THU AM News: Economist calls for self-funding incentive program to bring people to Wisconsin; U.S. Bank economist provides insights on tariff impacts

May 1, 2025

— Creating a self-funding incentive program to attract people to Wisconsin is the “only way” to offset demographic challenges in the years to come, economist Dale Knapp argues.

Knapp, who leads the Wisconsin Counties Association’s Forward Analytics research division, spoke yesterday during the 2025 Wisconsin Economic Forecast Luncheon. The Madison event was hosted by WisPolitics, WisBusiness.com and the Wisconsin Bankers Association.

Much of Knapp’s remarks were focused on the problems posed by the state’s demographic shift, as the large Baby Boomer generation continues to age out of the workforce and subsequent generations are putting pressure on the state’s labor pool due to their smaller size.

While he said “we’re not going to get out of these challenges” entirely, Knapp proposed using a chunk of the state’s projected $4 billion surplus to mitigate their impact.

He’s calling for putting $300 million of the surplus and putting it into a dedicated attraction fund, with $50 million of that going toward an advertising campaign to spread the word about Wisconsin and its quality of life. Meanwhile, the fund could support a $16,000 incentive for those willing to move to the state, he suggested.

“Let’s say we’re going to be very aggressive and we’re going to be very successful, we’re going to bring in 3,000 families a year,” he said yesterday. “We’re going to repay that fund with the income tax that those families generate over five years, and estimated sales tax that they pay, state sales tax. And that money’s going to go back. That fund never runs out.”

Under his approach, Wisconsin would have “probably the biggest” incentive program of any U.S. state, he said, adding it could be funded forever through the increased tax revenue it would generate. Similar efforts have been attempted elsewhere, including an incentive package aimed at bringing more remote workers to live in Tulsa, Okla.

“It’s the only way, I think, that we’re going to be able to begin to bring enough people into the state to minimize some of those challenges,” Knapp said.

His proposal comes as Wisconsin had fewer than 60,000 births in the state in 2023 — the lowest annual total for the state since 1941, according to Knapp. He pointed to worker shortages across much of Wisconsin, even in areas like Dane County that are continuing to see growth.

“A declining youth population over the past 15 years means that’s going to affect our workforce when we start looking 15, 20, 30 years out,” he said.

Some negative trends are already starting to play out in the state economy, he noted, as the number of large businesses in the state has been “shrinking” between 2017 and 2024. While growth was seen in the number of companies with fewer than 50 workers over that period, the opposite was true for those with larger employee bases.

“We don’t know exactly why all of this is, but I think you can make an educated guess that a lot of it is worker shortage, that some of these businesses are shrinking in terms of size, and there’s probably some of these businesses are leaving the state, especially smaller ones, and going somewhere it’s easier to find workers,” he said.

Meanwhile, he noted wage growth from 2019 to 2024 has been stronger among lower paying jobs. Though that’s “great” for the workers in these positions, Knapp said, the trend is making it harder for employers to hire those workers.

At the same time, he spotlighted a “very unusual” trend in labor force participation in Wisconsin, as the greatest decline in this rate in recent years was among those aged 35-44, which he called a “very critical” segment of the state workforce. Knapp said few states have seen declines in this age group.

“That’s driving part of our stagnant labor force,” he said, adding higher wages are driving expected increases in labor force participation among younger age groups.

— The Trump administration’s tariffs are expected to drive up inflation and weaken growth in the short term while causing “havoc” for businesses and disrupting supply chains.

That’s according to Andrea Sorensen, an economist with U.S. Bank in Minneapolis and a featured speaker during yesterday’s economic forecast event. While she predicted keeping tariffs in place would pose widespread challenges, she also emphasized the pervasive uncertainty factor several times in her talk.

Sorensen noted the current effective tariff rate — over 25% — is more than 10 times as high as at this point last year, putting the country in uncharted waters when it comes to economic modeling. That effective rate is the highest it’s been in more than a century, she said, noting “there’s literally no data for us to look back on” as a comparison.

“The economy is just structurally very different, and we can try to make forecasts and comparisons, and we do, all day, every day, but we don’t know,” she said yesterday. “There’s just so much unknown what this will do to the economy.”

Still, she said the tariffs are already throwing a wrench into businesses’ decisionmaking process and will likely snarl global supply chains — though the degree of disruption is still uncertain.

“We are fairly certain there will be higher inflation and weaker growth,” she said, adding “we’re not convinced we’re seeing it yet. But regardless of whether we are or aren’t, we do expect to see it very soon.”

