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Slow Churn: Declining Dynamism in America’s Dairyland


July 2018 — 

  • Since the start of the Great Recession, the death rate of Wisconsin businesses with employees (i.e. employer businesses) has outpaced the startup rate. As a result, after almost three decades of growth, the number of businesses with employees in Wisconsin started to decline in 2007.
    New employer businesses are a critical source of job creation. The low birth rate of these businesses is linked to the slow job recovery coming out of the most recent recession.
  • While the number of employer businesses in Wisconsin has declined slightly compared to 2000, nonemployer businesses have increased substantially. This perhaps signals a shift where more and more people are entering self-employment and work for themselves. This coincides with the rise of the “gig economy” where more people are doing freelance work, short-term contract work, or are otherwise employing themselves.
    Mobility has declined nationally. Within the state, the issue of mobility is especially pressing because in-migration is among the lowest in the country. This low in-migration limits a critical source of new ideas and innovation which are important for economic health.
  • A decreasing share of resources in Wisconsin is going toward research and development (R&D). While the manufacturing sector conducts the large majority of research and development nationally, Wisconsin manufacturing is dominated by subsectors that are less active in R&D.
  • Small business lending declined dramatically during the Great Recession and has yet to recover thus limiting an important source of financial capital for businesses to start and grow. The banking sector has also become increasingly consolidated resulting in both fewer vendors and fewer locations for consumers seeking financial services

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