs at the higher end of the spectrum.

“Knowledge” job creation: Part of the quality measure is the number of jobs created in growth sectors of the national economy. That often means jobs tied to information technology and other technology jobs that require skilled workers. According to the 2011 Cyberstates report of the TechAmerica Foundation, Wisconsin lost about the same number of tech jobs (1 percent) as it lost in its overall workforce in 2010. However, it added jobs in software publishing, where the state now ranks 10th among the 50 states, and electromedical equipment, where it ranks third. Wisconsin is also 11th in electronic components. Wisconsin’s reported high-tech payroll in 2010 was $5.2 billion, or 22nd nationwide.

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Company creation: Figures from the state Department of Financial Institutions showed 35,988 new business entities were created in 2012, up 8.4 percent from 2011 and the highest total since 2007, when the total was 33,164. Getting behind those numbers is the trick. Many of the “entities” created are on paper only, such as some LLCs. That means counting the actual number of companies created — even if it’s only one person — is important. Wisconsin has historically lagged in company startups but there are signs of a turnaround. Why is company creation so important? All net new jobs in the United States are created by young firms, according to the Ewing Marion Kauffman Foundation.

Exports and foreign direct investment: Exports by Wisconsin companies and investments by non-U.S. companies in Wisconsin produce a more balanced, profitable economy, and add to job creation over time. The state continues to outperform national growth in exports and foreign companies are increasingly investing in the state. In fact, Wisconsin was on pace in late 2012 to set a record for state exports — probably in excess of $23 billion. Industrial machinery, vehicles, farm products, electrical machinery and medical equipment were leading the way.

Investment in R&D: Wisconsin’s production of patents, which protect the intellectual property of companies and individuals, continues to out-perform the nation on a per capita basis. Also, academic research and development spending remains high, although the UW-Madison slipped back a notch to fourth in the United States in the most recent National Science Foundation statistics. What ultimately matters, however, is how that research is translated into companies and jobs. Improving that performance over time is a priority for a number of players, including the university system itself.

Economists also examine many other indicators, including workforce education levels, angel and venture capital investments and poverty rates in trying to assess how any given economy is performing. Raw jobs data is important, but it’s far from the only factor and not an indicator so exclusive that every month-to-month rise — or fall — is worth celebrating or lamenting.

For policymakers and citizens alike, keeping a broader range of indicators in mind is critical, even if political noise sometimes clouds the picture.

Tom Still is president of the Wisconsin Technology Council.

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(7) comments

LAXTEA

To the point of the article, I would like to see a metric showing the number of government jobs versus private sector jobs. We have an unsustainable level of government. It takes 4-5 private sector jobs to support each government job. So if you want a net increase of 200K "jobs" we could simply get rid of about 50,000 government workers. Boom!

Government workers are nothing but a net drain on the economy, we need to slash government!

CelticMan

1. It seems we are lagging quite a bit in the raw number of jobs, so much so that Walker has been fudging the numbers for a while.

2. Yes, the quality of jobs is important; we don't want good-paying construction, manufacturing, etc. jobs replace by McDonalds jobs.

3. Per-capita income lags? Hmmm, does that have anything to do with the forced pay cut all state workers took? That also created a drag on the economy, since middle class families spend something like 90% of their income locally.

4. Knowledge jobs are important? Sure, so lets cut education budgets, lets lower the quality of the teaching workforce, lets make it more expensive to get a college education. That should turn things around, shouldn't it?

LAXTEA

I value government school teaching jobs about equal with McDonalds jobs. Except the fast food workers produce something and are accountable for their performance.

CelticMan

Well, there we go, then. Thanks.

If you would like to come to my classroom as a guest teacher some day, just let me know. Fill out the background check paperwork at Hogan, send me a note on here, and we will work something out.

Napoleon

One can get a good qualitative measure of how Wisconsin is doing by traveling around the city, the state, the nation and the world: we look very run down, very dilapidated, even compared to what we thought of as poorer nations, like Spain or Belize. Most of the Deep South looks better than Wisconsin right now.

LAXTEA

La Crosse has the worst streets of any city I can think of. If you ask the average citizen what the first role of local government is they would say "pave the roads, and arrest the criminals". La Crosse is failing on both of those fronts.

Before the city decides how to culturally shape the city with arts centers, and social programs shouldn't we first try to get these 2 basic tasks handled?

Napoleon

That is why the current city government must go: fixing the roads comes before TIF corporate welfare for LHI and Kwik Trip. Social programs for the rich and well-connected must go, yes.

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