Wisconsin Real Estate Magazine -  June 2, 2004

Why Wisconsin is Becoming a Technology Hotspot

By Tom Still

ADISON, WI - A few days before Forbes magazine released its annual ranking of best cities for business and careers, author and futurist Joel Kotkin spoke in Madison about the rise of small and medium-sized communities as places to live and work. His conclusion was simple: The Information Age has made it possible to work just about anywhere, and "post-nomadic" Americans are settling down in smaller, more livable cities.

"Out-migration is dropping and even reversing in the Midwest," Californian Kotkin told a citywide economic development conference organized by Madison Mayor Dave Cieslewicz. "It's a really important historic change."

The annual Forbes rankings attached an exclamation point to Kotkin's observations. Mid-sized cities dominated the magazine's "best places" rankings, and its small cities category read like a roadmap of the Midwest and the Great Plains.

In the Forbes rankings for cities of all sizes, 18 of 25 would not be counted among the nation's major metropolitan areas. Six of the top 25 were Midwestern cities - Madison, Omaha, Des Moines, Appleton, Minneapolis-St. Paul and Ann Arbor, Mich. Among all Wisconsin cities ranked in this category, Madison was No. 1 (up from No. 5 a year ago), Appleton was 16th (up from 37th) and Milwaukee cracked the top 100 at No. 98, up from 116th a year ago.

The top 25 small places, according to Forbes, included 13 Midwest cities: Sioux Falls, S.D., Fargo, N.D., Iowa City, Lincoln, Neb., Lawrence, Kan., Bismarck, N.D., Rochester, Minn., Rapid City, S.D., Bloomington, Ind., Bloomington, Ill., La Crosse, Wis., Champaign-Urbana, Ill., and Grand Forks, N.D.

Education, income growth and a low unemployment rate worked to Madison's favor, according to Forbes' top editor.

"Madison's number one ranking is a result of the education of its labor supply, strong income growth, as well as the fact that the city ranked tops in per capita number of Ph.D's and third-highest per capita in the United States in terms of the number of people with college degrees," said Kurt Badenhausen, Forbes senior editor. "Madison has a strong economy with the lowest employment in the United States, half the national average."

The same factors contributed to Wisconsin's strong showing in the rankings. Despite a well-publicized loss of manufacturing jobs, Wisconsin has led the upper Midwest in creating jobs (about 37,000 overall) in the past year.

Strong technology sectors are one of the reasons. Wisconsin is home to major research institutions such as UW-Madison, the Medical College of Wisconsin, the Marshfield Clinic, the Milwaukee School of Engineering, UW-Milwaukee and the La Crosse Health Sciences Center. It boasts about 19,000 employees in life sciences fields (biotechnology, bioinformatics and medical devices) and ranks No. 21 among all states in total numbers of information technology workers. In addition, Wisconsin's manufacturing sector is rapidly converting from traditional processes and techniques to advanced manufacturing, which relies on technology.

All of this demands more educated workers - and more educated workers tend to demand a different kind of lifestyle.

"Wisconsin's performance compared to other areas is one of the best in terms of jobs and income growth. Wisconsin held up better than other states because of its ties to the University of Wisconsin and its highly educated labor supply," Bandenhausen said. "With all the talk of jobs moving offshore, the focus on education and labor supply shows there are good areas in the country to attract business as compared to India, China and the rest of southeast Asia."

None of this would surprise Kotkin, author of "The New Geography" and a firm believer that technology, lifestyle choices and the rebirth of the family are producing dramatic demographic changes across the United States. Technology has telescoped the distance between cities, affordable housing often drives location decisions, and people are searching for places that offer good schools, diverse culture and a sense of place. "People are looking for community, a place where they are comfortable," Kotkin said.

Affordable housing is a major component of that search for community. In some U.S. coastal cities, skyrocketing housing and commercial real-estate prices are driving professionals and emerging companies out of the market. Where are they going? They are slowly migrating to more affordable states and cities.

"The combination of affordable housing and sophisticated cities is a sweet spot for much of Wisconsin," Kotkin said.

The Pepperdine University professor also noted that people who were stung by the stock market collapse that began in mid-2000 were inclined to put money into real estate. "People are wary. People have been hurt. Where are they putting their money? In their homes," he said. In part because housing costs are so high, companies are finding it harder to attract and retain executives in larger, coastal cities. They are also encountering resistance from employees who don't want to be moved every three years, as if they're serving a military stint with better pay. "Companies that require constant transfers are having a harder and harder time keeping talent," Kotkin said, and the smarter companies are recognizing that computers and the Internet make it easy to disperse work.

Smart cities and communities are thinking of ways to attract tech-savvy companies and workers. In Madison, for example, the city has set a goal of creating "live/work neighborhoods" that attract what researcher Richard Florida of Carnegie-Mellon University has described as "the creative class."

Here's an excerpt from a city of Madison planning document released in May 2004:

"Today's urban employees are looking for a diverse, healthy and affordable lifestyle. Quality live/work/play neighborhoods, with a mix of uses, services, amenities and creative housing options, provide benefits top employees seek when relocating. [Those amenties are] greater accessibility, walkable to services, improved quality of life, reduced traffic congestion and transportation load, and reduced demand for energy resources."

Whether it's the resurgence of "green urbanism" or simply fewer traffic jams, Midwest cities are becoming more attractive places to live and create jobs. While there are still problems to overcome, it's reassuring to know that Wisconsin ranks high on the list of places to live and do business.

Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

 

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