The Wisconsin Policy Research Institute

Milwaukee's Poor Performance

By Ben Artz

Private employment is a good indicator of how a local economy is performing. It provides an indication of business growth and confidence in a particular geographic area, forming strong expectations that drive future economic success.

Unfortunately, Milwaukee’s private employment growth is dismal and is one of the worst among the nation’s 50 biggest cities. According to a recent report by UW-Milwaukee’s Center for Economic Development that uses public data from the US Bureau of Labor Statistics, Milwaukee’s private employment has been precipitously declining since 2000.¹ In fact, Milwaukee has lost 10%, or roughly 27,000 private sector jobs, and is ranked 47th out of the 50 biggest cities and 17th out of the 20 biggest “frost belt” cities. For this reason Milwaukee is considered as having one of the worst economies in the Midwest and as such, the entire country.

But as our current political leaders have so aptly stated, we should never waste a good recession. In other words, Milwaukee’s leaders, and also Wisconsin’s, must act now and change tactics or face further economic decline. The first task is to identify the key reasons that led to Milwaukee’s fall and the second is to provide solutions that aid in Milwaukee’s redevelopment.

Possibly the biggest problem associated with Milwaukee is its failing school system. Businesses locate where they can find a skilled and dedicated work force. Milwaukee’s public school system does not provide a competitive proportion of graduates with either of these qualities. This problem leads into the second, Milwaukee’s inability to change with the macro economy to one based on highly-skilled services and technology rather than manufacturing.

For instance, since 1990 Wisconsin’s manufacturing sector as a whole shrank by about 6%, whereas the nation’s dropped by 24%. Thus, Wisconsin has not effectively switched gears to a skills based economy.

A third problem is also related. As skilled service providers and technology firms were looking for places to set up shop and grow, Wisconsin and Milwaukee maintained environments that were not friendly to businesses, including relatively high tax and regulatory structures. Firms looked elsewhere and private employment in Milwaukee suffered.

Arguably the most important solution is to reform the Milwaukee Public School system. There must be incentives created in order for teachers and parents to focus the students on learning, graduation and college entrance. This can be difficult as teacher unions, school boards and other established institutions tend to vote against change.

Likewise, the city and state must promote the rise of UW-Milwaukee as a leading research institution in the area and provide incentives for firms to partner with UW-Milwaukee and other such places of higher learning. Public-private business ventures can boost applied training and education for students while exploring additional investment opportunities for the involved firms. This would help change the industrial makeup of Milwaukee to a more skills based economy.

Finally, the business environment in the state must improve. Wisconsin has always been one of the highest taxed states in the country and this certainly cannot help Milwaukee’s cause. Also, the city must stop supporting regulations that businesses actively fight against. A fine example is the sick day provision approved in last November’s election. Local business owners turned out in droves to voice their concern over the proposal, but it appeared on the ballot nonetheless and was passed. This harsh regulatory atmosphere must end if Milwaukee is to succeed.

Milwaukee is at a crossroads in its life as a city. It has fallen from grace, once competing with Chicago for Midwestern dominance, now struggling to survive with a decreasing population and a private sector based on a declining industry. The leaders of Milwaukee and Wisconsin alike must work together and improve the city’s future.

-May 11, 2009

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