Since I took office, "Wisconsin ranks 11th in the nation in total business establishment growth compared to 47th in the years Mary Burke was Commerce secretary."
Following the searing recall elections and years of bare-knuckle brawling in Madison, it wouldn’t have surprised anyone to see Wisconsin’s 2014 campaign season start nasty and get nastier in the closing months. Instead, we have numerical warfare -- an arms race of rankings and comparisons on the economy before and after Scott Walker. Yeah. Here at PolitiFact, that’s just the way we like it. The Republican governor’s new "Wisconsin’s Comeback" plan -- a platform for his 2014 re-election bid -- includes a raft of rankings and statistics in its 62 pages (and 208 footnotes). Many of those rankings compare Walker’s time in state government with that of his Democratic challenger, Mary Burke. She was state Commerce Department secretary under Gov. Jim Doyle from early 2005 to late 2007. Among the comparisons: "Since Governor Walker took office, Wisconsin ranks 11th in the nation in total business establishment growth compared to 47th in the years Mary Burke was Commerce secretary." Walker has argued tax cuts and other moves have helped spur small business growth. But is he right on the rankings? Before the Great Recession hit, was Wisconsin a bottom feeder for business establishment growth, compared to a near Top-10 showing now? Defining terms First things first: Let’s define "business establishment growth." It’s not a reference to job growth, or even new business creation, so it doesn’t carry the weight those figures carry. The phrase is a bit of jargon courtesy of the U.S. Bureau of Labor Statistics, the agency that releases state-by-state data every quarter on employment-related measures. Contrary to what the phrase may suggest, it’s not about how many businesses have incorporated or otherwise formed, compared with how many have folded or otherwise died. Instead, "business establishments" means a business location, such as a new store or factory or farm. A single "company" can have multiple "establishments," and new "establishments" can be opened by existing or new firms. The data comes from a very broad census of employers and economists use it as one indicator of net business activity. Walker cites the data as backup for the claim, and we agree it’s the right data to look at for his very specifically worded statement. Checking the rankings We started with Burke’s time at Commerce. Her tenure as the economic development chief coincides pretty well with the quarterly data collection, though it’s not perfectly aligned. She started in February 2005 and left in November 2007. We used the fourth quarter of 2004 as our starting point and the same quarter in 2007 as the end point. And we looked only at private-sector figures because both Walker and Burke have focused on economic growth in that sector. The numbers showed a ranking of 47, just as Walker claimed. (It was one lower if you use the first quarter of 2005 as the baseline as a nod to the fact that Burke arrived mid-quarter). The number of new establishments grew 1.3 percent in the three-year period from 2005 to 2007, ahead of only Michigan, Massachusetts and Maine. At the top of the heap were Arizona, Nevada and Florida, all with more than 14 percent growth. Illinois had the highest rank in the Midwest (11th). Walker compared Burke’s time at commerce to what happened since he took office. There is no data source we found that brings us to the present -- or even close. That’s because there is a long lag in reporting the quarterly data. (Information for the first quarter of 2014 is scheduled to be released Sept. 18, 2014.) We looked at the most recent data, which covers 2011 through 2013, Walker’s first three years in office. In this period, Wisconsin’s growth rate (5.5 percent) was 11th highest, just behind Iowa (10th) and Illinois (9th). So Walker’s claim is on solid ground. To be sure, the "establishment" rankings don’t necessarily match up with separate ranking of net job gains in the state. During Walker’s first three years, for example, Wisconsin was 35th for private-sector job growth, but 11th in establishment growth. There’s a much stronger correlation during the Burke era -- the state ranked 42nd in private job gains from 2005-’07, and 47th in pace of new business "establishments." So what should we read into these "establishment" growth numbers? It’s important to keep in mind the statistics make no distinction between the size of the firms being created and shutting down, according to economist Brian Jacobsen, chief portfolio strategist for Wells Fargo Funds Management in Menomonee Falls. "If you have a lot of firms with one to four employees being created, you can get a good ranking for the number of businesses being created, but a bad ranking for total employment growth," he said. Our rating Walker’s second-term blueprint said that since he took office, "Wisconsin ranks 11th in the nation in total business establishment growth compared to 47th in the years Mary Burke was Commerce secretary." The numbers, though not covering Walker’s complete time as governor, are the latest available and support Walker’s statement. We rate the statement True.
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