PPF Pearls: State investment in workforce development

As Governor Walker prepares his biennial budget, anticipation is building over whether he will propose additional state investment for workforce development. The Public Policy Forum’s July 2012 report on Wisconsin’s workforce development system identified 36 programs in nine state departments that provided employment and training services in fiscal year 2012, and found that a vast majority of the $407 million supporting those programs came from federal sources, with only $34 million (8%) contributed by the state.

The state contributed funds for 13 of the 36 workforce programs it administered in 2012, with nearly half of the state funding going to vocational rehabilitation. According to Competitive Wisconsin’s recently-released Be Bold 2 report, $19.3 million of the state’s total contributions were matching funds required by federal programs, while only $14.7 million represented state appropriations.

Past Forum research has indicated that Wisconsin may be more dependent on federal funding for workforce development than neighboring states, and has shown that federal funding has been decreasing over the long term, a trend that does not appear likely to change in the near future due to the current fiscal pressures facing the federal government.

The governor will present his budget in February.

Public Policy Forum's top five research findings of 2012

If it’s December, then it must be time for the Forum’s annual list of its top five research findings of the year.  Last year’s list included findings on MMSD’s daunting capital needs, the dramatic decline in Milwaukee County’s corrections population, the City of Milwaukee's reliance on state shared revenue, and our region’s tardiness in embracing strategic economic development planning.  The 2012 list is summarized below in chronological order:

1. More than four-fifths of Milwaukee County’s rated child care providers stand to lose funding under YoungStar, the state’s new child care quality rating system.  Our January report analyzing the first year of Youngstar implementation examined the ratings earned by 534 child care providers in Milwaukee County as of December 2011.  We found that 428 (80.1%) received 2-star ratings and 33 (6.2%) received 1-star ratings.  In light of the state’s plan to reduce Wisconsin Shares subsidy payments for 2-star providers and disqualify 1-star providers from Wisconsin Share payments entirely, that meant more than 80% of the rated providers would lose funding under YoungStar, a consequence that could impact the availability of child care options.

2. Much of the growth in the Milwaukee Parental Choice Program in the past year appeared to come from existing private school students.  The 2011-12 school year was the first to reflect the impact of major changes to school choice program eligibility adopted in the 2011-13 state budget, including an increase in the enrollment cap, broader eligibility limits, and expansion to schools outside the City of Milwaukee.  Our annual survey of voucher school participants released in February revealed not only that much of the growth in voucher use from the previous year was in schools that already participated in the program, but also that it appeared to have come from students already enrolled in those schools.  

3. Fire department consolidation that preserves existing capacity can still save millions.  In May, we released a comprehensive report on options for sharing or consolidating fire services in the southern Milwaukee County communities of Franklin, Greendale, Greenfield, Hales Corners and Oak Creek.  Our finding that a full consolidation option could save nearly $2 million annually may not have been surprising to those who have examined fire service consolidation proposals in other states, or to those familiar with Milwaukee County’s consolidated North Shore Fire Department.  It was illuminating to find, however, that such substantial savings were achievable without eliminating any fire stations or reducing direct firefighting staff.

4. MATC’s technical diploma offerings are generally attuned with the region’s projected job openings.  Our December report on the activities and resources of Milwaukee’s key workforce development players examined MATC’s role in providing non-degree occupational training to job seekers.  We found that despite longstanding criticism of the college for failing to appropriately align itself with the needs of area employers, MATC’s technical diploma offerings match up well with Department of Workforce Development projections regarding future job openings.  Nursing, Barber/Cosmetologist and Emergency Medical Technician were the most heavily enrolled technical diploma programs in the 2010-11 academic year. 

5. MPS’ five-year fiscal forecast is more optimistic than those of Milwaukee County or the City of Milwaukee.  Our December fiscal assessment of the Milwaukee Public Schools examined the district’s most recent five-year fiscal forecast and found that its projection of a $41 million deficit in 2017 is plausible and perhaps even a bit on the conservative side.  While a projected deficit of that magnitude certainly is not ideal, it is more optimistic than the five-year deficits projected by the City of Milwaukee and Milwaukee County earlier this year.  It is important to note that each government’s five-year forecast is based on financial modeling that is somewhat speculative in nature, and that a complete understanding of the fiscal condition of each must go far beyond their five-year forecasts.  Nevertheless, given the substantial position cuts and general gloom surrounding MPS’ budget in recent years, to find that MPS’ five-year challenges may not be deeper than those of the city and county was somewhat surprising. 

