Wisconsin ranks near bottom on new Kauffman index

For several years, Milwaukee and Wisconsin were ranked near the bottom of the barrel in business creation and growth compared to the rest of the country, according to the annual Kauffman Index of Startup Activity.

In the 2017 Kauffman Index of Startup Activity, the metropolitan Milwaukee area ranked 39th, tied with Pittsburgh for the lowest ranked major metro area. Meanwhile, Wisconsin ranked last (25th) of the larger states rankings. The state also ranked last in 2016.

But then in 2018, the Index of Startup Activity, put out by the Kansas City-based Ewing Marion Kauffman Foundation, was discontinued as the organization retooled its research strategy.

The entrepreneurship-focused nonprofit recently put out a new report, the Kauffman Indicators of Early-Stage Entrepreneurship, and Wisconsin still didn’t fare well.

According to the new report, based on 2017 data, Wisconsin received a -1.29 in the Kauffman Early-Stage Entrepreneurship Index. By this new measure, Wisconsin is again near the bottom of the rankings, placing ahead of just Rhode Island (-2.93), Ohio (-1.85), New Hampshire (-1.4) and Illinois (-1.36). The top performer was California, with a 2.86 index score, followed distantly by Missouri (1.86), Florida (1.75), Wyoming (1.68) and Texas (1.67).

The index is comprised of four evenly weighted measures: the rate of new entrepreneurs, or the average percentage of adults becoming entrepreneurs in a given month, year average (Wisconsin was at 0.26 percent); opportunity share of new entrepreneurs, or the percentage of entrepreneurs driven by opportunity rather than necessity (73.27 percent); startup early job creation, or the jobs created by startups per 1,000 people (4.17); and startup early survival rate, or the percentage of firms surviving one year after founding (77.25 percent).

Compared to other states, Wisconsin was in middling territory for its rate of new entrepreneurs, startup early job creation and startup early survival rate. It fared particularly poorly in opportunity share, placing second to last, ahead of just Rhode Island (68.72 percent). The median was 84.7 percent.

The Kauffman Early-Stage Entrepreneurship Index is calculated using data from the U.S. Census Bureau and Bureau of Labor Statistics, and the Business Employment Dynamics series, which is based on the Quarterly Census of Employment and Wages.

In this new index report, Kauffman was careful to emphasize actionable data rather than rankings among states, it said. This report replaces the previous 2015-2018 Kauffman Index of Entrepreneurship series, which measured startup activity, main street entrepreneurship and growth entrepreneurship, the organization said.

“This redesign was motivated by several priorities, including the need for a series of clear indicators, timely and current information in the context of existing data constraints, and a focus on the nature of early-stage entrepreneurship,” the report says. “The Kauffman Foundation received input from policymakers, researchers and other stakeholders about how to best accomplish these goals.”

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Molly Dill
Molly Dill, former BizTimes Milwaukee managing editor.