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As Milwaukee preps for Foxconn, metro sees increase in educated workers, while startups struggle

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If all goes well for Wisconsin, the state may be home to thousands of high-tech manufacturing jobs over the next decade, thanks to the July announcement that Taiwanese electronics manufacturer Foxconn will be building a manufacturing facility for LCD screens in a suburb of Milwaukee. But is the area equipped to turn into the R&D hub that Governor Scott Walker thinks the Foxconn factory will create?

That’s what a new report from Public Policy Forum, a nonprofit research organization based in Milwaukee, seeks to determine, gathering data from the U.S. Census Bureau, the Kauffman Foundation, and the National Venture Capital Association, among other sources. The report’s lead author, Joe Peterangelo, graded how well the Milwaukee metro area fared in 20 criteria determined to be vital to a knowledge-based economy, including the number of highly educated workers, startup density, and the amount spent on research and development by local universities. Peterangelo also determined how Milwaukee fared against 10 other metro areas — Austin, Portland, Buffalo, Cincinnati, Oklahoma City, Cleveland, Pittsburgh, Indianapolis, Minneapolis, and Kansas City — in these 20 categories.

The good news is that Milwaukee continues to add highly educated and highly skilled workers — and at a rate that is competitive with other metro areas. As of 2015, 33 percent of Milwaukee adults age 25 or older had a bachelor’s degree, an increase of 3.2 percent from 2005. Among the 11 metro areas included in the report, Milwaukee also had the third highest concentration of skilled and technical workers, defined by the U.S. Bureau of Labor Statistics as any job that requires more than a high school diploma. Peterangelo says this may be due to the fact that more manufacturing jobs in the metro area require more education.

“We continue to be a very strong manufacturing economy, and those jobs been elevated as automation comes in. The [employment] numbers have reduced, but at the same time the requirements [for these jobs] have increased,” Peterangelo told VentureBeat.

Additionally, Milwaukee has a competitive concentration of scientists and engineers per 1,000 working age adults, at 13.1 in 2016. That number is bested by five of the other 10 other metro areas on the list — Cincinnati, Pittsburgh, Austin, Portland, and Minneapolis. What is concerning, however, is that Milwaukee isn’t adding these scientists and engineers at a competitive rate. Milwaukee saw a 12.6 percent increase in the total number of scientists and engineers in the areas from 2005 to 2016 — only Indianapolis had a lower percent increase. That may be a strike against Milwaukee if it tries to compete for the research facility that Foxconn is reportedly considering placing in a number of U.S. states, including Michigan.

What’s most concerning is how poorly Milwaukee creates and retains startups compared to other metro areas — for the past five years, Milwaukee has had a higher business “birth to death” ration than the national average. In 2016, Milwaukee had a startup density (“startup” being defined here as any business less than one year old and employs one other person besides the owner) of 60.7 per 1,000 establishment businesses — lower than Austin, Kansas City, Portland, Indianapolis, Minneapolis, and Cincinnati. Milwaukee startups also struggle to attract venture capital — securing only $44.57 million in funding in 2016.

According to Peterangelo, the takeaway is that the Foxconn factory won’t likely serve as a “magic bullet” for startup creation.

“Some people talk about it like Foxconn will come and all of this new startup activity will happen because of it — and we’re just not sure yet,” he said.

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