With 18 research reports in 2012, it was not easy to reduce our list of top findings to five. Left off the list this year were important findings related to the application of the state’s new child care ratings system to afterschool care providers; the out-of-classroom spending habits of Milwaukee County suburban school districts; the range of case management services available to persons with mental illness in Milwaukee County; opinions on mental health redesign by nurses and their employers; and the continued impacts of pension and health care benefits on Milwaukee's city and county budgets. Those interested in reviewing those and other findings can access the Forum’s full list of research publications here.

Progress and challenges for workforce development efforts in Milwaukee

In a new report examining Milwaukee’s workforce development system, the Public Policy Forum cites a higher level of coordination and cohesion among key workforce development players since the establishment of the Milwaukee Area Workforce Investment Board (MAWIB) in 2007, but suggests a need for better coordination between the city’s economic development priorities and the needs of its unemployed.

The report – "Pathways to Employment" – analyzes the resources, programming, and priorities of MAWIB and the Milwaukee Area Technical College (MATC), widely considered the two most prominent workforce development entities in Milwaukee, and also summarizes the activities and spending of other key workforce agencies. In addition, the report explores promising efforts to coordinate workforce development activities in Milwaukee’s health care, manufacturing, and food and beverage sectors. 

On the whole, we find that sector-specific workforce strategies show considerable promise for the economy at large, but that many of the individuals being served by MAWIB may not have the education or skill levels to meet the requirements of area employers in sectors being targeted by economic development leaders – like advanced manufacturing, financial services, and water – or to benefit from related technical diploma programs at MATC or WCTC. As Milwaukee identifies economic development goals, therefore, it is important to determine the extent to which those goals should influence workforce development policies and programs. 

That is not to suggest the individuals MAWIB serves cannot advance beyond low-skill, entry-level positions through additional work experience and/or education, nor that the sectors targeted by regional economic development efforts should change. It does suggest, however, that MAWIB‘s role as the entity serving those with the greatest barriers to employment demands a commitment to a broad array of services and strategies that respond both to the needs of key industry sectors and the needs of its clientele.
Other key findings from the report include the following:

• MAWIB has made substantial progress in addressing several longstanding concerns that had surrounded its predecessor (the Private Industry Council), including improved coordination of local workforce development services and greater involvement of major area employers. Interviews with key stakeholders, however, indicate there is more progress to be made. 
• MATC’s technical diploma program offerings seem generally attuned to the demands of the Milwaukee area job market, as estimated by the Wisconsin Department of Workforce Development. In tandem with those offered at Waukesha County Technical College (WCTC), most MATC technical diploma programs seem to be appropriately scaled in relation to job projection numbers, though in many cases retention appears to be a problem. 
• The Milwaukee W-2 agencies’ designation as the one-stop job centers for Milwaukee County, and the sheer size of their funding base, make those organizations major players in Milwaukee’s workforce development system. Consequently, the education and skills levels of W-2 participants logically should play a prominent role in determining the city’s workforce development priorities and strategies. 
• Employment and training services in Milwaukee are largely supported by federal funding sources, which have been declining for many years. Consequently, local workforce development organizations must continue to pursue new revenue sources and improve efficiency in order to maintain existing service levels. The recent creation of the Milwaukee Area Workforce Funding Alliance to better leverage the funding contributions of local philanthropists and to pursue additional funding from national foundations has represented a positive start toward that effort. 

The report concludes by asking whether the region’s economic development vision – and the demands of specific area employers – should drive MAWIB funding priorities, MATC program offerings and Milwaukee’s overall workforce development strategies, or whether the education and skill levels of the local workforce should be the major factor in the development of both regional economic development planning and workforce development priorities.

The goal, it suggests, should be to strike a proper balance between the two.

Analyzing workforce development services in Wisconsin

Wisconsin’s workforce development system is comprised of a broad range of employment and training services, from job search and placement assistance to vocational rehabilitation for individuals with disabilities. The Forum’s latest report – commissioned by the Wisconsin Department of Workforce Development (DWD) – offers policymakers and service providers a view of the system as a whole, including the variety of state and federal funding sources that support workforce development programs in Wisconsin. The report also provides analysis of the trends affecting the state’s workforce development system and offers observations on ways the system may be improved.

