Assembling the parts

In a 2006 report on the City of Milwaukee’s economic development efforts, the Public Policy Forum concluded that “unlike the vast majority of its peer cities, the City of Milwaukee has neglected to sit down with stakeholders and map out an economic development plan. Absent a plan or guiding vision, one is left to conclude that the City has and will continue to engage in economic investments, no matter how worthy, in an ad-hoc fashion.”

Five years later, the economic development landscape in Milwaukee has changed dramatically. Privately-funded entities such as the Milwaukee 7 and Milwaukee Water Council have become prominent players on the economic development scene, suggesting a level of public-private teamwork that had been found lacking in 2006. Nevertheless, important questions remain regarding the precise roles and responsibilities of the various players in carrying out citywide economic development efforts and in formulating the city’s economic development vision.

In a new report released today - "Assembling the Parts: An examination of Milwaukee's economic development landscape" - the Forum attempts to address those questions.

The report commends City and private sector leaders for adding “strength and focus” to the community’s economic development efforts, citing city government’s successful efforts to spur revival in the Menomonee Valley, the ground-breaking work of business-led groups to build industry clusters and support entrepreneurship, and the bold plans of university leaders to establish world-class research institutions. The report also suggests, however, that while we’re assembling the right parts, we may be missing the blueprint needed to build a well-oiled machine.

Indeed, one of the report's key findings is the continuing lack of a true citywide strategic economic development plan that establishes clear economic development priorities, links those priorities to specific strategic objectives, measures each objective with performance indicators and benchmarks, and names the entities to be held accountable for each objective. It cites examples from other cities in which such planning is being used “to meaningfully enhance collaboration and coordination, create new tools, and foster accountability and innovation.”

The report concludes by stating that Milwaukee’s elected and business leaders “should be proud of their efforts to build an economic development infrastructure that has assembled many of the parts needed for success.” It asks, however, whether they now “have the patience, skill and camaraderie to transform those parts into a cohesive and strategically organized whole.”

The full report can be accessed here, and the media release here.

Metrics for boosting educational attainment in Southeast Wisconsin

Recognizing that a prosperous metro Milwaukee depends on an educated workforce, a new Talent Dividend Initiative has emerged in Milwaukee to boost regional educational attainment. The initiative - which is comprised of workforce development, economic development, and educational organizations across southeast Wisconsin - has set its sights on increasing the percentage of adults in the region with four-year college degrees by a full percentage point by 2013.

The initiative grew from a campaign launched by CEOs for Cities (a national network of urban leaders) based on their research suggesting that a one percentage point increase in the number of bachelors degree holders in a metro region can produce a $763 increase in annual per capita income. In southeast Wisconsin’s seven counties, CEOs for Cities estimates that increasing bachelors degree attainment from the current level of 28.7% of the population to 29.7% would produce 13,146 new degree holders and a resulting “talent dividend” of about $1.5 billion annually.

With that goal firmly established, the local initiative is considering two questions:

1. Where should resources be targeted to most effectively attack regional educational attainment?
2. How can the success of these strategies be measured?

The Public Policy Forum was commissioned by the Regional Workforce Alliance's WIRED Initiative to help answer those questions. A report we released today, entitled "Educational Attainment in Southeast Wisconsin," provides an overview of the region's educational pipeline from preschool to college, noting that the majority of new degree holders will come from the 525,000 students already engaged in the pipeline. It contains a series of metrics that provide insights into how the various points of the pipeline are performing and how progress can be assessed. The report also cites several opportunity points for boosting student success and attainment, including:

• Developing college-going behaviors among high school students. Our report finds that while 55% of high school graduates plan to attend a four-year college and 19% of graduates plan to attend a technical college, 17% are undecided about their post-high school plans. Programs to increase the number of college-bound students might set their sights on these undecided students.

• Re-engaging adults who have earned some college credit, but have not completed a degree. More than 20% of the region’s non-degreed adults have attended college at some point and may be interested in continuing their education. Identifying those who are just a few credits short of earning a degree would be the logical starting point.

• Increasing student transfers between two-year and four-year colleges and universities. Completing the degree requirements at a two-year college before transferring to a four-year college can help students reduce the cost of earning a degree. More data are needed, however, to understand and track college transfer trends in the region.

Finally, at all points in the pipeline, strategies to assist minority students offer a substantial opportunity to increase regional degree holders. Currently, just 12% of African-American and 10% of Hispanic residents in the region hold a bachelors degree or higher, compared to 31% of white residents. This is a logical focus for retention strategies, as minority student enrollment in higher education is on the rise, especially in the region’s 2-year institutions.

