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How's the State of the State? It depends on what numbers are crunched

Show me a governor who delivers a State of the State speech that is anything less than optimistic, and I’ll show you an aspiring ex-governor.

Whether Republican or Democrat, riding high in the polls or battling mediocre approval ratings, Wisconsin governors always use their annual State of the State speech to inspire, cajole and sprinkle a few rose petals on the voters. Gov. Jim Doyle’s fourth report to the state was no exception.

But how accurate were his claims about the strength of the economy? Generally speaking, they were on the money. Critics would be quick to point out, however, that what Doyle didn’t say during his televised address to the Legislature could matter just as much over time.

The unemployment rate in Wisconsin has fallen a full percentage point to 4.7 percent since Doyle took office in January 2003. The number of jobs created since that time, when seasonally adjusted, is an impressive 70,000. Both figures exceed the performance of the nation as a whole, when Wisconsin’s share of the total U.S. population and workforce is taken into consideration.

It becomes a bit more complicated after that. While unemployment is down, a nagging problem in Wisconsin is the “under-employment” of middle-aged workers who lost their jobs during the manufacturing recession. Many of them have yet to find work that pays as much as they earned before – and some may never do so. Those who are willing to retrain increase their chances, but there’s no guarantee.
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In some businesses, there are chronic worker shortages. Many manufacturers are having trouble filling orders because they can’t find enough skilled workers for the types of job at hand. The tech colleges are trying to crank out workers who fit industry demands, but the skilled worker pipeline (which begins in high schools) has been somewhat dry. If there’s a drag on the Wisconsin economy in 2006 – other than high energy costs – it will be spot labor shortages.

Manufacturing groups such as Wisconsin Manufacturers & Commerce see other problems on the horizon. It recently accused the state Department of Revenue of “overriding zeal” and “abuses” in how it taxes Wisconsin companies. The state’s largest business group is still smarting, as well, over Doyle’s vetoes of four bills that would have made it harder to sue makers of allegedly defective products. One bill would have shielded manufacturers from lawsuits if plaintiffs could not pinpoint the exact maker of a harmful product, a stance a majority of legislators found reasonable.

Wages in Wisconsin, while improving, continue to run behind the U.S. average. Twenty-five years ago, personal income per capita in Wisconsin was essentially dead-even with Minnesota. Today, there’s a gap of roughly $4,000 per capita, or more than $21 billion when spread over the state. Even if Wisconsin matched the U.S. per capita income, the state would have $4.5 billion more in wages.

Not coincidentally, Wisconsin lost ground on wages during a time it was also losing educated people. Between 1989 and 1999, Minnesota showed a net gain of 141,000 adults (25 and older) with a four-year college degree. Wisconsin showed a net loss of 51,000 four-year degrees. The numbers have improved in the last five years, but not enough to close the “brain” gap.

There is a great deal of good news about the Wisconsin economy. Investment in high-tech businesses appears on the rise, entrepreneurs are on the loose, there’s a sense of optimism among most business groups, and strategies to improve the state’s stock of “human capital” are taking hold.

So, how’s the State of the State? It’s better than it’s been since the late 1990s. But there’s plenty of room for progress in a competitive world that never stops spinning.

Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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