Report: Milwaukee’s workforce is stronger, but entrepreneurship remains a challenge

Public Policy Forum suggests Foxconn related growth won’t happen on its own

Metro Milwaukee’s workforce is getting stronger and is competitive with peer areas, but the region is under-performing in the areas of idea development, capital formation and entrepreneurship, according to a new Public Policy Forum report.

Milwaukee’s skyline.

The report found the region is losing more businesses than it is creating and while university research and development spending and patent activity have trended up, Milwaukee has ranked behind its peers in many categories.

Joe Peterangelo, Public Policy Forum senior researcher and the report’s lead author, acknowledged Foxconn Technology Group’s plans for a 20-million-square-foot LCD production campus could dramatically alter the region’s economy, but also offered a word of caution.

“Our findings suggest that any increased startup activity and prolonged business dynamism that may result from the Foxconn development will not simply happen on its own, but will require diligent and strategic efforts to shore up some of the weaknesses identified in this report,” Peterangelo said.

The report measured Milwaukee’s performance in a number of areas and compared current data against the region’s performance before the Great Recession. The peer regions in the report included Minneapolis, Portland, Pittsburgh, Cincinnati, Kansas City, Austin, Cleveland, Indianapolis, Oklahoma City and Buffalo.

Milwaukee performed best on measures related to workforce development with an upward trend in educational attainment and the number of scientists, engineers and tech and IT workers. The region was in the middle of the pack amongst peer cities for most measures, except for the number of skilled and technical workers where Milwaukee was in the top four.

The one area where the area was below the national average was the increase in college-educated, foreign born population. The U.S. as a whole saw that population increase by 31.3 percent from 2005 to 2015 while metro Milwaukee increased by 18.9 percent, ranking last among peer cities.

Leaders at the region’s universities, especially the University of Wisconsin-Milwaukee and Marquette University, have both made increasing research a priority. The region has seen an average annual increase on R&D spending of 4.7 percent from since 2006 and reached $293 million in 2015. The Medical College of Wisconsin accounted for $199 million of the total, followed by UWM at $63 million.

Despite the increase, Milwaukee was eighth among peer regions in per capita research expenditures.

Venture capital funding in Milwaukee has increased over the last three years, reaching $44.6 million in 2016, but despite the gains, the region ranked ninth in per capita investment ahead of only Oklahoma City.

The report also found a decline in the number of micro and small business between 2005 and 2015. The number of micro businesses, defined as those with one to nine employees, was down 6 percent and small businesses, those with 10 to 99 employees, were down by 5 percent.

The region also had a 1.02 ratio of business births to deaths, below the national trend of 1.11 and ahead of only Cleveland.

Milwaukee did out-perform Cleveland and Pittsburg on startup activity, which the report described as noteworthy.

“Pittsburgh has garnered national attention for transforming its economy from a historic focus on steel and manufacturing to a more diverse set of strengths in health care, tech, and other knowledge-based sectors,” the report said. “The fact that Pittsburgh has enjoyed success in diversifying its economy and transforming its national image without apparent success on the entrepreneurial front may temper concerns about Milwaukee’s similar poor showing in this area.”

But Milwaukee ranked dead last among peer regions on business survival, with 46.8 percent of businesses surviving at least five years. Pittsburgh led the way at 53.8 percent.

The report also found 10.7 percent of businesses in metro Milwaukee are minority owned, while 31.1 percent of the region’s population is minority. The 33.4 percent minority business ownership (relative to the region’s minority population) is a slight improvement over 2007, but it is still well behind the national figure of 54.2 percent and ranks ahead of only Cleveland among peer areas.

The authors point out a number of organizations and facilities have been created in recent years to boost startups and expansions.

“Given that the region’s performance in this area remains a concern, however, it may make sense to analyze how effectively these organizations are meshing with one another, and whether there is a need for additional capacity in this arena and/or better coordination in working toward collective goals,” the report says.

Metro Milwaukee’s workforce is getting stronger and is competitive with peer areas, but the region is under-performing in the areas of idea development, capital formation and entrepreneurship, according to a new Public Policy Forum report.

Milwaukee’s skyline.

The report found the region is losing more businesses than it is creating and while university research and development spending and patent activity have trended up, Milwaukee has ranked behind its peers in many categories.

Joe Peterangelo, Public Policy Forum senior researcher and the report’s lead author, acknowledged Foxconn Technology Group’s plans for a 20-million-square-foot LCD production campus could dramatically alter the region’s economy, but also offered a word of caution.

“Our findings suggest that any increased startup activity and prolonged business dynamism that may result from the Foxconn development will not simply happen on its own, but will require diligent and strategic efforts to shore up some of the weaknesses identified in this report,” Peterangelo said.

The report measured Milwaukee’s performance in a number of areas and compared current data against the region’s performance before the Great Recession. The peer regions in the report included Minneapolis, Portland, Pittsburgh, Cincinnati, Kansas City, Austin, Cleveland, Indianapolis, Oklahoma City and Buffalo.

Milwaukee performed best on measures related to workforce development with an upward trend in educational attainment and the number of scientists, engineers and tech and IT workers. The region was in the middle of the pack amongst peer cities for most measures, except for the number of skilled and technical workers where Milwaukee was in the top four.

The one area where the area was below the national average was the increase in college-educated, foreign born population. The U.S. as a whole saw that population increase by 31.3 percent from 2005 to 2015 while metro Milwaukee increased by 18.9 percent, ranking last among peer cities.

Leaders at the region’s universities, especially the University of Wisconsin-Milwaukee and Marquette University, have both made increasing research a priority. The region has seen an average annual increase on R&D spending of 4.7 percent from since 2006 and reached $293 million in 2015. The Medical College of Wisconsin accounted for $199 million of the total, followed by UWM at $63 million.

Despite the increase, Milwaukee was eighth among peer regions in per capita research expenditures.

Venture capital funding in Milwaukee has increased over the last three years, reaching $44.6 million in 2016, but despite the gains, the region ranked ninth in per capita investment ahead of only Oklahoma City.

The report also found a decline in the number of micro and small business between 2005 and 2015. The number of micro businesses, defined as those with one to nine employees, was down 6 percent and small businesses, those with 10 to 99 employees, were down by 5 percent.

The region also had a 1.02 ratio of business births to deaths, below the national trend of 1.11 and ahead of only Cleveland.

Milwaukee did out-perform Cleveland and Pittsburg on startup activity, which the report described as noteworthy.

“Pittsburgh has garnered national attention for transforming its economy from a historic focus on steel and manufacturing to a more diverse set of strengths in health care, tech, and other knowledge-based sectors,” the report said. “The fact that Pittsburgh has enjoyed success in diversifying its economy and transforming its national image without apparent success on the entrepreneurial front may temper concerns about Milwaukee’s similar poor showing in this area.”

But Milwaukee ranked dead last among peer regions on business survival, with 46.8 percent of businesses surviving at least five years. Pittsburgh led the way at 53.8 percent.

The report also found 10.7 percent of businesses in metro Milwaukee are minority owned, while 31.1 percent of the region’s population is minority. The 33.4 percent minority business ownership (relative to the region’s minority population) is a slight improvement over 2007, but it is still well behind the national figure of 54.2 percent and ranks ahead of only Cleveland among peer areas.

The authors point out a number of organizations and facilities have been created in recent years to boost startups and expansions.

“Given that the region’s performance in this area remains a concern, however, it may make sense to analyze how effectively these organizations are meshing with one another, and whether there is a need for additional capacity in this arena and/or better coordination in working toward collective goals,” the report says.

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