1. The Current Economy and Future Trends Terry Ludeman November 19, 2009

2. Wisconsins Unemployment Rates Actual and Projected

3. Some Things You May Not Wish To Know About Wisconsin Wisconsin is a low wage state. Wisconsin is a low wage state. Wisconsin has low productivity per worker. Wisconsin has low productivity per worker. Wisconsin has low post secondary educational attainment. Wisconsin has low post secondary educational attainment. Wisconsin is growing slowly compared to U.S. Wisconsin is growing slowly compared to U.S. Wisconsin is one of fastest aging states. Wisconsin is one of fastest aging states.

4. Wisconsin is a Low Wage State Our average wage is about $38,100 per job, per year. Our average wage is about $38,100 per job, per year. We rank 32nd in wages per job. We rank 32nd in wages per job. The national average is about $44,600. The national average is about $44,600. Minnesota ranks 14th, at $44,400, Illinois ranks 8 th at $47,700. Minnesota ranks 14th, at $44,400, Illinois ranks 8 th at $47,700. – In the late 1970s we had higher wages than Minnesota.

5. Wisconsin has Low Productivity Per Worker Wisconsins Gross State Product (GSP) per job was $81,954 in 2007. Wisconsins Gross State Product (GSP) per job was $81,954 in 2007. National average Gross State Product was $99,051. National average Gross State Product was $99,051. Delaware was the highest with $137,333. Delaware was the highest with $137,333. Wisconsin ranked 39th in productivity per job. Wisconsin ranked 39th in productivity per job.

6. Wisconsin has Low Productivity Per Worker Wisconsins Gross State Product (GSP) per job was $81,954 in 2007. Wisconsins Gross State Product (GSP) per job was $81,954 in 2007. National average Gross State Product was $99,051. National average Gross State Product was $99,051. Delaware with the highest was $137,333. Delaware with the highest was $137,333. Wisconsin ranked 39 th in productivity per job. Wisconsin ranked 39 th in productivity per job. If Wisconsin was at the national average, we would increase our Gross State Product by $50 billion. Thats $9,300 per person in the state! If Wisconsin was at the national average, we would increase our Gross State Product by $50 billion. Thats $9,300 per person in the state!

7. Wisconsins has Low Post-Secondary Educational Attainment We rank 31 st in post secondary educational attainment. We rank 31 st in post secondary educational attainment. We rank 30 th in baccalaureate level degrees. We rank 30 th in baccalaureate level degrees. We rank 36 th in masters or higher attainment. We rank 36 th in masters or higher attainment. We rank 9 th in associates degrees. We rank 9 th in associates degrees. We rank 11 th in students majoring in science and engineering per population. 44 th in science and engineering majors in work force. We rank 11 th in students majoring in science and engineering per population. 44 th in science and engineering majors in work force.

8. Wisconsin is growing slowly compared to the US. We rank 30 th in growth. We rank 30 th in growth. Natural growth is particularly slow, in migration growth is not fast. Natural growth is particularly slow, in migration growth is not fast. Our growth is about 60 percent as fast as the United States, at large. Our growth is about 60 percent as fast as the United States, at large. Our present growth is likely to slow. Our present growth is likely to slow.

9. Wisconsin is one of the fastest aging states The states baby-boom cohort is unusually large. The states baby-boom cohort is unusually large. Almost 31 percent of Wisconsins population are baby-boomers, decreasing, but slowly. Almost 31 percent of Wisconsins population are baby-boomers, decreasing, but slowly. Nationally, about 27 percent of population are baby-boomers, but decreasing rapidly. Nationally, about 27 percent of population are baby-boomers, but decreasing rapidly.

10. The Demand Side Of the Labor Equation Three factors affecting the demand for workers: Three factors affecting the demand for workers: 1.The number of jobs has continued to grow, until now; 2.The demand for replacement workers is expanding; 3.The aging population needs more and more services.

11. The number of jobs has continued to grow, until now Nonfarm Jobs

12. Wisconsin Nonfarm Wage & Salary Jobs Although we have been adding an average of 36,000 jobs per year, that growth will stop for the next few years. There will likely be a loss in total jobs in 2009 and again in 2010. Although we have been adding an average of 36,000 jobs per year, that growth will stop for the next few years. There will likely be a loss in total jobs in 2009 and again in 2010. There will be a few industries that will not be hit as hard as others, particularly health care. There will be a few industries that will not be hit as hard as others, particularly health care. Smart companies will find ways to hold on to smart workers. Smart companies will find ways to hold on to smart workers. Watch the economic recovery plans! Watch the economic recovery plans!

13. Wisconsin Residents Turning 65 Years Old

14. We dont know how the wealth effect will play out in retirement plans. We dont know how the wealth effect will play out in retirement plans. Workers have been retiring earlier than 65, but plans will change somewhat. Workers have been retiring earlier than 65, but plans will change somewhat. Older workers who lose their jobs may not return to the job market, but older workers who dont lose their jobs will likely stay on longer. Older workers who lose their jobs may not return to the job market, but older workers who dont lose their jobs will likely stay on longer.