Key findings from the report include the following:

While it appears that some consolidation of employment and training funding has occurred in recent years, Wisconsin’s workforce development system remains somewhat fragmented. Overall, nine state departments will receive $407 million in federal and state funding in fiscal year 2012 to offer 36 programs that provide employment and training services. While many programs provide distinct services that target specific populations, state policymakers should consider whether the current structure is the most effective and efficient way to organize these services.

Projected changes in Wisconsin’s workforce and economy may demand increased attention to workforce attraction and retention as well as enhanced emphasis on worker training and education. Over the next 20 years, Wisconsin must address a projected decline in the size of its workforce while ensuring that workers have the training required for jobs that are expected to become available. According to DWD estimates, of the 78,570 projected annual job openings between 2008 and 2018, approximately 60% will require some form of “training” while 37% will require a formal degree. An important question for Wisconsin policymakers is whether the current array of workforce development programs and services is appropriately calibrated to meet the state’s evolving workforce needs, particularly in the areas of skills training and education.

The vast majority of funds supporting Wisconsin’s workforce development system are from federal sources, a trend that may not bode well for the future. The federal government will provide 92% of the funding that supports Wisconsin’s workforce development system in fiscal year 2012, an increase from 88% in 2008. This increase is largely attributable to the lingering national recession, which expanded enrollment for Wisconsin’s W-2 program and brought about a federal stimulus package that included additional support for workforce development programs.

Wisconsin’s acute dependence on federal support may not be sustainable or desirable because of the many restrictions typically attached to federal funds and because of the intense fiscal pressures facing the federal government, which place all federal discretionary funding at budgetary risk. In addition, federal funding for workforce development programs has been decreasing over the long term; the overall budgets for the six largest workforce development programs in Wisconsin have declined from a collective total of approximately $430 million in 2000 to $299 million in 2012.

Some new approaches to structuring workforce programs and diversifying funding sources have been initiated in Wisconsin, and those efforts should continue. For example, despite declining federal Workforce Investment Act allocations, the Milwaukee Area Workforce Investment Board has been able to increase its annual revenue, largely by diversifying its revenue sources. Also, the Milwaukee Area Workforce Funding Alliance (MAWFA), which was established in 2009, may serve as another model for cities and regions looking for additional funding streams to support workforce development programs. MAWFA is a consortium of private and public workforce development funders and service providers in the Milwaukee area that helps to coordinate the distribution of funding from private and public funders for local workforce development efforts.

We hope this report can serve as a guide in ongoing efforts to improve the effectiveness of Wisconsin's workforce development system.

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.

Meeting the workforce development needs of healthcare employers in southeast Wisconsin

A Public Policy Forum survey of healthcare employers finds that despite near-record unemployment rates in the region, southeast Wisconsin’s healthcare sector faces a distinctive challenge: finding sufficient numbers of qualified and trained workers to fill current and future job openings. Survey respondents said applicant quality (60.7%) and retaining qualified workers (30.2%) are the biggest challenges they face in meeting their organizations’ workforce needs. Gaps in applicants’ basic skills, especially soft skills such as professionalism, team skills and verbal communication, also make it harder for healthcare employers to recruit and hire competent job candidates.

The recent survey of 28 healthcare facilities included the four largest hospital systems in Southeast Wisconsin, as well as nursing and residential care facilities such as medical offices and diagnostics labs.

Respondents said current job openings are greatest for registered nurses and nursing aides and attendants. However, a significant number of respondents were unwilling or unable to provide data on current job openings or predict how demand for healthcare professionals will change in the next one to three years.

This is important because lack of job growth data limits the ability of workforce development officials to adjust regional workforce development training resources to address healthcare employers’ short-term needs. Nevertheless, the challenges indentified in the survey point to areas for regional workforce development organizations and area healthcare employers to work together to increase the supply of healthcare workers.

The Public Policy Forum conducted the survey on behalf of the Milwaukee Area Healthcare Alliance (MAHA), a new workforce development partnership between the YWCA of Greater Milwaukee and the Milwaukee Area Health Education. The Research Brief titled Assessing Healthcare Employers Workforce Development Needs in Southeastern Wisconsin, which can be accessed here, details the survey’s results and highlights challenges healthcare employers face in hiring and retaining a qualified workforce.

How do we compare to our neighbors? Depends on whom you ask

You know the drill: Wisconsin’s economic strategy just isn’t measuring up compared to others.

