What If Wisconsin Diversified Beyond Agriculture and Manufacturing?

The Actual History

Wisconsin's economic development has largely followed the trajectory of many Midwestern states, with its economic identity strongly tied to agriculture and manufacturing for much of its history. After achieving statehood in 1848, Wisconsin quickly established itself as an agricultural powerhouse, with dairy farming becoming particularly prominent by the late 19th century. The state's abundant forests, fertile soil, and access to water transportation via the Great Lakes facilitated early economic growth centered around farming, lumber, and food processing.

By the early 20th century, Wisconsin had developed a robust manufacturing sector. Milwaukee became known as "the Machine Shop of the World," with industrial giants like Allis-Chalmers, A.O. Smith, and Harley-Davidson establishing major operations. The state also developed significant paper and wood products industries in cities like Green Bay and Appleton. Manufacturing employment in Wisconsin peaked in the late 1970s, accounting for approximately 33% of the state's workforce.

Beginning in the 1980s, Wisconsin, like much of the American Manufacturing Belt, experienced significant deindustrialization. Global competition, automation, and changing market demands led to substantial manufacturing job losses. Between 1979 and 2010, Wisconsin lost approximately 160,000 manufacturing jobs, a decline of nearly 30% in this sector. While the manufacturing decline was less severe than in some neighboring states (like Michigan), it nonetheless represented a significant economic challenge.

Wisconsin's response to these structural economic changes was relatively conservative. Rather than aggressively pursuing diversification into emerging sectors like information technology, biotechnology, or advanced services, state policy largely focused on preserving existing manufacturing through tax incentives, workforce development, and trade policies. The state maintained its strong agricultural base, particularly in dairy, food processing, and cranberry production, but did not develop nationally significant clusters in high-growth sectors of the late 20th and early 21st centuries.

The University of Wisconsin-Madison, a world-class research institution, represented potential for economic transformation through innovation and technology transfer. However, the commercialization of university research remained relatively modest compared to other major research university states like Massachusetts, California, or North Carolina. While UW-Madison attracted significant research funding (consistently ranking in the top ten for research expenditures nationally), the state struggled to translate this research capacity into proportionate economic diversification.

By the 2010s, Wisconsin's economy remained more heavily dependent on manufacturing than the national average, with approximately 16% of its workforce in this sector (compared to about 8% nationally). The state showed strengths in food processing, paper, machinery, and medical equipment manufacturing, but had below-average representation in high-growth technology sectors. Wisconsin consistently experienced slower population growth and somewhat higher rates of young-adult out-migration than the national average, suggesting challenges in creating enough high-skilled job opportunities.

Between 2000 and 2020, Wisconsin's GDP growth (adjusted for inflation) averaged 1.4% annually, below the national average of 1.8%. The state maintained lower unemployment rates than the national average but also experienced slower wage growth. By 2023, Wisconsin ranked 26th among states in per capita income, reflecting its middle-tier economic performance.

The Point of Divergence

What if Wisconsin had aggressively pursued economic diversification beginning in the 1970s, recognizing earlier than most Midwest states that manufacturing would face significant long-term challenges? In this alternate timeline, we explore a scenario where Wisconsin's political and business leaders implemented a comprehensive economic development strategy that deliberately moved beyond the state's traditional focuses on agriculture and manufacturing.

The point of divergence occurs in 1975, when Governor Patrick Lucey, instead of accepting an ambassadorship to Mexico, decides to remain as governor and champion a bold economic diversification initiative. Lucey, having observed early warning signs of manufacturing decline and growing international competition, convenes a future-focused economic summit bringing together business leaders, academics, and government officials.

This divergence might have occurred through several plausible mechanisms:

First, UW-Madison Chancellor Edwin Young could have played a pivotal role by presenting compelling research showing the inevitable decline of traditional manufacturing employment and advocating for a new model of university-industry collaboration modeled on emerging technology corridors in other regions. His academic background in labor economics would have made such foresight credible.

Second, several prominent Wisconsin business leaders, particularly from forward-thinking companies like Johnson Controls, might have recognized the coming economic transformation earlier than their peers and advocated for proactive rather than reactive policies, having observed Japan's emerging competitive threat to American manufacturing.

Third, the Wisconsin state legislature might have responded differently to the 1973-1975 recession, seeing it not as a temporary setback but as the beginning of a structural economic shift requiring fundamental changes in the state's development approach.

In our alternative timeline, rather than focusing primarily on preserving existing manufacturing through tax incentives and trade protections, Wisconsin adopts what becomes known as the "Wisconsin Transformation Plan" – a multi-decade strategy to diversify the state's economy while maintaining strengths in advanced manufacturing and value-added agriculture.

Immediate Aftermath

The Wisconsin Transformation Plan (1975-1980)

In the months following Governor Lucey's economic summit, the Wisconsin legislature approves the Wisconsin Economic Development Corporation (WEDC) – decades before such an entity was created in our timeline. This new public-private partnership receives substantial funding to pursue targeted economic diversification. Unlike similar entities in other states that focused primarily on business attraction through tax incentives, the alternate Wisconsin model emphasizes growing new industries from within.

The immediate components of the Transformation Plan include:

The Wisconsin Innovation Fund, a state-backed venture capital fund seeded with $50 million (approximately $260 million in today's dollars) designed to provide capital for promising technological startups, particularly those commercializing university research.
The creation of three Research and Technology Parks adjacent to UW-Madison, UW-Milwaukee, and the newly expanded Fox Valley Technical College, with infrastructure specifically designed to house technology-based businesses.
A reformed tax structure providing significant incentives for research and development activities rather than just capital investment in traditional industries.
An overhaul of the UW System's intellectual property policies, making it easier and more lucrative for faculty to commercialize research discoveries while keeping the resulting companies in Wisconsin.