15. Demand Is Strongest Where Supply Is Weakest 1.Much of the older population lives in more remote areas. 2.Much of the tourist industry is in remote areas. 3.Manufacturing in Wisconsin tends to be in rural areas.

16. The Supply Side Of the Labor Equation Five Factors Affecting Supply of Workers: 1.The number of entry level workers is diminishing; 2.There will be little increase from increased female participation; 3.There is a sizeable commuting net loss; 4.The brain drain is real; 5.Wisconsin is low in net gain from migration.

17. Wisconsin Births 1940 to Present

18. United States Births 1940 to Present

19. Female Labor Force Participation Wisconsin is at the top or very nearly at the top of states per female labor force participation rates. Wisconsin is at the top or very nearly at the top of states per female labor force participation rates. Approximately 72% of females 16 years old and older participate in the labor force in Wisconsin. Approximately 72% of females 16 years old and older participate in the labor force in Wisconsin. Approximately 65% of females 16 years old and older participate in the labor force in U.S. Approximately 65% of females 16 years old and older participate in the labor force in U.S.

20. Wisconsin has a strongly negative state-to-state commuting ratio Approximately 120,000 workers along Wisconsin borders cross state lines to work. Approximately 120,000 workers along Wisconsin borders cross state lines to work. 100,000 or those workers live in Wisconsin and leave the state to work. About 20,000 live in neighboring states and come into Wisconsin for work. 100,000 or those workers live in Wisconsin and leave the state to work. About 20,000 live in neighboring states and come into Wisconsin for work. Wisconsin borders Illinois, Iowa, Michigan and Minnesota. The ratio is positive only for Iowa. Wisconsin borders Illinois, Iowa, Michigan and Minnesota. The ratio is positive only for Iowa.

21. The Legendary Brain Drain is Real Indiana Fiscal Policy Institute Net Migration

22. The Legendary Brain Drain is Real Indiana Fiscal Policy Institute Retention

23. The Legendary Brain Drain is Real Minneapolis Federal Reserve States1989 College Graduates 1999 College Graduates Adl College Graduates 1989 to 1999 Additional Graduates From State Gain/Loss Minnesota577,920953,920376,000234,945141,055 Montana106,977134,16027,18342,976(15,793) North Dakota89,24489,200(44)45,072(45,116) South Dakota79,672110,84831,17640,669(9,493) Wisconsin571,725790,600218,875269,647(50,772) Minn Fed Res District 1,425,5382,078,728653,190633,30919,881

24. MSAs That Attract College Graduates City 1.Atlanta 9. San Diego 9. San Diego 2.Denver 10. Houston 3. San Francisco 11. Chicago 4.Seattle 12. Los Angeles 5.Dallas 13. Tampa 6.Phoenix 14. Miami 7.Minneapolis 15. New York 8. Washington, D.C. 16. Boston

25. Migration Into Wisconsin Has Lagged Approximately 12 percent of United States resident population is foreign-born. Highest level since 1920s. Approximately 12 percent of United States resident population is foreign-born. Highest level since 1920s. Approximately 4.2 percent of Wisconsin resident population is foreign-born. Approximately 4.2 percent of Wisconsin resident population is foreign-born. Some in migration from neighboring states, i.e. Illinois and Minnesota. (Kenosha and Walworth, and St. Croix and Pierce counties) Some in migration from neighboring states, i.e. Illinois and Minnesota. (Kenosha and Walworth, and St. Croix and Pierce counties)

26. A Word of Caution The economy is transitioning from traditional to new. The economy is transitioning from traditional to new. Recessions speed transitions Recessions speed transitions Economies will continue to be transformed! Economies will continue to be transformed! It is a major mistake when economic development officials ignore or dismiss the structural changes that are being generated by the New Economy. It is a major mistake when economic development officials ignore or dismiss the structural changes that are being generated by the New Economy.

27. What is the New Economy? The New Economy is knowledge driven. The New Economy is knowledge driven. The New Economy is global The New Economy is global. The New Economy is entrepreneurial The New Economy is entrepreneurial. The New Economy is rooted in information technology. The New Economy is rooted in information technology. The New Economy is defined by innovation The New Economy is defined by innovation. The New Economy is volatile. The New Economy is volatile.

28. What is Knowledge Activity? The intangible ability to use existing facts and understandings to generate new ideas. The intangible ability to use existing facts and understandings to generate new ideas. Knowledge is embedded in the education, experience, and ingenuity of the wielder of knowledge. Knowledge is embedded in the education, experience, and ingenuity of the wielder of knowledge. Knowledge is the ability to use what you have learned. Knowledge is the ability to use what you have learned. Knowledge is the value-added component of the market. Knowledge is the value-added component of the market.