A July 18th editorial claimed “Wisconsin is struggling.” It said Iowa seems to have a better plan. An August 8th column by John Torinus argued, “We get outgunned by states with much larger budgets for economic development.” He said Michigan seems to be doing better. On October 3rd, Torinus wrote that Wisconsin was falling behind Illinois and Minnesota. He quoted a UW-Madison expert as stating the state economy is in “very bad shape.” Meanwhile, Marc Levine’s recent editorial blasts local economic development efforts as being prey to “irrational exuberance.”

While that’s the tone we’re used to, it appears others see our economy and business climate differently. A two-part series (here and here) in the Minneapolis Star Tribune by Thomas Lee details a competition for biotech firms in which Minnesota is clearly the underdog. “When it comes to innovation,” Lee states, “Minnesota is quickly falling behind its neighbor.”

The articles cite a number of Minnesota-grown biotech start-ups fleeing to Wisconsin, where businesses interviewed claimed they had access to more money, and where organizations like the Wisconsin Alumni Research Foundation, University Research Park and Accelerate Wisconsin, along with tax incentives and investor capital, create a friendly climate for new ventures. (The Milwaukee County Research Park's Technology Innovation Center uses similar strategies locally.)

Even with a $6.5 billion deficit, the budget passed by Wisconsin legislators increases angel investor tax credits from $5.5 million to $18.25 million and venture capital credits from $6 million to $18.75 million. Minnesota has no comparable tax credits and, while Minnesota does not appear to track angel investors, Wisconsin has 22 angel groups that made 53 deals in 2008.

In the Star Tribune, Wisconsin and its Madison university are compared to Silicon Valley, North Carolina’s Research Triangle Park, MIT, and Stanford University and are said to feature “the most formidable university technology transfer program in the country” as well as “the country’s most industrial workforce.”

The director of business development at a Minneapolis health consulting group explains, “There is a real desire to succeed in Wisconsin. The state has no stodgy culture. It’s a culture of newness, a desire to try new things.” Another executive gushes, “Wisconsin is a very exciting place. You just get a sense of forward motion. Wisconsin is doing something right.”

What are we to make of the contrast in tones between how we see ourselves and how others perceive us? Judging from the above-referenced inter-state economic comparisons, as well as the Public Policy Forum’s own analysis of the Minnesota business community’s involvement with early childhood education reforms, in some ways, the grass is always greener on the other side. However, that does not change the fact that comparison with other states is an important tool for seeing one’s own state – its problem areas and its strengths – in sharper focus.

The future is today for STEM-savvy workers

The Forum's latest report, on the need for science and math skills in the state's future workforce (which was reported in Sunday's Milwaukee Journal Sentinel and followed-up with an editorial today) highlights opportunities for the state to strengthen policies regarding science, technology, engineering, and math (STEM) education in K-12.

And while our findings focus on forecasted workforce needs, today's New York Times reports that the few occupations where the current recession has had only a glancing blow are those requiring skills in math, science, or technology:

[The Conference Board's] monthly count of online job openings — listed on Monster.com and more than 1,200 similar Web sites — breaks the advertised openings into 22 broad occupational categories and compares those with the number of unemployed whose last job, according to the bureau, was in each category. In only four of the categories — architecture and engineering, the physical sciences, computer and mathematical science, and health care — were the unemployed equal to or fewer than the listed job openings. There were, in sum, 1.09 million listed openings and only 582,700 unemployed people presumably available to fill them.

In addition, like the Forum's report, the Times article does not limit its observations to just those jobs requiring a college degree. The article notes that "middle skills" jobs are those hardest to fill right now, in the midst of the recession; for example, welders, electrical linemen, and respiratory technicians. These jobs require education, but often not more than high school, along with some training and on-the-job experience.


For today's high school graduates, being adequately prepared to step into a training program could mean not only finding a job when others cannot--it could mean the difference between thriving and surviving as their future arrives.

Is Wisconsin state-of-the-art for K-12 science and math education?

The Public Policy Forum's latest report, released today, finds that of the 10 career clusters predicted to grow the most over the next five years, seven include occupations requiring strong backgrounds in science, math, technology, or engineering (STEM). Of the 10 specific jobs predicted to be the fastest growing in the state, eight require STEM skills or knowledge and six require a post-secondary degree.

Do Wisconsin's state educational policies reflect this growing need for STEM-savvy and skilled workers? Are Wisconsin education officials focusing on STEM in a coherent and coordinated way? Our new report probes those issues by examining state workforce development data and reviewing state-level policies and standards that impact STEM education.