Although the latest U.S. GDP figures show a decline for the first quarter of 2025, Sorensen said the picture isn’t quite as bad as national headlines would suggest.

“Within the details as well, we saw fairly strong consumer spending, weaker than last year, but it still was healthy, and same with investment,” she said. “The economy has not cracked yet, but that’s not to say it won’t.”

Meanwhile, consumer sentiment has been “plummeting” as Americans weigh the possible impacts of tariffs and other trade conflicts, she noted. Before the pandemic, she said there had been “a fairly decent” correlation between changes in sentiment and consumer spending.

“That relationship, for many reasons that we’re still exploring, has not held up post-pandemic,” she said. “And so we basically don’t know … Does this plunging sentiment mean recession ahead? Or does it just mean people are not happy, but the economy is going to be okay? And we don’t know.”

— In the latest episode of “WisBusiness: the Show,” Dairyland Power Cooperative President and CEO Brent Ridge discusses the future of energy generation and distribution in the region the co-op serves.

Dairyland, based in La Crosse, has a 50,000-square-mile footprint spanning parts of Wisconsin, Iowa, Minnesota and Illinois. The generation and transmission co-op serves distribution cooperatives and municipal entities across the region, serving about 800,000 people.

“It’s mostly rural, that is our niche in the world, is serving rural America. That’s why we were created,” Ridge said.

The conversation also touches on new nuclear energy technologies as well as the “right of first refusal” debate that’s been taking place in the state Legislature. The issue has been pitting advocates for giving utilities with existing transmission infrastructure first crack at building new lines against those who oppose the move.

Opponents have argued provisions of ROFR legislation would lead to higher construction costs, while backers say the move would allow operational expenses of coming projects to be spread over a larger area, rather than falling on Wisconsin customers alone.

Ridge notes Dairyland is one of the incumbent transmission system operators that would benefit from ROFR.

“Without ROFR, what’s likely to happen is we’ll see people from outside of the state, and really from far outside of the state, that don’t have maybe the same level of knowledge, or ownership of facilities in the four states that we serve,” he said. “Certainty is way more important than taking a large risk.”

Watch the show here and see more on ROFR at WisPolitics.

Find more episodes here.

— Rep. Amanda Nedweski is touting a bill that would require insurers to cover certain follow-up breast cancer screening exams for those at higher risk.

The Pleasant Prairie Republican says the bill, dubbed “Gail’s Law,” is “not only cost-saving, it is also life-saving.” She says the legislation aims to boost access to breast cancer screenings for women in Wisconsin while bringing down long-term health care costs.

Under current law, insurance coverage is required for initial mammograms but follow-up screenings aren’t covered, even in cases where dense breast tissue or other “abnormal” results suggest a higher risk for the patient, according to Nedweski’s office. The release notes about half of women have dense breast tissue, making them up to six times more likely to develop breast cancer.

“The suffering of the women in our lives and their families could be reduced with increased access to effective screening because early detection dramatically increases survival rates,” Nedweski said in a statement.

She says the financial burden of additional screening can keep some women from getting these tests, as out-of-pocket costs for such imaging can be $1,000 or more.

“This bill would bring the current screening law in line with the capabilities of modern technology to not only serve more women effectively, but to also save resources that would otherwise be required to provide long-term treatment,” she said.

See the release.

For more of the most relevant health care news, reports on groundbreaking research in Wisconsin, links to top stories and more, sign up today for the free daily Health Care Report from WisPolitics and WisBusiness.com.

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— The Assembly State Affairs Committee has signed off unanimously with no discussion on AB 10, a bipartisan bill that would exempt gun safes and gun safety devices from sales taxes.

Originally, the bill was written to just exempt gun safes from the tax, but the committee also voted in favor of an amendment that would add “firearm safety devices” to the exemption.

The amendment defines firearm safety devices as devices that can be installed on a firearm “to prevent unauthorized access to the firearm or to prevent it from being operated without first deactivating the device.”

Chair Jerry O’Connor, R-Fond du Lac, said he thinks the amendment “is a good idea.”

A spokesperson from Rep. Adam Neylon’s office confirmed the Pewaukee Republican introduced the amendment to expand the impact of the bill by encouraging further gun safety measures.

Gov. Tony Evers had a proposal last session to exempt gun safes from state sales tax, but GOP lawmakers removed it from the budget. He included the same proposal in his 2025-2027 budget.

Bill authors have said the bill will promote gun safety and prevent some unnecessary deaths by firearm by incentivizing gun owners to lock up their firearms.

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