29. New and Old Economies IssueOldNew MarketsStableDynamic Scope of competition NationalGlobal Organizational form HierarchicalNetworked Production system Mass production Flexible production Key factor of production Capital/laborInnovation/ideas Key technology driver MechanizationDigitization Competitive advantage Economies of scale Innovation/quality Relations between firms Go it alone Collaborative SkillsJob-specific Broad and changing Workforce Organization Man Intrapreneur Nature of employment SecureRisky State New Economy Index Kauffman Foundation

30. Knowledge, Productivity, & Income Although education is the great predictor of wages and income, the real cause is productivity. Although education is the great predictor of wages and income, the real cause is productivity. Knowledge, by enabling innovation and creativity, provides the mystic value-added to the product or service. Knowledge supercharges goods and services. Knowledge, by enabling innovation and creativity, provides the mystic value-added to the product or service. Knowledge supercharges goods and services. Find states with high educational attainment and youll usually find high productivity and high wages. Find states with high educational attainment and youll usually find high productivity and high wages.

31. Wages, Education, Knowledge Knowledge Rich Economies Wage Rich Economies Education Rich States Alaska CaliforniaCaliforniaCalifornia ColoradoColoradoColorado ConnecticutConnecticutConnecticut DelawareDelaware District of Columbia IllinoisIllinois Kansas MarylandMarylandMaryland MassachusettsMassachusettsMassachusetts Michigan MinnesotaMinnesotaMinnesota New Hampshire New Jersey New York Rhode Island Utah Vermont VirginiaVirginiaVirginia WashingtonWashingtonWashington

32. Productivity Comparisons The top 12 states averaged $119,119 in GSP per job in 2007. The top 12 states averaged $119,119 in GSP per job in 2007. The bottom 20 states averaged $80,909. Thats a difference of $38,210 per job! The bottom 20 states averaged $80,909. Thats a difference of $38,210 per job! Had the bottom 20 states matched the national average, they would have generated an additional $17,777 per job. Had the bottom 20 states matched the national average, they would have generated an additional $17,777 per job. Thats $29.4 billion per state! Thats $29.4 billion per state!

33. MSAs That Attract College Graduates City Atlanta San Diego DenverHouston San Francisco Chicago Seattle Los Angeles DallasTampa PhoenixMiami Minneapolis New York Washington, D.C. Boston

34. Super Metros Metro Area 2007 Population Percent Growth Las Vegas, NV1,836,33331.8% Raleigh, NC1,047,62930.2% Phoenix, AZ4,179,42727.5% Austin, TX1,598,16126.3% Riverside, CA4,081,37124.5% Atlanta, GA5,278,90423.3% Charlotte, NC1,651,56823.2% Orlando, FL2,032,49622.7% Houston, TX5,628,10118.7% Dallas, TX6,145,03718.2%

35. Mid-size Dynamic Metros Metro Area 2007 Population Percent Change Greeley, CO243,75033.2% Cape Coral, FL590,56433.0% Provo, UT493,30629.8% Myrtle Beach, SC249,92522.1% Boise City, ID587,68925.3% Ocala, FL324,85724.8% Port Lucie, FL400,12124.8% Fayetteville, AK435,71424.6% Naples, FL315,83924.3% McAllen, TX710,51423.9% Wilmington, NC339,51123.1% Laredo, TX233,15219.8% Bakersfield, CA790,71019.2%

36. Smaller Dynamic Metros Metro Area 2007 PopulationPercent Change Palm Coast, FL88,39774.8% St. George, UT133,79146.6% Bend, OR154,02832.1% Gainesville, GA180,71527.9% Prescott, AZ212,63525.9% Lake Havasu City, AZ194,94424.8% Coeur dAlene, ID134,44222.7% Sioux Falls, SD227,17120.6%

37. An Awakening A widening disparity between wealthier and poorer U.S. citizens has been noted. A widening disparity between wealthier and poorer U.S. citizens has been noted. The pool of poorer U.S. citizens is expanding, while the pool of wealthy U.S. citizens is contracting. The pool of poorer U.S. citizens is expanding, while the pool of wealthy U.S. citizens is contracting. This widening disparity will fuel a growing discontent and despair within the poorer community. This widening disparity will fuel a growing discontent and despair within the poorer community.

38. A Transition, Economic to Demographic A global economy, where markets transcend and ignore national borders, diminishes and erodes the power and influence of the nation state. A global economy, where markets transcend and ignore national borders, diminishes and erodes the power and influence of the nation state. Nations and states have two choices; Nations and states have two choices; 1.A broad distribution of education and wealth, or 2.A broad distribution of ignorance and poverty. Minority populations, which are not wholly participating in the New Economy, will cost states somewhere down the line. Minority populations, which are not wholly participating in the New Economy, will cost states somewhere down the line.

39. The New Economy Characterized by: Knowledge activity; Knowledge activity; 1.Innovative 2.Creative 3.Adaptive 4.Collaborative 5.Technology based Global markets; Global markets; Instant communication; Instant communication; Volatility; Volatility; Lessened government influence. Lessened government influence.