Benchmarking Milwaukee’s economic progress

    Editor’s note: This blog is the text of the speech about the economic health of the southeastern Wisconsin region by Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, at the MMAC’s recent all-member meeting held at the Bradley Center.

    Before tackling our agenda, we need to be honest with where we stand – no hallucinating.
    Ten years ago, MMAC compiled its first report comparing Milwaukee to 20 other metros, using objective indicators to measure the region’s progress, both over time and against this peer group. 

    To know where we are going, we must know where we stand. Today we are releasing our 2009 Benchmarking report. Here is a brief snapshot of five key indicators that tell the story.
    Perhaps the purest measure of economic strength is our per capita Gross Metropolitan Product, which stands at $53,000 dollars and ranks us seventh among our 20 peers. How do we continue to grow?
    Median Household Income measures the base unit of economic health – the household. At $54,000, we are at the midpoint in our peer group.  How do we raise the region’s income level?
    Net Population Migration is a vote-with-your-feet measure of a region’s appeal. Since 2000, we had a net loss of 50,000 people. Other regions in the Midwest like Minneapolis, Indianapolis, and Columbus, have gained population. It can be done.  How do we attract and retain talent?
    Prior to the recession, our Job Growth was only half the rate of our peers. By the end of this year, we are likely to fall even further behind.  How do we generate more high-value, high wage jobs?
    The final measure, Educational Attainment, may be the biggest determinant of future prosperity.  In the last eight years, the region had a 4-percent increase in the number of adults with a bachelor’s degree, growing from 27 to 31 percent. This places us at the median of our peers. A sustainable quality of life is based on educated and skilled citizens.  How can we help more students to be college-ready?
    Our agenda will provide answers to these questions.  Overall, there is a small margin between gaining ground and losing ground with these metrics. 

    To ensure our agenda is on track, we asked for your input through a series of interviews and surveys.
    Eighty-five percent of the 300 participants were CEOs or business owners. Here, in your own words, are some of the representative responses:

    • “High taxes, corporate and personal, are part of the disconnect between elected officials and business owners.” (20-year high.)
    • “Our greatest long-term threat is the cycle of poor education and parenting of our youth.  he City’s public school system is a travesty.” (Harsh, maybe, but very representative.)
    • “Our challenge is drawing young people into manufacturing. The stigma of a dirty facility and grimy jobs does not match up with our plant floor or the opportunity to earn good money.” (No. 1 state in manufacturing jobs/No. 2 region.)
    • “Our top issue is regional growth – we must think regionally in all we do.”
      (There’s more to pull us together than to keep us apart.)
    • “When the issues become bigger than we are, when we feel we can’t influence them, then we move elsewhere.” (With your help we CAN influence the issues.)

     

    While our region has much to offer, this feedback reflects cracks in the foundation. You spoke, we listened, and we are taking action through our Blueprint for Economic Prosperity.

    Our first Blueprint goal is a tax and regulatory climate that positions Wisconsin for growth.
    We heard from hundreds of business leaders speaking out against the referendum mandating paid sick leave on all employers doing business in the city. This was a galvanizing issue for the membership and led to MMAC’s lawsuit to overturn this ordinance. Our success in the first round of court leaves us cautiously optimistic as we face an appeal.
    I want to publicly thank Mayor Barrett and Common Council President Hines for supporting our position, keeping Milwaukee “Open for Business.”
    Tax increases levied in this economic environment topped member concerns. Eighty-three percent of our survey respondents believe that our tax burden has a negative impact on economic development and evidently Forbes agrees, ranking us 48th best for business climate.  In your own words, it’s like having your house on fire and the fire department responding with a gas tanker.
    If we continue to raise taxes, without calculating the impact on job creation, Wisconsin will continue to take two steps back for every step forward.
    Case in point: In a difficult state budget year, we made headway with a number of targeted tax exemptions that will encourage investment, business starts, and job creation.  Our thanks to the governor and state legislature for their work on these credits. 

