Wisconsin's failure to attract federal defense dollars crimps tech economy

Economists love to compare the performance of Minnesota and Colorado to Wisconsin. They’re similarly sized states, all removed from the East and West coasts, and each lays claim to being a high-tech haven.

But the comparisons end when it comes to federal research spending on defense and aerospace industries. There, Wisconsin is a dismal third, and it helps to explain why an otherwise well-positioned state is failing to keep up with the Joneses.

While it is a clear leader in attracting academic research and development funding from the federal government, Wisconsin lags behind Minnesota and Colorado in the number of high-tech jobs, its ability to create new companies, and total R&D spending, according to The Alliance for Science and Technology Research in America. Wisconsin even trails Minnesota and Colorado on patents issued per 1 million residents – despite the exemplary performance of the University of Wisconsin-Madison in that category, year after year.

Why has Wisconsin failed to keep pace with its two, slightly less populous peers? The answer may be simple: We don’t know how to play Defense.

That’s “Defense” with a capital “D” because it refers to the Department of Defense, one of the largest financiers of academic and private R&D in the United States. Wisconsin carried out a paltry $38 million in DoD research in fiscal 2003, according to ASTRA, compared to $525 million in Colorado and $584 million in Minnesota. Wisconsin fared some better in R&D spending from the National Aeronautics and Space Administration, with about $16 million for the year compared to $9 million for Minnesota. But Colorado weighed in with $155 million in NASA spending.

The Department of Defense is the No. 1 source of federal R&D dollars in Minnesota and Colorado, but it is an also-ran in Wisconsin. The Department of Health and Human Services, which includes the National Institutes of Health, is the source of 70 cents out of every $1 spent on R&D by the federal government in Wisconsin.

Lamont lament

Members of the Ned Lamont wing of the Wisconsin Democratic Party may puff out their chests in pride over the lack of federal defense R&D here, but it doesn’t appear to be a matter of political affiliation elsewhere. Minnesota and Colorado have produced their share of liberal politicians over the years, and neither state has resisted performing the kind of basic research that is necessary to protect our shores, air space, and citizens.

“Federal R&D in Wisconsin has been declining since 1994,” ASTRA reported. “Because it lacks defense contractors, large federal labs and federally-supported laboratories, Wisconsin’s share of total federal R&D is well below its share of the total U.S. population.”

The difference is pronounced when it comes to high-tech jobs. Colorado has about 203,000, Minnesota has about 183,000 – and Wisconsin can claim only 77,000, according to 2003 figures compiled by ASTRA. There are certainly other factors, such as the state’s reliance on manufacturing and its tax structure, but a good deal of Wisconsin’s deficit is due to its almost allergic reaction to defense R&D.

A few weeks ago, when the director of Metro Denver’s economic development authority spoke in Milwaukee and Madison, he noted that defense and aerospace jobs are a priority in that state. In Wisconsin, those jobs are rarely a policy objective.

Classified research

That will change over time when the Wisconsin Security Research Consortium, a project of the Wisconsin Technology Council, the UW System and other academic players, takes form. This group was created to help bring more classified and sensitive research dollars to Wisconsin, which has the core scientific ability to carry out this vital national task while creating jobs at home.

Last week’s foiled plot to blow up U.S.-bound airliners from London shows the war on terror is far from won, regardless of how long American troops are stationed in Iraq. Wisconsin can continue to watch its share of federal research dollars decline, or it can aggressively compete in a sector where it has nowhere to go but up.