Submitted By Sen. Julie Lassa (Stevens Point) of the the 24th Senate District.

In recent weeks the word “outsourcing” has been making the headlines, as charges and counter-charges about sending Wisconsin jobs overseas have become the focus of the gubernatorial race.

As a member of the Wisconsin Economic Development Corporation Board of Directors, I have called on the agency to make sure that it does not reward companies for laying off workers, and to ensure that the taxpayers’ investment in job creation results in jobs that stay here in our state.

I think the outsourcing issue brings up larger questions, however, about what the state’s economic development strategy ought to focus on. It is tempting to focus on “smokestack chasing,” the strategy of trying to lure the big corporate headquarters or huge new expansion facility to locate in our state. And it’s easy to see why: it brings hundreds of jobs in one fell swoop and promises to make a big impact on the local economy.

But luring a big national or multinational firm puts Wisconsin in a bidding war with other states and even other countries that are also vying for those jobs. Incentive packages can involve millions of dollars in infrastructure improvements, loans and tax credits. As a result, this kind of competition can eat up a large proportion of the state’s job creation investment.

One Wisconsin Now’s recent report on WEDC found that 60 percent of the agency’s economic development funds went to only 30 percent of businesses receiving assistance. That’s $570 million out of a total $975 million in awards going to some of the largest corporations in the state. And, as the recent headlines have shown too clearly, the jobs that come into the state today can leave just as easily tomorrow.

There’s another way to promote economic prosperity, a strategy you might call “growing your own.” A business that starts in Wisconsin is far more likely to grow here and add good new jobs that stay in our state. And these kinds of small businesses are the ones that create the lion’s share of new jobs, while large companies tend to remain static or decrease employment over time.

We don’t have to look far from home for examples of this phenomenon. The school software company, Skyward, was started in a Stevens Point garage; it now employs 275 people and plans to add hundreds of more jobs in the near future. Organic Valley started out as a small food coop in LaFarge; today it has customers all over the country, buys produce from farms all over central and western Wisconsin and has a large distribution center in Cashton in Monroe County. Central Waters Brewing was started by two home brewing enthusiasts in an old car dealership in Junction City. Its 18 employees expect to sell 13,000 barrels of their products this year from the new facility the company built in Amherst in 2007.

Smaller, newer companies create the most jobs, and those jobs tend to stay put. But the most recent study by the Kaufmann Foundation found that Wisconsin ranked 45th among the states for new business development. Wisconsin clearly needs to do more to improve its ability to help local entrepreneurs create the businesses that will provide the jobs we need.

WEDC has made some encouraging steps in this direction, but we need a major change of emphasis if we are going to make new business development the focus of our job creation efforts. I voted against the proposed WEDC budget for next fiscal year, in part because it largely maintains the status quo on our job creation strategy. We need to do better than 45th in new company start-ups if we are going to revitalize Wisconsin’s economy and keep jobs at home.