Wisconsin’s Economy Outshines Nation’s, Study Finds

Real personal income growth in Wisconsin in the 1990s surpassed the rate of growth in the nation by 24 percent, according to a study by Jon Udell, the Irwin Maier Professor of Business at the UW–Madison School of Business.

The study, Wisconsin’s Economic Expansion, 1969-1996 and 1990-1996 was sponsored by the Wisconsin Department of Commerce and used data provided by the U.S. Department of Commerce.

According to Udell’s research, the state’s economy, except for the farm sector, exhibited impressive growth. Total real earnings from all non-farm sectors in Wisconsin grew at 1.68 times the national rate in the 1990s. “Choose almost any time period beginning after 1973,” Udell states in the report, “and Wisconsin’s economic growth at least equals the nation’s.”

When Udell began researching the state’s economy in the 1960s, Wisconsin “was the laggard of the Midwest and the Midwest was the laggard of the nation.” Wisconsin’s total personal income rose 643 percent between 1969 and 1996, and 38 percent between 1990 and 1996. The latter growth rate exceeded that of the nation’s and every other Great Lakes state, and every New England, Mideast, and Plains state except Minnesota and South Dakota.

Other findings are:

• Only two states with higher per capita incomes than Wisconsin – Michigan and Minnesota – exceeded Wisconsin’s 31.3 percent per capita income growth during the 1990-1996 period. As of 1996, per capita income averaged $23,269 in Wisconsin.
• Two major industries, manufacturing and construction, which have been sluggish nationally, enjoyed healthy growth rates in Wisconsin. Real earnings in Wisconsin’s manufacturing sector rose at more than four times the national rate. While manufacturing employment declined nationally, it rose 8 percent in Wisconsin in the 1990s. Earnings in the construction sector declined in the nation, but rose nearly 16 percent in Wisconsin. Employment in the construction industry in Wisconsin rose 17.7 percent while the national increase was only 5.3 percent.
• The one sector of the state economy bearing bad news is the farm economy. In 1990-95, Wisconsin farmers saw their total receipts decline 2 percent while total expenses rose almost 11 percent. The result was a 126 percent decline of corporate and proprietors’ farm income, Udell reports.

Going beyond earned income, Wisconsinites saw their dividend, interest and rent income rise about 21 percent between 1990 and 1996, exceeding the national increase by 28 percent. On the other hand, transfer payment income, including social security benefits and other public benefits such as food stamps, grew substantially less rapidly in Wisconsin than nationally.

In every major industry, Wisconsin’s employment growth exceeded the national rate of growth between 1990 and 1995 – a remarkable achievement, according to Udell. In general, the fastest rates of growth were in the service and construction industries, each with more than 17 percent growth in the five-year period.

Based on his previous research, Professor Udell observes that the quality of business life has improved in Wisconsin. “This study reveals that the improvement has benefited the people of Wisconsin in terms of employment and income, as well as increased revenues for government.”

To receive a copy of the study, call Jon Udell at The Enterprise Center, UW–Madison School of Business, (608) 263-4100.