We present several policy options that could be considered to build on localized STEM initiatives and establish a greater statewide imperative to prioritize STEM activities in coordination with workforce needs. Those include:

* Strengthening state standards in science, math, and other STEM fields, creating model curricula in STEM fields, and aligning standards to workforce needs and college matriculation requirements.

* Creating incentives to recruit and retain qualified STEM teachers and ensuring districts use teacher standards and professional development goals in hiring, evaluation, promotion, and possibly compensation.

* Creating incentives for more coordination of local efforts and increasing support, both financial and regulatory, for district-level STEM initiatives.

The data indicate that a coordinated state-level focus on STEM education will be critical in meeting our state's future workforce needs. Is Wisconsin up for the challenge?

Go to the full report: PREPARING THE FUTURE WORKFORCE Science, Technology, Engineering and Math (STEM) Policy in K12 Education

Regional identity could help Great Lakes cities leverage their assets

We’ve all heard of the brain drain—that powerful vacuum sucking all of the college-educated young professionals out of cities like Milwaukee. More recent reporting suggests that many who leave later return to the Milwaukee area. What do these returned brain drainers like myself have to say about their beloved but struggling Midwestern cities? Detroit’s Sarah Szurpicki and Abby Wilson of Pittsburgh have the answer. After stints in New York City and South Africa, the duo returned to their hometowns to co-found GLUE (Great Lakes Urban Exchange), an organization seeking to bolster regional identity among older industrial cities.

GLUE just completed its second annual conference in Milwaukee, featuring an inspirational mix of post-boomer urbanites from rust-belt cities like Buffalo and Cleveland sharing ideas about urban renewal, the green economy, sustainability, transit, community journalism and more. Following tours of the Growing Power urban farm, Menomonee Valley’s sustainable redevelopment, and the Great Lakes Water Institute, I’m still on a high from hearing so many people call Milwaukee a beautiful and impressive city. One participant from St. Louis commented, only partially joking, that he was now deciding between Paris and Milwaukee for his honeymoon.

If that didn’t warm my Milwaukee-loving heart enough, there was also serious information about how the Midwest can leverage its assets to compete in the post-industrial economy (covered locally here and here). Conference speaker Richard Longworth, senior fellow at the Chicago Council on Global Affairs, first laid out some bad news: the Midwest has in some ways lost its embrace of change and its former knack for innovation and creativity. Moreover, independent-minded Midwesterners are not accustomed to working across borders to create regional, shared solutions. No Midwestern university teaches even one course on the Midwest. Fragmented efforts, such as the fact that each state has its own separate bioscience organization, lead to duplication and competition. Longworth didn’t mince words. “The good news is this era is so new. The bad news,” he said, “is that so much of the Midwest is already behind.”

The advantages that Great Lakes cities share include having existing infrastructure and appealing street grids, a density that can support development, an intense work ethic, access to bioscience raw materials, and, of course, plentiful fresh water. Opportunities exist if the region plays its cards right, in industries of the future such as clean water technology, bioscience, nanotechnology, green industry, and transit.

But how can the Midwest and its Great Lakes cities maximize assets? Multiple speakers at the GLUE conference stressed the need for regional planning and geographic unity (as did this recent local editorial), what Longworth characterized as a need for a Midwestern Marshall Plan. Tom Wolfe of the Northeast Midwest Institute described how sustainability should be a principle criterion for the distribution of federal dollars. Kate Rube of Smart Growth America showed how current zoning and land growth laws need to be revised because they often make “smart growth” sustainable development illegal. John Austin of the New Economy Institute highlighted affirmative, targeted immigration policies as a promising strategy for bringing innovation back to the Midwest, an especially important approach for Midwestern cities that are losing population.

The winds of change blowing off the lake appear to suggest that Great Lakes cities would do well to adopt an open attitude toward regionalism, the new green economy, and the feedback of young professionals who are reversing the brain drain in their post-industrial Midwestern cities and beginning to speak with a unified voice through organizations like Great Lakes Urban Exchange.

No Worker Left Behind: Testing job applicants not shown to harm equity

UWM economist Marc Levine’s most recent figures (2006 data) on what he has termed “the crisis of black male joblessness in Milwaukee,” identifying that 46.8 percent of working-age black males in the city are out of work, suggest that Milwaukeeans should take notice of studies about minorities and employment. A new study in the Quarterly Journal of Economics by David Autor and David Scarborough makes a connection between equitable hiring and worker productivity.

