24 May Academic R&D pays for itself in jobs and economic growth
As the Legislature’s budget-writing committee wrestles with balancing the state’s biennial budget, calls for additional cuts in spending by the University of Wisconsin System will likely move front and center. In some ways, that’s logical: The UW System budget is one of the state’s five biggest spending programs.
There would be little logic, however, in cutting UW System programs that contribute to the state’s economic growth. As a 2004 report by the Wisconsin Technology Council illustrated, the state’s investment in academic research and development on UW System campuses pays for itself many times over in terms of economic growth and jobs.
Academic research institutions in Wisconsin spent about $883 million on direct research activities in the fiscal year ending in mid-2002, according to figures reported last fall, with more than $700 million of that total taking place on UW campuses. The UW-Madison was the runaway leader with more than $660 million in research spending, but other UW campuses – notably UW-Milwaukee – are aggressively expanding their R&D programs. The UW-Milwaukee could hit $100 million in research within five years, and UW-Green Bay, UW-Stout, UW-Platteville and UW-La Crosse are among other campuses with growing R&D efforts.
That’s important to the state’s economy because academic R&D creates jobs, directly and indirectly. Using an economic multiplier long-established by the U.S. Department of Commerce, the $883 million in academic R&D spending in Wisconsin created 31,788 jobs – or 36 direct and indirect jobs per every $1 million spent.
If the jobs spawned by academic research spending in Wisconsin were reported as a separate category within the labor market statistics of the state Department of Workforce Development, it would represent a significant sector in its own right. For example, paper manufacturing employs 39,100 people in Wisconsin, printing 34,700, plastics and rubber products 34,600, and construction of buildings 31,600.
State government’s investment in academic R&D attracts federal aid — an area where Wisconsin rarely shines. Wisconsin ranks 15th among the 50 states in total academic R&D spending, and its per capita spending ($148.14 in fiscal 2002) was well above the U.S. average of $126.17. About three-quarters of all academic R&D is funded by federal programs such as the National Institutes of Health, the National Science Foundation and other research-oriented agencies. But the feds rarely fund research projects unless there is sufficient state and university support.
Without a vibrant foundation in academic research and development, Wisconsin would find it difficult, if not impossible, to grow a high-tech, “knowledge-based” economy. Thanks to decades of investment in people and facilities, Wisconsin has a strong base in academic R&D today. However, continued erosion of the UW System budget could undermine the state’s advantage.
The past 25 years have generally seen a trend toward weaker public support for higher education in Wisconsin. The state’s higher education “effort,” as measured by per capita public spending, has declined faster than the U.S. average and more sharply than in all but one of the eight Big Ten Conference states.
Wisconsin has reduced its higher education effort by 47.8 percent since 1978. That is 40th among the 50 states – with 50th representing the weakest effort. This decline in public support is chipping away at an infrastructure that supports academic research in Wisconsin.
The 2003-2005 state budget reduced UW System spending in real dollars, and Governor Jim Doyle’s proposal for 2005-2007 is hardly a return to profligate habits. The Legislature’s Joint Finance Committee is right to look for ways to balance the state’s books, but it should be careful not to damage those programs, such as academic R&D, that more than pay for themselves in terms of economic growth.
Wisconsin has a strong foundation in academic R&D. Lawmakers should seize the opportunity to keeping building the state’s 21st century economy.
The opinions expressed herein or statements made in the above column are solely those of the author, & 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.