Wisconsin Outshines The Rest of Midwest

Joel Kotkin reports on Wisconsin:

the state has done far better than its Midwestern counterparts — such as Michigan, Illinois and Ohio — in virtually every measurement, from job creation to net migration. In addition, due to its stronger economy, the state is also expected to remain relatively unscathed by the mortgage crisis devastating some of its neighbors.

In this sense, then, Wisconsin represents not the failed past of the Midwest but the direction of its future. Always a center for progressive ideas in economics, over the last decade the state has experienced a remarkable transformation that separates it from failed one-industry states such as Michigan or the older industrial belt of northern Ohio. This is certainly a core message pushed by James Doyle, the state’s progressive Democratic governor and key Obama booster.

Doyle’s backers point out that even though Wisconsin is about as dependent on manufacturing as its neighbors, the nature of its industrial base is quite different. For one thing, with the notable exception of places like Janesville, site of a major General Motors plant, the Badger State has been far less susceptible to the current turmoil in auto-related mass manufacturing.

Instead, Wisconsin has emerged as a major center for the precise kind of industry that is flourishing, such as medical equipment, electronics and specialized machine tools. These industries reflect one of the most unappreciated sectors of America’s economy, the advanced manufacturing sector. Since the 1980s, these industries — and the skilled workers who key their growth — have weathered the competitive storms even as lower-wage and rote manufacturing employment have ebbed, boosting overall employment by 37 percent.

Wisconsin’s diversified, highly skilled manufacturers have been leaders in this promising development. In fact, Wisconsin’s advanced manufacturing sector has grown handsomely over the past three years, even as it has shrunk in places like Michigan, Ohio and even Illinois.

This shift has been closely tied to the surge in exports, which are increasingly a source of strength for the battered U.S. economy. In fact, Wisconsin’s exports — mostly industrial goods and paper — have been growing at twice the national rate. Capital goods exports have benefited in large part from markets in developing countries such as China and Mexico, as well as in Japan and Canada.

Such growth also has implications beyond the state’s industrial sector. As a 2006 Chicago Federal Reserve Bank study demonstrates, high-end manufacturing jobs also tend to spawn higher-end business service jobs. This fits the pattern seen in Wisconsin, which has enjoyed nearly 80 percent growth since 1990 — performance almost twice as good as that in Ohio and Michigan, as well as New York.

Overall, for the past two decades, Wisconsin has been a pretty good job producer, performing at close to the national average, while most other industrial states have lagged far behind. Certain regions have been particularly prolific. A critical leader has been the state capital, Madison, but many smaller cities like Wausau, Eau Claire and, particularly, Green Bay have also registered strong growth.

These economic trends have produced markedly different demographics in Wisconsin than those seen in its neighbors. Unlike many Great Lakes states, for example, the state’s population growth has not stagnated; since 1990, the state has been growing nearly three times as rapidly as Ohio and almost twice as fast as Michigan. The demographic pattern within the state parallels the job numbers, with the strongest growth in Milwaukee’s suburbs as well as in Madison, Appleton, Green Bay and Eau Claire.

The state’s economic success has also helped Wisconsin, since 2004, attract younger, educated workers — particularly between the ages of 26 and 40 — which is itself a rare phenomenon in the industrial Midwest. The snowbound state may not be gaining younger and middle-aged educated workers at the rate of the Sunbelt giants North Carolina, Texas or Arizona, but its emerging demography skews younger than that of many of its immediate neighbors.