Wisconsin is falling behind Minnesota

There has been a widening gap between the states
Wisconsin is falling behind Minnesota

Minnesota produced about $20.7 billion more in goods and services than Wisconsin in 2008, and by 2017, the difference was $27.1 billion. The widening wage gap between Minnesota and Wisconsin over the same 10-year period is remarkable, too. Minnesota reported wages and salaries totaling $11.9 billion more than Wisconsin in the first quarter of 2008. By the first quarter of 2018, that gap had nearly doubled to $22.4 billion.

In the ongoing comparisons between these two Midwestern states, Minnesota appears to have the edge.

At least Wisconsin’s larger population has supported more employment than in Minnesota – until we were recently eclipsed in that respect as well. The U.S. Census Bureau says Wisconsin has almost 219,000 more residents than Minnesota. And 10 years ago, the Badger State had about 98,000 more jobs. But Minnesota has eked out a lead in employment now, too. The U.S. Bureau of Labor Statistics showed Minnesota pulling ahead of Wisconsin in 2017 by 3,096 total jobs out of overall workforces of about 2.9 million each.

Laura Dresser, associate director of the Center on Wisconsin Strategy at the University of Wisconsin-Madison, says one key difference is that the Twin Cities metropolitan area, at 3.5 million people, is far larger than that of Milwaukee, home to 1.5 million people. This imbalance is exacerbated by large companies in the Twin Cities that benefit the entire state of Minnesota by exporting goods outside the state while supporting in-state vendors and suppliers.

“Big cities export goods and services to other states and import wealth, jobs and people,” Dresser says.

In May, the liberal-leaning Economic Policy Institute released a report comparing the economies of the two states – one under the fiscally conservative administration of Gov. Scott Walker in Wisconsin and the other operating under the progressive policies supported by Gov. Mark Dayton in Minnesota.

The report pointed out that since late 2010, the growth rate in total nonfarming employment increased 11 percent in Minnesota and 7.9 percent in Wisconsin. From 2010 to 2016, median household income in Minnesota increased by 7.2 percent and in Wisconsin grew 5.1 percent. Median real hourly wages (after deducting workers’ costs of doing their jobs) have gone up 2.4 percent since 2010 in Minnesota, compared to just 0.3 percent in Wisconsin.

Noah Williams, director of the Center for Research on the Wisconsin Economy at UW-Madison, says “wage growth in the two states has been basically the same” over the last eight years.

“From December 2010 to September 2018,” Williams says, “wages have grown cumulatively 21 percent in Minnesota and 20.3 percent in Wisconsin, a very minor difference.”

He notes that while Minnesota’s cumulative growth rate in gross domestic product (total annual value of the state’s goods and services) outpaced that of Wisconsin, growth in GDP per capita increased more in Wisconsin – 10.3 percent to Minnesota’s 9.3 percent growth from 2010 to 2017.

“The overall economy grew more in Minnesota but Wisconsin grew ‘richer,’ ” Williams says. “Population growth has been much slower in Wisconsin, so in many of the overall size measures the state performs
a bit worse,” he says.

Minnesota created more jobs in the private sector, construction, education and health care over that period, and as of September, maintained a slightly lower unemployment rate: 2.8 percent compared to Wisconsin’s 3 percent.

While manufacturing employment is more prevalent in Wisconsin, manufacturing’s share of the workforce is falling in both states. Meanwhile, health care employment is rising faster in Minnesota.

Minneapolis-based Medtronic Corp., which invented the pacemaker, is the world’s leading medical technology company. UnitedHealth Group, the nation’s largest health insurer, has about 18,000 employees in Minnesota. Minnesota’s abundance of health care jobs lessened the impact of the 2007 recession and has continued to drive the state’s prosperity.

History in Tandem
Minnesota became a state in May 1858 – 10 years after Wisconsin did.

From the 1940s to the 1960s, Minnesota and Wisconsin were virtual mirrors of each other. In addition to sharing a climate that takes some getting used to, they were ethnically similar – overwhelmingly white, with steady streams of German and Scandinavian immigrants fueling population growth.

The states were also economically similar, with mining, logging, manufacturing and farming as the largest industries. Each state had a top-notch Big Ten university and one large, dominant and vibrant city. In 1950, Milwaukee and Minneapolis-St. Paul each had about a million residents.

In the late 1940s, Wisconsin’s per-capita income was about equal to the national average and Minnesota’s was slightly below it. But in the 1960s, Minnesota began to outperform Wisconsin in some key areas. -DB

Joel Patenaude is associate editor of Madison Magazine. Dustin Beilke, a Madison freelance writer, contributed to this story.