    At the same time, the state budget increased taxes on job growth by $745 million dollars through capital gains, combined reporting and personal income tax hikes. And these taxes provide just over 1% of the state’s $56 billion biennial budget. Couldn’t we have reduced spending a bit more?
    MMAC’s Tax Committee will review the state and local fiscal structures and propose specific changes that foster growth while continuing to provide needed government programs.
    Education and Workforce.  Our goal is a workforce powered by innovative, knowledgeable and skilled individuals who are productive, lifelong learners.
    Nowhere is change needed more than in the K12 education system in the City of Milwaukee.  Milwaukee Public Schools graduation rate is 41 percent. We have a greater percentage of high school dropouts than people with college degrees.
    That is why MMAC remains focused on improving educational outcomes.
    We will continue to support a robust system of schools where parents can exercise choice. MMAC has been a leader in this effort since the early 90s. Today, more than 26,000 students are enrolled in choice and charter schools in the city. These options have created more high-performing schools and resulted in fewer dropouts.
    Last session we worked with Milwaukee state representatives to defeat legislation that would have lowered the cap on the number of students who can attend a choice school.

     

    Our priority next session is to build a bi-partisan coalition to restore, and ultimately increase the funding for choice and charter schools to a level comparable to MPS. This was a priority with 84 percent of our members.
    Education reform has never been a one-part strategy for MMAC.  We have long supported MPS and we will continue to do so.  We’ve been active in school board elections; helped raise $17 million through a Gates grant to develop smaller high schools; and contributed $15 million for MPS graduates to attend college. More recently, MMAC’s Council of Small Business Executives raised $70,000 for reading enrichment programs.
    But in order to make significant, system-wide change, MPS needs a new governance structure. COSBE has taken a leadership role in pushing for this change. 
    We support efforts of the governor and mayor to draw a clear line of accountability with MPS.  Specifically, having the Mayor choose the Superintendent, and take responsibility for collective bargaining, the budget and tax levy.  Mayor, it may be lonely at the top, but thanks for stepping up and we stand behind you. (Call legislators)
    If we do not act now, we will not see significant improvement in graduation rates, and we will see MPS face bankruptcy as its benefit costs reach one half its current $1 billion dollar budget.
    We also support the governor’s efforts to put Wisconsin in line for federal education funding – available only if we get our education act together by:
    • Removing the barrier to evaluate teacher performance based on students’ results
    • Intervening to close failing schools
    • And providing common standards and assessments for student performance.

    Unfortunately, late last week, the Assembly passed by one vote a reform package that does not make these changes.
    We realize there are extensive challenges in our community.  We wish we had more two-parent families and less poverty, but that should not prevent us from improving our system of education. As former MPS superintendent Howard Fuller has said, we need to educate the kids we have, not the kids we wish we had. 

    Moving on to infrastructure. Our goal is a reliable and sustainable infrastructure that supports a growing regional economy.
    The capacity of our people is a competitive advantage; the capacity of our infrastructure is a necessity.
    We have, by and large, met this basic expectation.  We remain a commute-friendly region, with the completion of the Marquette Interchange and the reconstruction and expansion of Interstate 94 south to Illinois underway.
    But we have some identifiable challenges, starting with transportation.
    With 350,000 vehicles a day, accelerating reconstruction of the Zoo Interchange, the state’s busiest, needs to be a priority.
    In addition, we must keep the state transportation fund for transportation. We cannot reach into the cookie jar to balance state spending. We were successful last session in keeping a lid on this jar.
    We need a regional approach to transit – funding it, operating it and connecting it through a Regional Transportation Authority. We need to get out of the spiral of cutting bus routes and raising fares, straining the connection between people and jobs. 
    Removing transit from the property tax and providing a dedicated sales tax will put us in line with almost every other metro area in the country.

    We need to remove the moratorium on building nuclear plants in Wisconsin as the current plants reach the end of their useful life.  We can’t afford to lose this component of our power grid, even as we seek to diversify our energy sources with new alternatives.
    At the federal level, Cap and Trade legislation would put Wisconsin at a competitive disadvantage. As a large coal user, Wisconsin would be forced to bear costs that its competitors would not. Our message to the state’s federal delegation is that a vote for Cap and Trade is a vote against jobs.

