MILWAUKEE OPEN FOR BUSINESS?

MILWAUKEE…High costs, inconvenience, and a striking disconnect between the perceptions of business and local government concerning Milwaukee’s business and regulatory climate threaten Milwaukee’s competitiveness when compared to four other cities, according to new research from the Lakeland College Center for Economic Education.

According to the study, Milwaukee businesses rank the regulatory climate as a major problem. Milwaukee firms are more likely to disagree that local governments go out their way to help business, view the business climate as less favorable, and are more likely to consider relocating than businesses in the cities of Green Bay, Wisconsin;  Denver, Colorado; or the Raleigh-Durham/Chapel Hill, (RDCH) North Carolina area.

“To a degree, businesses everywhere complain about government regulations and their negative impact on the economic climate,” said Scott Niederjohn, Ph.D., the lead researcher on the Lakeland College study.  “Milwaukee stands out, however, in that its businesses consistently view government as more of an obstacle than other cities.   Businesses in Milwaukee also appear to be markedly more pessimistic about the local business climate than firms in other parts of the state and country.  In a global marketplace where perception is often as important as reality, this finding poses a serious threat to Milwaukee’s competitiveness.”

The most significant discrepancies occurred in the following areas:

• Less than half (49%) of Milwaukee business surveyed rank the community’s business climate as “very favorable” or “favorable”—compared to 75.5 % for Denver, 73.8% for Green Bay, and 77.5 % for RDCH.

• 27% of Milwaukee business respondents rate the local business climate as “unfavorable” or “very unfavorable” – compared to 11.2% in Green Bay; 9.5% in Denver; and 8% in RDCH.

 Nearly one in five (18.5%) of the Milwaukee respondents report that they have considered moving their businesses out of the city because of the city’s unfavorable regulatory or business climate – compared to 14% in Green Bay; 10% in RDCH; and 8.5% in Denver.

Study co-author, UW-Milwaukee’s Mark Schug, Ph.D., said that another dynamic identified by the researchers was a disturbing disconnect between the perceptions toward regulations held by business and the perceptions held by local government officials.

• While businesses most frequently cited “dollars spent to comply” as the single greatest problem caused by government regulation, only one of the Milwaukee aldermen surveyed identified compliance costs as the greatest problem government regulation causes.  In addition, more than half of the alderman surveyed cited “low fees” and more than one third “low cost compliance” as characteristics associated with doing business in Milwaukee.

• While none of the aldermen surveyed identified government regulation as a “very serious” problem for businesses in Milwaukee, nearly a quarter (23.5%) of businesses categorized government regulation as a “very serious” problem for businesses in Milwaukee.

• While 36% of the Milwaukee businesses surveyed disagreed or strongly disagreed with the statement that Milwaukee goes out of its way to create a favorable business climate, only one of the aldermen surveyed disagreed or strongly disagreed with that statement.

“There is clearly a serious disconnect between the public and private sectors here in Milwaukee  when it comes to perceptions of government regulation and the status of the local business climate,” said Schug.  “One of the keys to Milwaukee’s competitiveness in the future will be to create institutional tools to reduce that disconnect.”

To that end, the researchers made the following recommendations:

1. That Milwaukee create a Business Regulatory Advisory Panel charged to review existing and proposed regulations.  The study’s authors also suggest that this panel might be empowered to block or overturn regulations deemed as particularly harmful to the local business environment.

2. That the City continue efforts to streamline its regulations and develop a true “one stop shop” within city government, allowing businesses to deal with one agency for all city licenses and permits.

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REGULATORY STUDY

3. That city officials and business people work with local legislators as well as the state’s congressional delegation to determine how new rules at the state and federal level may have negative local impacts.

4. That Milwaukee immediately freeze or reduce the regulatory compliance costs, taxes, and fees that businesses pay within the City.

5. That leaders in Milwaukee embrace the goal—explicitly and unambiguously—of creating a regulatory culture that is friendly and welcoming to business.

About the Researchers

M. Scott Niederjohn is Charlotte and Walter Kohler Professor of economics and business at Lakeland College.  A former Wisconsin Policy Research Institute fellow, Dr. Niederjohn has authored five WPRI studies.  He specializes in economics education, applied microeconomics and public policy analysis.  A recognized scholar, Professor Niederjohn has published articles in national economics and education journals such as Urban Affairs Review, Monthly Labor Review, Journal of Private Enterprise, Applied Economics, Journal of Business Strategies and Social Education.

Mark C. Schug is Professor Emeritus at the University of Wisconsin‑Milwaukee and Associate Director of UWM Center for Economic Education.  Dr. Schug taught for 36 years and has written and edited more than 200 articles and books.  He is the Governors Kohler Fellow for the Wisconsin Policy Research Institute and has co-authored eight WPRI studies and several articles in Wisconsin Interest. In 2007, he received the Henry H. Villard Research Award from the National Council on Economic Education.  He is president of a Grafton-based consulting firm focused on economics and education research, writing and speaking.

The full study is available at http://lakeland.edu/cee .