Wisconsin Policy Forum’s recently updated Innovation DataTool shows the Milwaukee metro area has a promising concentration of highly educated STEM workers, but the region continues to struggle in several categories linked to economic growth, including VC investment and the number of small businesses opening in the area.
The Innovation DataTool was created to gauge the Milwaukee metro area’s performance in several categories linked to innovation and economic growth. The tool looks at categories including regional talent and economic trends and provides local data, while also comparing that data to 11 peer metro areas.
Using data from the U.S. Census Bureau, the innovation tool also tracked business births and exits in Milwaukee from 2010 through 2021. The number of business births and deaths in the area has remained roughly equal for several years, with 3,175 closures in 2021 and 3,156 business openings.
The number of micro-businesses in the Milwaukee area, those with between one and nine employees, grew by 4.1% between 2012 and 2021, which was below the median growth rate of 9.7% among the comparison metro areas during the same time frame. Austin, Texas saw the largest percentage change in its number of micro-businesses, seeing a 42.6% increase.
Venture capital funding continues to be a struggle for the Milwaukee area. While metro Milwaukee startups attracted more VC investment in 2021 ($103.7 million) and 2022 ($104 million) than in any of the past seven years, the region attracted less VC investment in 2022 than all but one peer metro area. The average size of the VC deals in metro Milwaukee were also smaller than all the other comparison metros. Once again ranking first in the amount of venture capital investment is Austin. That metro area's VC investment per capita is $5,096, while Milwaukee’s is $51. Only Oklahoma City fell behind Milwaukee, with a VC investment per capita of $34.
"While venture capital investing is highly concentrated in a few coastal metros, metro Milwaukee trails even most Midwestern peers and has been near the bottom on this indicator for many years," according to the WPF report.
However, Milwaukee’s pool of talent continues to be a bright spot. The city ranks fifth out of the 11 comparison metro areas and just above the U.S. average in its current concentration of tech talent. The Milwaukee metro area ranks third out of 11 comparison metros in its concentration of scientists and engineers. The city also ranks fifth in its concentration of knowledge workers, defined as people working in industries that typically require at least a bachelor's degree.
Despite a strong concentration of talent, Milwaukee has been in the bottom tier of comparison metros in employment growth since 2012. The region added jobs at a “far slower pace” than the national average during that decade, according to the report. Portland, Oregon was ranked number one, seeing a 51.3% change in total employment from 2012-2022. Milwaukee saw a 2.2% change.
“Among our most troubling findings is that incomes have risen more slowly since 2012 in metro Milwaukee than in all of the comparison metros and have not kept pace with the nation,” according to the report.
While Austin workers had an average median household income of $94,604 in 2022, Milwaukee workers had an average median income of $70,898. The national average was $74,755. Over the past decade, the change in median household income in Milwaukee has only increased 5.7%, compared to Austin’s 24.9%.
The Milwaukee metro area was also ranked last in gross domestic product growth from 2011-2021. Gross domestic product measures the value of all finished goods and services within an area. Metro Milwaukee saw a 31.3% increase, while Austin’s GDP growth increased by 102.4%. The national average was 49.5%.
"Until recently, metro Milwaukee was competitive with its peers in per-employee gross domestic product," according to the report. "The region’s productivity has slid, however, and in 2021 it ranked last among the 11 comparison metros on this indicator."
