Wisconsin Lags in Economic Competitiveness

Wisconsin ranks 21st in the country on its economic competitiveness, according to a new report from the Center for Community and Economic Development at UW-Madison’s Division of Extension. 

Wisconsin’s ranking places it behind surrounding states, including Minnesota (fifth), Michigan (13th), Illinois (16th) and Iowa (20th). 

The report reconsiders the notion that economic growth and competitiveness are always driven by lower taxes and business costs. In fact, higher tax rates generally indicated a more competitive economy.

“It suggests the traditional view of a positive business climate and competitiveness is wrong: higher taxes are not necessarily bad for economic performance,” the report said.

The index developed in the report considers innovation as measured by the number of patents awarded, broadband-coverage research and development, and the number of PhDs awarded. The index also considers metrics that would drive the innovative workforce away, such as crime rate and infant mortality as a proxy for public health.

Wisconsin has a relatively high crime rate (13th) and low broadband coverage (35th), which depressed the state’s ranking.

“Access to high-quality broadband is now considered a ‘necessary condition’ for economic growth and development, particularly pertaining to innovation,” the report said.

Although Wisconsin ranked 32nd in its state and local tax burden, lower taxes are not necessarily correlated with a more competitive economy.

“Fiscal austerity policies in the name of economic growth and development may be counterproductive,” the report said. “Investing in people – whether through education, quality-of-life attributes or public-health characteristics – matters because they are the drivers of innovation.”

The Center for Community and Economic Development is the UW-Extension outreach unit that provides applied research, educational programs and assistance on community and economic development to individuals, local governments and community organizations.