Study says state is a 'C' student

Jul 10, 2010 — Milwaukee Journal Sentinel

John Schmid

Jul. 10, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- If Wisconsin's economy were a student, it would not make the honor roll.

Just when folks thought they had seen every conceivable state-by-state ranking of competitiveness, a professor at Ball State University in Muncie, Ind., came up with a new one: He handed out grades.

And the Badger State took home a "C" average report card.

While Wisconsin got a "B+" for the size of its manufacturing economy, it got a "D+" on the volume of venture capital, which many see as a proxy for entrepreneurialism. It earned a "C-" in productivity and innovation, a "C+" for export prowess, and it flunked benefit costs, an index of non-wage labor costs that cover health, retirement and worker compensation plans.

For the overall tax climate, among the red-hot issues in a state many call a tax hell, Wisconsin took home a "C-."

At 16.1%, Wisconsin's share of its workforce in manufacturing leads the nation, just ahead of Ball State's home state of Indiana. The university's Center for Business and Economic Research, which carried out the research, put a heavy emphasis on metrics relating to manufacturing.

Indiana emerged among the best-ranking states, not least because it enacted a comprehensive tax reform in 2008 that cut property taxes and rebalanced a raft of other taxes, said Michael Hicks, a Ball State economics professor who serves as the center's director. Indiana got "A s" in manufacturing, tax climate and the global reach of its exports.

Hicks, however, denied any grade inflation for his university's home state. A case in point: Michigan and Ohio, both homes to major automotive-dominated (OOTC:MJRC) industries that have been slammed by global competition, also got an "A" in manufacturing. That's because Hicks' manufacturing index doesn't measure how much each state's manufacturing sector has grown. Instead, it measures manufacturing as a share of each state's economy, per-capita factory employment in each state, and manufacturing wages in each state.

Washington State, Utah and Pennsylvania also got high marks.

As the nation struggles out of the deepest and longest downturn since the Depression, the report card raises a new worry.

Hicks argues that manufacturing will recover to pre-recession levels in the next two years in those states with low tax rates and a diverse collection of industries. Inauspiciously, Wisconsin got "C s" in both categories

Wisconsin's report card

Wisconsin had a "C" average in a study from Ball State University, which graded each of the 50 states on the key metrics of manufacturing and economic competitiveness:

--Manufacturing: B+

--Exports/"global reach": C+

--Productivity and Innovation: C-

--Tax climate: C-

--Diversification: C+

--Venture capital: D+

--Non-wage labor costs/benefits: F

--Workforce/education: B+

--Logistics: C+

Source: Ball State University

For the full 50-state economic report card, as well as an interactive state-by-state map, go to www.bsu.edu/cber.

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