Where have all the Millenials Gone

What is an economic engine and on what does it depend?  Wisconsin Governor Scott Walker has been attempting, for nearly four years, to figure out the best answers to that question. He will well miss his promised target of having created 250,000 jobs in four years.  Although, one has to realize that promise is a good example of political hubris.  It had little basis in reality four years ago, and it would not be realistic today. Politifact, an arm of the Milwaukee Journal-Sentinel, notes that over 21,000 jobs a month must be created over the next seven months for him to meet his target.   Politifact seems to think it interesting, but is really simple math, that the number since the end of May is almost twice that number in January.  When you have lukewarm job creation, and that is being generous, and the time for creating the jobs is cut almost in half, this is a result you would expect.  Politifact does say, that at least through May, private sector job creation in Wisconsin had reached 102,013 since the Governor took office. 

This would seemingly show that his “Open for business” slogan has not produced results even though the state continues to throw money after almost any business.  This includes an existing business where they only  have to say they were looking at an out of state site, and hard-earned tax payer money is thrown their way.  Corporate welfare at its best.  Interestingly, how those who claim the free market, and desire little government are their first in hand for the hand-out. A handout is not the free market at work.  But, back to the key point of this post.  Forbes Magazine (on-line) ranks Wisconsin as 41^st as a best state for business.  This, even though in their six subcategories, the state’s lowest ranking is 39 (labor supply), it highest 15 (quality of life), and the other four are in the thirties.  By contrast, neighboring Minnesota, who Marshall Erickson, a fictional character on a TV sitcom once said something to the affect that but for their manners, a Minnesotan would be no different than someone from Wisconsin.  Minnesota ranks 8^th for business on the Forbes list, just below the power house state of Texas.  Minnesota’s lowest rank in the subcategories is 34, its highest (quality of life) is 5.  Forbes notes that Minnesota growth is powered by the twin cities of St Paul and Minneapolis, which is really the metropolitan region, as neither city is highly populated.  62% of the population of Minnesota lives in the twin cities region. 

Does business attract talent, or does talent attract business?  Most recently it seems more the former than the latter.  For example, The University of Wisconsin is regarded as one of the nation’s premier universities in producing high quality graduates for high-technology fields, particularly in the bio-sciences.  Morris Davis, a Professor of Real Estate at the UW, and former advisor to Federal Reserve Chairman Bernanke, has produced some interesting figures on demographic and educational movement.  Using the American Community Survey data from 2008 to 2012 Davis produced figures which should give pause to Scott Walker.  For all age cohorts, the net migration of population (those moving in and those moving out of the state) for Wisconsin saw a net  loss of 10,932 persons.  Given our northern climate, one would think it to be the ever present and discussed snow-bird.  But it is not.  Two population cohorts making up ages 21—29 and having at least a college degree, saw a net migration out of Wisconsin of 8,720, or almost 80% of the total net loss.  When you add in the net loss in the next five year cohort (30-34), ages 21—34 make up near 87% of the total. 

So where do they go?  For ages 21—39 the top four states were Texas, Missouri, California, and Minnesota.  Texas, by far, grabs the most in that age group.  More interesting is the probability of a move as he identified in the following chart:

Source:  Morris Davis, UW, Feb 2014, accessed on-line from CARPC website

Can a state continue to lose almost 1/4 of its young well educated population, and remain healthy?  One dangerous way to look at data is does it fit anecdotal evidence or qualitatively.  In this case, anecdotal evidence is similar, if not worse, than projected.  As one anecdotal example, let us take a look at the 16 persons who make up my two children and their 14 cousins.  Of this 16, six live out of state, and a seventh will be moving out of state with her husband, so let us say seven.  Six of the seven have at least a Bachelor’s degree.  Four have full time occupations currently out of state, one is pursuing an advanced degree, one is a stay-at-home mother, and the other is moving with her husband.  Of the remaining nine who are in-state, six are in registered for the fall semester at UW or in  high school.  That leaves three who are employed, and of those three one has at least a bachelor’s degree.  Of the number out of state two will be in Texas, and one in Minnesota.  None in California, or Missouri.  The one with a college degree remaining in state is employed in one of the state's economic engines, at least according to Forbes magazine—health care.

This drain poses implications for the state in the long-term.  College graduates, it has been shown, earn higher salaries, which means more purchasing power, which in turn drives the economy of the state.  One would also expect them to pay more in taxes, raising state revenues.  The state needs a strategy to assist in finding sectors of the economy to keep the young millennial talent at home.  If the situation gets worse, it does not portend well for the economic health, nor well-being, of the Wisconsin.  St Croix County, next to Minnesota and only a half hour or so ride to the twin cities, is one of the fastest growing regions in the state, but unfortunately, much of its new growth is driven by jobs in Minnesota.  Demographics play a large role in what occurs in the developed world and politicians need to educate themselves so as to avoid making silly promises.  On the other hand, does any really believe a promise made by a politician?