WED AM News: UW experts discuss business ownership disparities in Wisconsin; Hospitals facing financial pressures, WHA leader tells lawmakers

May 29, 2024

— Wisconsin could have about 150,000 more jobs if the state achieves parity in business ownership rates between white and minority entrepreneurs, a UW-Madison economic development expert says.

Matt Kures, a community development specialist with the UW-Madison Division of Extension’s Community Development Institute, spoke yesterday during an online briefing. He highlighted the “significant benefits” Wisconsin would see by reaching parity in business ownership rates — in which the share of the population for a racial or ethnic group matches the share of businesses owned by that group.

He referenced a university report released earlier this year showing most people of color in Wisconsin are underrepresented as owners of employer firms, with the exception of Asian residents.

Based on 2019 figures, Black state residents made up 6.44% of the population but just 0.77% of classifiable employer businesses. And Hispanic or Latino residents made up 7.09% of the population but just 1.51% of business ownership, the report shows. American Indian residents made up 0.94% of the population and 0.36% of business ownership.

While Asian residents buck the trend, with 2.88% of population and 3.25% of business ownership, non-Hispanic white residents made up 80.8% of the population and owned 93.9% of employer businesses.

Under conditions of parity, Wisconsin would have an additional 29,706 non-employer firms and 15,942 more employer firms that provide 151,892 additional jobs, Kures said yesterday. He also noted those jobs would generate more than $4.5 billion in additional income.

“These are not small numbers, and they would have a significant impact on many parts of the state,” Kures said yesterday.

In 2019, about 48,720 businesses or 11% of the total were owned by people of color in the state, employing 55,000 workers and generating more than $1.6 billion in payroll, according to the presentation.

Report co-author Tessa Conroy, an associate professor of agricultural and applied economics with the university, yesterday noted Wisconsin is becoming increasingly diverse over time, particularly among younger demographics. She called for pursuing an inclusive economic development approach that includes diverse residents in both urban and rural areas.

“These diverse populations are also going to be a key source of growth,” she said. “So when we think about the Baby Boomers for example, aging out of the workforce, when we think about the need for in-migration … We want to be an attractive place for people to live, people to move to, and part of that is this inclusive economic development.”

Conroy also pushed back on the narrative that most companies owned by people of color are small businesses, noting some critics believe investments in diverse companies “won’t have that big of a return” due to this perceived trend.

“We want to answer that and make clear that there are businesses across the size spectrum here,” she said, noting “actually for businesses owned by people of color, the largest bucket … is in businesses with $1 million or more” in revenue.

In 2020, the number of minority-owned employer firms in Wisconsin in that category was 1,932, according to Conroy’s figures. That’s well above the next-largest category with 1,354, which is the number of firms with revenue between $100,000 and just under $250,000.

See more from the report.

— Hospitals in the state are facing persistent financial pressure in the post-pandemic era, the head of the Wisconsin Hospital Association told lawmakers in a recent briefing.

“In the 22 years I’ve been at WHA, I have not seen fiscal pressure on hospitals and health systems like we had in 2022,” WHA President and CEO Eric Borgerding told a bipartisan group of legislators last week, referencing the organization’s most recent data.

In fiscal year 2022, a total of 117 hospitals had falling operating margins and 139 had falling total margins, while 53 had a negative operating margin and 65 had a negative total margin, according to Borgerding’s presentation.

He added the number of Wisconsin hospitals operating at a loss tripled in 2022.

“This got national attention, it’s not the kind of attention we like, frankly,” he said. “We much prefer attention on the fact that we have the fourth highest number of five star-rated, by CMS, hospitals in the country. Great quality. But the financial pressures continue.”

While lingering effects of the COVID-19 pandemic are playing a role, he said, rising labor and supply costs are driving financial challenges for health care providers. He noted labor makes up 60% of some hospitals’ operating budget, adding “that continues to be a serious challenge.”

He also highlighted the increasing share that Medicare is contributing to the payor mix for hospitals, rising from 42.2% to 49.7% between 2010 and 2023 as the state’s population has aged.

“You add Medicaid to that, which is about another 15%, we’re looking at about 65%, and it’s even more for some hospitals,” he said. “Sixty-five percent of their patients are covered by a government health care program that … is significantly under-reimbursing for those services.”

See the full briefing at WisconsinEye and see WHA’s latest workforce report.

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.

Sign up here.

— A group called More Housing Wisconsin is calling for local officials to reduce minimum required lot sizes and widths in order to “begin eliminating zoning barriers” to adding housing supply.

The organization is a partnership between the League of Wisconsin Municipalities, Wisconsin Builders Association, and Wisconsin Realtors Association, according to a release. These groups yesterday released the latest in a series of briefing papers they say lays a foundation for local housing policy decisions.

The release notes construction of new housing in the state hasn’t kept up with demand, also highlighting increased costs for construction materials and a “lock-in effect” of high mortgage interest rates as major challenges for the housing market.

They also criticize “out-of-date local land-use regulations and zoning restrictions” as standing in the way of increasing the number of types of housing available across the state.

Along with the change to minimum lot sizes, the group is calling for municipalities to reduce setback requirements to allow more of existing lots to be used by developers.

“Many Wisconsin communities have very little variation regarding setback requirements throughout their residential zoning districts, and they are distinctly 20th century suburban standards,” report authors wrote.

They’re also calling for local officials to adopt a traditional neighborhood development, or TND ordinance, which is a planning concept based on traditional small town and historic city neighborhood development. While municipalities with more than 12,500 population are required by the state to adopt such an ordinance, smaller communities are “encouraged” to do the same, the report shows.

“A traditional neighborhood is a compact, mixed-use neighborhood where residential, commercial, and civic buildings are within proximity to each other. … Traditional neighborhood development is found in the older parts of Wisconsin’s cities and villages, parts that often developed prior to World War II,” report authors wrote.

See the release.

— The latest episode of “Talking Trade” features Alan Gogbashian, UK Consul General in Chicago.

He discusses increasing trade between the United States and UK, the possibility of free trade agreements between the two countries, the post-Brexit trade landscape and related opportunities, and more.

“Since leaving the European Union, the UK has been allowed to pursue its own international trade policy,” Gogbashian said. “We couldn’t do that as a member of the [EU] … We can pursue our own trade objectives in the way that makes the most sense for UK interests, and the interests of the individual countries we have relationships with.”

Watch the full episode here.

“Talking Trade” is now available in audio form on Apple Podcasts and Google Podcasts. Subscribe and find more episodes here.

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