    As we look to the future, our fresh water location holds much promise. Our high capacity and low costs for water and wastewater treatment can be a real game changer for economic development. You will hear more about this later.

    Our infrastructure is relatively healthy, and where it’s not, the solutions are fairly obvious. Not so for health care.
    Our goal in health care is a consumer-based system that provides high-quality and cost-effective health care.
    The Milwaukee region has a great reputation for high-quality health care that attracts outside dollars into the region, like Children’s Hospital. We also have a major industrial player here that produces and exports health care technologies in GE Healthcare.  Great to have Mark Vachon, President & CEO of GE Healthcare Americas.
    But as studies over the years have shown, health care generally costs more here.  That gap has closed significantly, down from 55 percent above the Midwest average in 2002 to 9 percent above the average today. We would like to close that gap altogether.
    When 20 percent of the population accounts for 75 percent of health care spending that can be impacted by lifestyle choices, wellness and prevention is the place to start.
    How can we make a difference? Through what we can control.
    Partnering with the Mayor of Milwaukee and the Greater Milwaukee Committee, we launched an effort to engage employers in a “Well City” campaign.  This is part of a national program to promote wellness and recognize organizations for their commitment to the health and well-being of their employees.  The point is not just to receive an award, but to bring employers together to share best practices on what really works for wellness.
    For more information on what your company can do to create a well workplace, check out the healthcare section of our website for programs and member services. 
    And I am pleased to announce today that our health care insurance partner, WPS, is offering a two-year rate guarantee starting January 1st to any MMAC member with 2-50 employees. 
    On the offense, MMAC worked to defeat “Healthy Wisconsin” – a state-run health care mandate with a billion dollar price tag.  In the coming year we will continue efforts to exempt health savings accounts from state taxes and reform medical malpractice to reduce the costs of defensive medicine.
    The moving target of federal health care legislation makes it difficult to predict future costs. To hold our elected officials accountable, MMAC issues a Legislative Scorecard to track votes on these key policy issues.  Go to our website, get informed, and help us deliver the message.

    While public policy is a major focus of our Blueprint, a number of initiatives are directed at strengthening connections between our members.
    In its ninth year, FUEL Milwaukee is helping employers retain and attract talent by connecting thousands of young professionals. This network provides opportunities to learn, have fun and volunteer. I’d like to recognize their leadership and respective team members for all their hard work – Mechelle King, Leslie Dixon and Diane Eckstrand.
    FUEL will continue its work with its 55  employer partners united around strategies to:
    • Grow the number of great places to work
    • Improve perceptions of the Milwaukee Region and
    • Increase community engagement
    Last year, FUEL adopted 8 non-profit organizations, which benefited from the volunteer work of more than 400 young professionals. The more connected you are, the more likely you are to remain in the region.

    Broadening our economic impact includes increasing the participation of minority-owned businesses in our economy. We know from our benchmarking work that the region lags in this important area.
    Through The Business Council, a network of ethnically-diverse businesses, we have developed a Supplier Diversity module, aimed at connecting diverse firms to corporate and public sector work.
    To date, the 22 participating ethnically-diverse firms have earned almost $136 million in new contracts.  Thank you to The Business Council and our corporate partners. Our goal is to add six corporations to the module and increase their spending with participants by 10 percent.

    And, lastly, in an effort to extend our reach internationally, MMAC was successful in obtaining federal approval to create an Immigrant Investor Zone for southeast Wisconsin.  This has quickly put us on the global map for foreigners interested in investing in the region. 
    In exchange for a minimum investment of $500,000 and the creation of 10 jobs, they qualify for a permanent U.S. visa.
    This tool extends our reach to attract capital to the region and has already resulted in $15 million dollars in new investment.  We expect this number to double next year. Many thanks to our China Business Council chairs, Bob Kraft and Ulice Payne, for teeing up this idea.  All of these efforts are starting to pay off for the region.

    Tim Sheehy is president of the Metropolitan Milwaukee Association of Commerce.

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