With employers increasingly using company-designed standardized tests to measure applicants’ potential job skills, Autor and Scarborough wanted to find out what effect this testing had on rates of minority hires. Perhaps testing would reduce racial discrimination (and increase minority employment) by introducing objective data to rely on in hiring. Due to multiple societal and demographic factors, overall, minorities as a group tend to score lower on standardized tests than non-minorities. So, would the testing lead employers to hire fewer minorities based on differential scores? Additionally, would the employees hired based on test scores perform better than those hired before the firms introduced testing?

The researchers used data from over 1,300 retail stores of a national chain, and determined the test in use to be non-racially-biased. After examining hiring and job tenure both before and after testing was instituted, the study found that employees hired using testing had higher job tenures by 10%. Though minorities did score lower than others on the standardized test, minority hiring was unaffected by the introduction of testing to the application process. Furthermore, the aspects of testing that enhanced employee productivity accrued to both minority and non-minority job applicants.

The testing not affecting minority employment is good news, but the increase in job tenure accruing to both minorities and non-minorities is even more encouraging. It implies that the job testing allowed employers to make more informed decisions of whom to hire in both the minority and non-minority pools of applicants.

The study’s findings, as some have noted -- especially the fact that minority hiring was stable despite lower test scores – suggest that testing applicants is not incompatible with affirmative action goals.

Worth the risk for some female small business owners

The Women’s Initiative for Self-Employment, a nonprofit program in California that helps low-income women start their own businesses, presented findings at this month's Summit on Economic Justice for Women in Atlanta showing microenterprise to be a successful strategy for increasing household income and wealth.

It seems that starting a small business would be even riskier for low-income women with no prior business experience, but some evidence shows the growth in business equity could be a worthwhile strategy to break the cycle of intergenerational poverty.

While many anti-poverty efforts focus on increasing income, emphasis on building asset ownership and wealth could prevent "asset poverty" and provide a safety net for long-term self-sufficiency. Business ownerhip is an important route to increasing assets: as a share of overall household wealth, business equity ranks second to homeownership.

Research cited by the Small Business Association is grim, showing that over half of new small businesses do not survive four years. Despite the risky environment, Women’s Initiative clients, all of whom are low-income at program entry and 78% of whom are women of color, are doing well. Seventy percent of program graduates are in business within a year of training, and 133 graduates report businesses grossing a combined $2.9 million, with net profits of $1.3 million. Annual household income for participants entering the business training program is just $14,000, but two years after training, average income is $37,000.

One key to the Women’s Initiative’s success may be cultural competency. Training is available in Spanish, and with microenterprise, it may be easier than in a traditional corporation to maximize cultural ties as an asset rather than a barrier. For instance, women of color may choose to start businesses that relate to their cultural backgrounds or feature their non-English language skills (46 percent of Women's Initiative clients are Spanish-speaking).

Minority groups in the U.S. have larger shares of women business owners, including 31 percent of Asian American and 46 percent of African American business owners. The Women’s Initiative organization found the greatest gains from their intervention for women of color, especially from Latina clients whom, as a group, tended to begin the program in debt with an average net worth of -$5,684. African American clients reported the greatest average absolute growth in business equity, while Latinas saw the largest relative gains in business equity, growing over 300%, and the largest gains in average overall household wealth. Rates of home ownership (a key marker of asset wealth) increased most rapidly for Latina clients as well, growing from 11 percent before training to 32 percent after participation.

Nationally, women own 28 percent of non-farm U.S. firms. Only 14 percent of these firms employ workers, and almost 80 percent had receipts totaling less than $50,000 in 2002. While those dollar figures are small, Wisconsin's 104,200 women-owned small businesses generated a substantial $17.6 billion in revenue in 2002, the latest year available. A 2004 study showed that Wisconsin is a good place for African American women entrepreneurs. Wisconsin ranked among the top states in survival and employment of businesses owned by African American women. Female business owners in Wisconsin receive support from the Wisconsin Women's Business Initiative Corporation.

Some skepticism about microenterprise as a route to wealth may still be warranted, given that many Women’s Initiative clients created their ventures in fields with traditionally low profits, such as child care, housekeeping, and food service. The fact remains that female-dominated professions like child care and housekeeping tend to be less lucrative than, say, defense contracting, or financial trading. Following Women’s Initiative training, nearly 17 percent of clients still lacked health insurance, though that share is fairly low for a recently-low-income group.

