Midwest Economy Blog

Economic Development in Milwaukee, WI

August 4, 2014

Milwaukee is the focus of this third blog examining the economic structure and development plans of the five largest cities in the Seventh Federal Reserve District. (For a complete profile of all five cities see, Industrial clusters and economic development in the Seventh District’s largest cities.) Milwaukee grew up as a manufacturing city and was famed for its beer industry. Today manufacturing still plays an important role, but the city has added an array of financial and professional services firms and is targeting niche industries, such as freshwater management and industrial controls, to help drive future growth. Milwaukee also has an important difference from other large cities in the District in the sense that it is geographically close to Chicago. Chicago’s considerable economic shadow presents both advantages and disadvantages for Milwaukee. On the one hand, Chicago provides a huge market for Milwaukee’s products. On the other hand, Chicago’s size and influence pulls regional assets, including skilled workers, away from Milwaukee. However, as we will see from the economic development plan, Milwaukee is focused on industries that are either absent in Chicago or might compliment the greater bi-state regional economy.

Milwaukee’s Industry Structure

Table 1 shows the Milwaukee MSA’s employment and industry concentration levels (also known as location quotients or LQs) relative to the US. Milwaukee has a diverse economic base, with above-average shares of employment and industry concentrations across an array of industries.

Table 1. Milwaukee MSA employment shares, 2012

Milwaukee MSA employment shares, 2012
Note: ND indicates nondisclosure rules prevent reporting of the data. Employment shares above the U.S. average are in bold.
Source: US Bureau of Labor Statistics and Haver Analytics

Economic Development Strategy in Milwaukee

The Milwaukee 7 Regional Economic Development Partnership released a strategy plan in November 2013.1 The plan was developed over 18 months and was based on the work of five cross-sector working groups. The plan recognizes that Milwaukee’s economy has been lagging that of the nation for the past decade and is in a state of transition, with growth favoring knowledge-intensive products, services, and processes over traditional manufacturing.

The plan identifies nine specific strategies aimed at improving regional productivity. These strategies are:

  • become a leading innovator, producer, and exporter of products and services related to energy, power, and controls
  • become a global hub for activity in water technology
  • grow the food cluster by leveraging geographic, supply chain, and human capital advantages
  • increase export capacity, particularly for small- and medium-sized firms
  • align work force development with growth in high-potential clusters
  • foster an innovation and entrepreneurship ecosystem
  • catalyze economic place-making (e.g., recast the economy from an image of traditional manufacturing to more technology-oriented manufacturing and services)
  • modernize regional infrastructure
  • enhance inter-jurisdictional cooperation and collaboration

Milwaukee’s strategy appears to be more targeted than most other cities’. The Milwaukee MSA has a diverse economic base, with LQs above 1.05 in five industries. Rather than focusing on broader categories, the plan looks at subsectors within large groups, such as energy and energy controls, water science and management, and food production. The other elements of the policy are designed to create economic conditions (through productivity policies) that would benefit almost any industry. These infrastructure and workforce policies seem designed to create a platform for growth for many types of firms.

Finally, as Figure 1 illustrates, Milwaukee’s job growth generally exceeded the region’s average heading into the Great Recession but underperformed the region during the early years of the recovery. Over the past two years, however, Milwaukee’s job growth has been on par with the region’s average.

Figure 1. Employment growth: Milwaukee and Seventh District (percent change year-over-year)

Employment growth: Milwaukee and Seventh District
Source: BLS and Haver Analytics

Footnote

1 Available online.

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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