By Tom Still
In its latest State Tech and Science Index, the California-based Milken Institute reinforced the perception that the Midwest is a frozen wasteland amidst the nation’s high-growth economy. Small New England states such as Rhode Island, New Hampshire and even Vermont (with no city larger than 45,000 people) ranked ahead of all nine Midwestern states except for Minnesota.
Coastal-centric flaws aside, the Milken index nonetheless offered a glimpse at what’s right about Wisconsin’s science and tech economy – which ranked 25th among the 50 states – and revealed serious challenges that deserve the attention of business, academic and government leaders.
The Milken Institute report is issued every two years to examine the components that make up a successful tech-based economy. Its five major categories are human capital investment, research and development inputs, risk capital and entrepreneurial infrastructure, tech and science workforce and “tech concentration,” which attempts to measure which states are most effective in turning assets into prosperity.
Wisconsin’s middle-of-the-road overall ranking was unchanged from the last Milken index in 2012. Within the composite ranking for 2014, Wisconsin was 23rd in human capital investment, 20th in R&D inputs, 36th in risk capital, 17th in tech and science workforce, and 25th in tech concentration.
Most revealing, however, were the 80-plus subcategories that drill down into each state’s profile. Some highlights:
Human capital investment: While Wisconsin ranks high in average college placement test scores, it’s still below average (29th) in the percentage of the 25-and-older population with a bachelor’s degree or higher. It also ranks low in the number of adults with advanced degrees (31st) and doctoral degrees (33rd). While there are signs of growth in recent tech degree awards, three figures call into doubt the ability to sustain that progress. Wisconsin is 37th in state appropriations for higher education, 47th in percentage growth in higher education spending, and 31st in state spending on student aid. It’s hard to build a high-tech workforce without investing in people.
R&D inputs: Wisconsin is top quartile in academic R&D spending per capita, competitive National Science Foundation proposals, spending on biomedical R&D, spending on other life sciences R&D and spending on physical science R&D. However, it’s middling in industry R&D (20th) and bottom quartile in federal R&D dollars per capita (41st). That low federal R&D standing is largely because Wisconsin is home to only a few federal labs… and hasn’t tried very hard to attract others.
Risk capital and entrepreneurial infrastructure: Wisconsin scored well in the number of business incubators per 10,000 business establishments (11th) and patents issued per 100,000 people (16th), but was well down the list in venture capital investment as a percentage of gross state product (36th) and a dismal 47th in the increase in companies receiving venture capital investment. Milken measured 2012 and 2013 venture capital data, which came before a doubling in that category in the first three quarters of 2014. Wisconsin has excellent angel investors; it needs more VCs for the investment baton pass.
Tech and science workforce: Wisconsin ranks in the top third in its concentration of agricultural and food scientists and engineers, biochemists and biophysicists, computer programmers, computer systems analysts, electrical engineers, medical scientists, microbiologists and other engineers. That’s vital to the health of some of Wisconsin’s core industries. The state is bottom half, however, in professions essential to growth in the tech, financial services and insurance, cybersecurity and business service sectors. Those include information systems experts, computer hardware engineers, computer support specialists, database and network administrators, software engineers and systems software experts. More welders? Sure. But more hackers, too, please.
Tech concentration: A persistent rap against Wisconsin is that company startup rates are low. That does not appear to hold true for tech-based companies, according to Milken. The state ranked 12th in the average yearly growth of high-tech industries, 18th in the net formation of high-tech establishments per 10,000 business establishments, and sixth in the number of high-tech industries growing faster than the U.S. average. That represents the best news in the Milken index. While Wisconsin entrepreneurs may not be starting enough bakeries, shoe stores and hair salons, they are launching more high-tech businesses – which are most likely to add high-paying jobs.
Like much of the Midwest, Wisconsin still suffers from the perception that it’s not very “techie” compared to the coasts – and the reality that public policies often act to keep it that way. Reports such as Milken’s Science and Tech Index are basically snapshots in time, but the pictures they reveal can be instructive to policymakers.
Still is president of the Wisconsin Technology Council, which includes the Wisconsin Angel Network and the Wisconsin Innovation Network. This column was written for the Milwaukee Journal Sentinel at www.jsoline.com