While microenterprise efforts might not lead women to head firms in traditionally male-dominated, highest-net-worth arenas, low-income women can make impressive leaps in assets in the risky small business ownership environment.

NAFTA bashing does not jibe with Milwaukee's high-tech reality

NAFTA bashing is the new blood sport on the presidential campaign trail. As both major democratic candidates were quick to discover in the Wisconsin and Ohio primaries, their populist message of blaming the upper Midwest's economic woes on free-trade deals certainly made for catchy sound bites.

But, is NAFTA really to blame for the Midwest's slow job and income growth?

And, are things really that bad? To the contrary, some suggest that it could be (gasp!) the Rust-Belt which could lead us out of our country's recession based on the strength of its manufacturing exports. This week, the Federal Reserve Bank of Chicago threw additional cold water on the fiery NAFTA rhetoric. The Chicago Fed highlighted new data from the International Trade Administration which reported that the four-county Milwaukee region exported $6.8 billion worth of goods in 2006, up 14% from 2005. Fed contributor Bill Testa concluded that "the outlook for Midwest exports remains strong."

A double digit growth in exports is a good thing for Milwaukee. Well, actually, it's a very good thing for Milwaukee. The 14% increase in exported goods is a critical economic indicator that should intrigue those with even a passing interest in economic development policy. After all, sustainable economic development can only be realized if you sell more "stuff" outside of your region so as to bring new dollars into your region. Without new money coming in, your region's "secondary" economy (housing, retail, etc.) will slowly starve.

Thankfully, we are not starving in Milwaukee. In fact, with the weakening dollar and explosive growth in developing countries, the stars are aligned for continued manufacturing export growth in our region. Perhaps this is one reason why the Milwaukee region was recently highlighted in a Chicago Tribune article as one of only 4 US regions (in a survey of 25 large metro areas) where housing prices didn't fall in 2007. This could be an example of our region's foreign export growth propping up local housing demand. After all, Milwaukee's exports made up 37.3% of all the exports out of Wisconsin - this despite the region only comprising 27% of the state's population. In the midst of such export strength, it may be no wonder that Milwaukee is experiencing relative price stability in a treacherous housing market.

To the extent that NAFTA has accelerated Milwaukee's investment into the research and development of new "high-end" manufactured products, the trade deal may deserve a bit of praise. Milwaukee 7 representative Jim Paetsch recently stated, "Some places believe that manufacturing is dead or dying. We don't." The quote was pulled from an article at Forbes.com which highlighted new research that showed how Milwaukee's manufacturing base was acting as an important platform for high-tech innovation and patent generation. Perhaps this means that southeastern Wisconsin has finally figured out that competing on cost for low-end of manufacturing jobs is a fruitless "race to the bottom."

But while we pat ourselves on the back, let's not forget that NAFTA has contributed to the upheaval of thousands of households in Milwaukee which were, for decades, firmly rooted in family-supporting, high-wage manufacturing jobs. Many of these low-end production jobs have left Milwaukee for China, Mexico and other countries that are pulling in massive amounts of foreign capital investment based solely on their lower cost structure. With these jobs gone, the workers that remain need an effective and seamless workforce development system which trains capable workers for high-end manufacturing and service jobs in our region. This is going to take money - a cooperative effort with public, corporate and foundation financial support.

Corporate profits also need to be plugged back into research and development to ensure new patent and product development. To encourage such investment, there is a need to align local and state government economic development programs with our new economic reality. The Wisconsin Tech Council hits on several such changes to state policy in this 2003 report. The City of Milwaukee is also getting in on the innovation game with their recent investment into the development of a new line of lithium-ion batteries at C&D Technologies in the Riverwest neighborhood.

The 20th century's economic development paradigm was jobs. The 21st century economic development paradigm is innovation. Like it or not, NAFTA has played a role in ushering this new economic reality - which Milwaukee seems to be embracing.

PPF Viewpoint luncheon: Workforce Development

Workforce for the 21st Century
The force behind economic development

Southeastern Wisconsin’s economy will come to a standstill without trained and capable workers. How will the new Milwaukee Area Workforce Investment Board grow a workforce in the hope of attracting jobs to our region? And what role will our technical colleges play?

Speakers:
Donald Sykes, president,
Milwaukee Area Workforce Investment Board
Dr. Darnell Cole, president,
Milwaukee Area Technical College

Wednesday, October 31, 2007
11:45 – 1:30
Hilton Milwaukee City Center
Monarch Ballroom
509 West Wisconsin Avenue

Forum members: $40
Non-members: $50

Reserve your place now by clicking here

Changes or cancellations will be accepted until Monday, October 29.
No refunds will be given after that date.

