Pick almost anyeconomic indicator and chances are it hit unthinkable levels in Wisconsin this year. The unemployment rate? Jumped from 3.1% in March to 13.6% in April and was still at 12% in May. Unemployment claims? More than 750,000 initial claims were filed through mid-June compared to around 150,000 by the same time last year. There were an average
Pick almost anyeconomic indicator and chances are it hit unthinkable levels in Wisconsin this year.
The unemployment rate? Jumped from 3.1% in March to 13.6% in April and was still at 12% in May.
Unemployment claims? More than 750,000 initial claims were filed through mid-June compared to around 150,000 by the same time last year. There were an average of 277,000 continuing claims each week in May and June compared to around 21,000 last year.
Jobs? Private sector employment was down 338,000 from last year in May and that’s after a gain of 72,100 from April. Leisure and hospitality employment was still down 135,000 from last year.
GDP? Down 5% in the first quarter. Exports? Down $900 million from last year and $1.2 billion from 2018.
Climbing out of the hole created by the coronavirus economic downturn won’t happen overnight. A recent report from the Wisconsin Economic Development Corp. estimated the state would recover 25% of lost jobs by the third quarter of this year and 75% by the second quarter of 2021, but full recovery could take more than two years.
The report, required by coronavirus-relief legislation passed in April by lawmakers and signed by Gov. Tony Evers, also spells out ideas for boosting the recovery of Wisconsin’s economy. The bill tasked the agency with developing a plan to support the state’s major industries.
WEDC’s recommendations fall into three major buckets: Getting people back to work, fixing broadband and supporting innovation.
“The complexity of what we’re facing is pretty awesome,” said Missy Hughes, chief executive officer and secretary of WEDC. “This isn’t just a tornado that has touched down in a small town in central Wisconsin. This is something that has hit the entire state and of course the whole world.”
[caption id="attachment_508767" align="alignnone" width="1280"] Missy Hughes, chief executive officer and secretary of WEDC.[/caption]
Hughes also pointed out that even as WEDC and state leaders begin looking toward recovery, the challenge of getting the virus under control remains.
“The best and fastest way to get to recovery is if we can continue to do our best to control the spread of the virus,” she said. “Certainly, what we’re seeing right now is causing a lot of nail-biting for everybody.”
She said things like hand washing, social distancing and wearing a mask will be key to limiting the spread. Legal questions aside, Hughes said another shutdown of the state similar to Evers’ “Safer at Home” order from the spring may not be feasible for the state’s economy.
“The small businesses that survived until now, I’m not sure they can take another hit. We’ve got to keep the momentum, but asking them to shrink their capacity or to close is just going to be really hard,” Hughes said.
WEDC’s report highlights the variety of challenges facing the state’s major industries. Tourism, retail and service sectors are either still closed, open in a limited capacity or struggling for customers. Agriculture and food and beverage are dealing with wild shifts in demand and disruptions to their supply chain. While manufacturing and construction did not see the same immediate disruption as, say, restaurants, lower levels of consumer spending and declining capital investment could have a long-term impact.
Some of the WEDC recommendations include things Wisconsin is already doing, like training workers for in-demand careers, investing in broadband, having established firms work with entrepreneurs and developing a Wisconsin-focused venture fund.
Hughes said the report’s three broad recommendations are important to prioritize.
“We need to focus because we’re going to be in a time of limited resources,” she said.
She noted the state budget will take a hit from the slowing economy and said Wisconsin should leverage every federal dollar possible.
Hughes said the recommendations also offer a chance for quick gains.
“Having a bias toward action on some efforts will kickstart and launch us forward, especially on innovation,” she said.
Specific innovation recommendations include piloting and funding innovative ideas for supporting entrepreneurs, including taking equity positions, incentivizing established firms to work with seed accelerators and second- or third-stage developers to mentor and provide capital to entrepreneurs, investing in a Wisconsin venture fund solely focused on supporting entrepreneurs based in the state and dedicating part of the fund to underserved, underinvested communities. Other recommendations include better connecting research institutions and industry; and supporting trends in manufacturing like artificial intelligence, data science and sustainability through entrepreneurship.
“If we can present Wisconsin as an innovative state here in the Midwest that’s moving things forward, we have a real opportunity,” Hughes said.
She acknowledged the idea of WEDC taking equity investments in companies would come with more risk than some of the agency’s other investments and it would require being transparent with taxpayers about the state’s strategy.
“One of the challenges we’ve had in Wisconsin is getting access to capital and investment and so if the state shows a willingness to stand behind these businesses, then hopefully other investors will and we can create capital stacks that really move these ventures forward,” Hughes said.
“If we can demonstrate that the strategy of investing in innovation and entrepreneurship is beneficial to the whole state because we see that energy and that job creation and people wanting to move here and be a part of what’s happening in Wisconsin, rather than looking at each individual investment and saying ‘well, that was a bad idea,’” she added.
When it comes to getting people back to work, the WEDC report assumes that many of the jobs lost in the service sector will not return. The specific recommendations include incentivizing businesses to train new employees; investing in programming at technical colleges and the UW System to provide certifications while also encouraging longer term degrees; creating direct connections between businesses in need of employees and those that are willing to train or assist in training; investing in child care and education to support people going back to work; and addressing access to health care by expanding Medicaid.
Hughes said that with businesses like restaurants either not reopening or doing so at a smaller scale or simply with fewer customers, the challenge is in getting people into family-sustaining jobs.
“There’s a moment that we have here of taking those displaced workers and filling gaps that our industries are seeing,” she said.
Wisconsin also benefits from already having made investments into its higher education system over the years, Hughes said.
“Where we have strengths, let’s not cut back on them. Let’s not defund and, if we can find the resources, let’s invest in them, because that’s the network that’s going to move us forward,” she said.
BIZEXPO | EARLY BIRD PRICING | REGISTER BY MAY 10TH AND SAVE