The Talent Dividend Initiative plans to regularly update the metrics presented in the report to measure the effectiveness of specific strategies toward the overall goal. The full report can be accessed here.

What's Wrong With Local Competition?

Do regional economic development initiatives have plenty of gloss but little substance? That’s a question some are asking after a recent Journal Sentinel report that our own regional initiative, the M7, is shifting its strategic focus. The M7 commissioned a study to outline a strategy for recruiting some businesses that might like to relocate to the region. The study suggests that the M7 focus on recruiting from two industrial sectors: control and instruments technology and food processing.

While the report is a useful planning tool, it brings attention to the fact that M7 has yet to draw a major corporation to the area. We should commend the 5-year-old M7 for acknowledging that reality and announcing a new tactic. But, there’s a broader question here about regional cooperation as a strategy to attract new businesses. From a public policy perspective, are these sweeping regional cooperative efforts the best option?

Informal regional cooperation and governance initiatives similar to M7 became popular in the 1990s after a cycle of more formal regional governing institutions that sprang up during the 1960s and 70s, such as Unigov in Indianapolis and the federated tier system in Miami-Dade.

Unfortunately, there has been little empirical evidence linking regional cooperation initiatives or regional governing bodies with clear economic benefits. Local competition among municipalities appears to work just as well. In fact, there is much economic research, based on the “public choice” theory of Charles Tiebout, that argues that local competition is more efficient than regional cooperation.

More recent research shows that strong, tangible incentives from individual municipalities (along with state tax breaks) draw the first-class corporations, like Boeing moving to Chicago.

Regional efforts have more success in building regional infrastructure projects, which arguably have the largest economic benefits of all kinds of public spending. Regional cooperation in building specific infrastructure projects, such as public transit or intermodal freight stations, has been found consistently to raise local property values.

All this calls into question the appropriate goal for M7: should they continue to focus on business recruitment or should our regional efforts also concentrate on funneling local investments into larger regional projects?

What if Milwuakee went to bat for Chicago?

Here's a twist. Milwaukee lobbying for investment in Chicago. A recent Sun-Times editorial, suggests that leaders in large metro areas (like Milwaukee and Chicago) should band together and lobby the federal government for more investment to spur metro economic growth.

The editorial states that Chicago's train yards would be a good place to start:

"At the heart of the nation and on the shores of Lake Michigan, Chicago's location makes it the third largest intermodal port in the world, after Hong Kong and Singapore. Almost $1 trillion of our nation's freight moves through this region annually, and freight volumes are expected to increase 80 percent or so in the next 20 years. Yet trains often must slow to a crawl through northeastern Illinois and northwestern Indiana because technological and physical updates to tracks and rail yards are long overdue. Businesses are losing money due to delayed deliveries, and drivers are experiencing more traffic jams on local roads. The federal government's response has been to spread surface transportation funding around like peanut butter, rather than investing strategically in major national rail hubs, ports and gateways, like Chicago."

What would be the rationale for politicians in Southeastern Wisconsin to go to bat for federal investment in Chicago's train yards? Simply put - the more goods that Chicago imports, the more goods that southeastern Wisconsin can distribute.

The Milwaukee region is a natural hub for distribution and logistics. In fact, the M7 has identified "distribution" as a regional export driver - with the region currently playing host to 10,386 distribution jobs paying an average wage of $50,815. Not bad.

Our region is emerging as a distribution hub because of ample land and lower costs. Just look at yesterday's news that Illinois-based Coleman Cable, will expand into a 502,000 sq. ft. building and bring with them 75 jobs for their warehousing and distribution functions. The company states:

"...the Pleasant Prairie location will allow the company to consolidate distribution facilities and reduce costs, while simultaneously...providing first-in-class logistics, delivery and customer service."

The Coleman Cable expansion news follows the announcement by Uline Inc. that it will move its headquarters, R&D and distribution functions from Illinois to Wisconsin by 2010 - adding 1000 jobs to the Milwaukee region.

Despite our market advantages and recent "wins" in the distribution game, can we really expect our region's leaders to expend their political capital south of the Wisconsin border?

It's possible. The most recent precedent for Wisconsin going to bat for Illinois is Milwaukee's recent embrace of Chicago's 2016 Olympic bid. On the state level, Wisconsin also recently joined an effort last year to win a federally funded, state-of-the-art coal gasification plant for southern Illinois.

In the end, cooperative lobbying efforts could translate a Chicago gain into Milwaukee growth.