Feeding the Red Dragon

Governor Doyle's trip to China has highlighted Wisconsin's strong export growth to the world's largest country. A recent article in the Milwaukee Journal-Sentinel points out that the state's growth in exports to China grew at an annual average of 23% over the last decade and jumped 29% just last year. In this time, China has become Wisconsin's third largest trading partner behind Canada and Mexico.

This growth trend shows no sign of abating.

Looking at the most recent export statistics, we see that Wisconsin exports to China accelerated at an even faster clip than usual in 2007. In the first quarter of 2007, $297 million worth of Wisconsin goods were exported to China. This represents an impressive 75% increase in exports over the first quarter of 2006. Although this is just three month's worth of data, Wisconsin moves up from China's 19th largest US state trade partner, to 14th largest. Not bad for a state that ranks 20th in population.

Wisconsin's export increase to China was fueled by a $71 million year-over-year gain in exports from the state's machinery manufacturers - think engines, turbines, mining equipment and other industrial machines.

In other words, if the past decade was good for Wisconsin-China trade, 2007 might be exponential. Maybe Wisconsin manufacturers are beginning to get the picture when it comes to competing with China: stop trying to slay the Red Dragon - feed it exports instead.

So, what does all this mean for the typical Wisconsinite? It means that if you need a job, a good place to look would be to our export related industries. For example, in my neighborhood there is a large manufacturer of mining machines, P&H. I encourage you to take a look at their current job openings on their website. WARNING: It's going to take you awhile to view all of the listed jobs as the list seems to go on forever.

The problem for P&H and other high-end manufacturers has been finding skilled workers to fill current opening. This problem should only worsen as baby-boomers drop out of the workforce over the next twenty years.

With China's continuing hunger for highly-engineered manufactured products showing signs of acceleration, it's logical that we step up efforts to train workers. A strong partnership between local, state and federal government, private foundations and the employer's themselves will be needed to meet our workforce development needs.

PPF Thoughts: workforce development

Milwaukee Mayor Tom Barrett recently announced the creation of the Mayor’s Office of Workforce Development. This new agency would shift state and federal job training dollars from Milwaukee County's Private Industry Council (check out the PIC's snazzy new website) to the city.

Is this a good idea? Should the city play host to a function that has long been the domain of the county?

Arguments for the shift of responsibility from county to city have been well documented in recent articles and editorials:

• More visibility for workforce development issues by placing the program in the mayor’s office
• More accountability by having one contact that reports directly to the mayor
• More responsiveness because the city is southeastern Wisconsin’s largest source of labor and its center of employment
• There is a great need for adult job training opportunities in the city to alleviate high unemployment and underemployment among minority populations.

Conversely, it’s argued that a regional workforce development authority would better reflect the reality that labor markets are regional (many of us live in one county but work in another) and that, accordingly, workforce development efforts should also be regional.

Who is right? Should our workforce development nerve center stay at the county level, shift to the city, or move to become part of a new regional alliance?

Efficiency may be as good a reason as any to house job training efforts at the city. As detailed in the Public Policy Forum’s “Growing Up” report released in November, the city currently spends upwards of $100 million per year to grow the region’s economy. This dwarfs the economic development capacity at the county. It also dwarfs the capacity of any existing regional economic development effort. Even the ambitious seven-county M7 initiative only has the capacity to spend around $2.4 million per year.

Therefore, the proposed transfer of workforce development to the city would, in essence, be governmental consolidation – a good thing when budgets are tight and property taxes are sky-high. With the city at the helm, the mayor would have a more comprehensive set of economic development tools with which to grow one of the most stagnant economies in the country.

Historically, only 1% of the city’s economic development expenditures in any given year have been devoted to increasing the skill level of our workforce. With highly skilled workers serving as the lynchpin to any 21^st century economic development strategy, it’s high time that the city gets serious about tackling one of region’s most serious challenges.

The city and its partners also would be expected to continue and expand cooperative job training opportunities throughout Milwaukee County and the seven-county region. Included in this regional effort would be action to break down barriers that impede labor mobility in our region – transportation, race relation, affordable housing, and access to quality child-care.

In the end, who plays host to the region’s workforce development function may be a less important question than how effective the agency is at delivering talented workers to area businesses.