Educational System Reforms (1976-1982)

The Wisconsin legislature passes the Higher Education and Economic Development Act of 1976, which substantially increases funding for STEM education throughout the UW System. UW-Madison's College of Engineering and Computer Sciences receives particular emphasis, with new facilities constructed specifically designed to foster industry collaboration.

The Technical College System undergoes significant reform, with curriculum redesigned in consultation with emerging technology companies rather than just traditional manufacturers. New programs in computer programming, telecommunications, and automated systems appear throughout the state, with particular emphasis on retraining manufacturing workers.

Milwaukee Area Technical College establishes one of the nation's first comprehensive programs in computer-aided design and manufacturing, helping transition skilled workers from traditional machining to the emerging digital manufacturing paradigm.

By 1980, Wisconsin's educational institutions are producing a significantly larger number of graduates in computer science, electrical engineering, and biomedical fields than in our timeline, providing a crucial workforce for emerging industries.

Initial Business Developments (1977-1985)

The early years of Wisconsin's transformation show promising signs of diversification:

Epic Systems, founded in 1979 by Judith Faulkner (as in our timeline), receives crucial early-stage funding from the Wisconsin Innovation Fund, allowing it to scale more rapidly and cementing its decision to remain headquartered in the state. By 1985, Epic employs over 500 people in Madison (compared to approximately 100 in our timeline at that point).
Several biomedical startups emerge from UW-Madison's renowned medical research programs, particularly in molecular diagnostics and medical imaging. The Wisconsin Research Park in Madison becomes home to over 30 biotech companies by 1985, collectively employing nearly 2,000 people.
Milwaukee experiences a different kind of transformation, with several manufacturing firms successfully pivoting to higher-value products. Johnson Controls expands its electronics division more aggressively, becoming an early leader in building automation systems and energy management technology.
The paper industry in the Fox Valley begins investing heavily in advanced materials research rather than just traditional paper products, supported by a newly established Center for Advanced Paper Technology at UW-Stevens Point.

Early Challenges (1979-1985)

The transformation faces significant opposition and setbacks, particularly during the economic downturn of the early 1980s:

Traditional manufacturing interests lobby against the perceived "abandonment" of core industries, arguing that state resources should focus on saving existing jobs rather than speculating on future industries.
Several early investments by the Wisconsin Innovation Fund fail, leading to political criticism and calls to redirect funding to more established businesses.
Rural communities initially see fewer benefits from the technology-focused strategy, creating political tension between urban and rural interests in the state legislature.

However, by 1985, initial evidence suggests the diversification strategy is showing promise, with Wisconsin weathering the manufacturing recession better than neighboring states like Michigan and Illinois. The percentage of Wisconsin's workforce employed in manufacturing has declined less dramatically than initially feared, while employment in technology-related sectors has grown to approximately 5% of the workforce, compared to less than 2% in our timeline.

Long-term Impact

Technology Corridor Development (1985-2000)

By the late 1980s, Wisconsin's deliberate diversification strategy begins showing substantial results with the emergence of three distinct technology corridors:

The Madison-Janesville Biotechnology Corridor

The I-90 corridor connecting Madison to Janesville develops into a significant biotechnology and healthcare IT cluster. UW-Madison's strength in biological sciences combines with the reformed technology transfer policies to spin out dozens of successful biotech companies. By 2000, this corridor employs over 20,000 people in biotechnology, medical devices, and healthcare software:

Epic Systems grows more rapidly than in our timeline, reaching 3,000 employees by 2000 (compared to approximately 1,400 in our actual timeline).
Promega Corporation expands more aggressively, becoming a major global player in biological reagents and research tools.
Several pharmaceutical research operations establish major facilities, attracted by the concentration of talent and research infrastructure.

The Milwaukee Technology Triangle

Milwaukee undergoes a more successful transition from traditional manufacturing, developing expertise in automation technology, advanced materials, and industrial software:

The Milwaukee School of Engineering (MSOE) becomes nationally recognized for its industry-integrated programs in manufacturing automation and control systems.
Johnson Controls evolves into a global leader in smart building technology earlier and more comprehensively than in our timeline.
A cluster of industrial software companies emerges, specializing in manufacturing execution systems and industrial automation.
Rockwell Automation expands its Milwaukee operations substantially, making it the global headquarters for its industrial internet-of-things initiatives.

The Fox Valley Innovation Corridor

The Fox Cities region successfully transitions from paper manufacturing dominance to a more diverse economy:

The paper industry evolves toward advanced materials rather than traditional paper products, developing expertise in specialized films, coatings, and composites.
A significant electronic components manufacturing sector emerges, initially serving the medical device industry but later expanding to broader applications.
Green Bay becomes a center for supply chain technology, leveraging its traditional logistics expertise but applying it to digital systems.

Structural Economic Changes (1990-2010)

By the turn of the millennium, Wisconsin's economic structure differs significantly from our timeline:

Manufacturing employment represents 20% of the workforce (compared to 23% in our timeline), but the composition has shifted dramatically toward higher-value production of medical devices, electronic components, and specialized equipment.
Technology services account for approximately 8% of employment (compared to less than 3% in our timeline), concentrated in software development, biotechnology, and engineering services.
Agricultural employment continues its decline, but Wisconsin becomes a leader in agricultural technology, with Madison hosting several significant agtech companies leveraging the state's agricultural expertise and technology capabilities.

The 2001 recession and 2008 financial crisis impact Wisconsin less severely than in our timeline due to its more diversified economy. While manufacturing still experiences significant challenges, the growth in technology sectors provides alternative employment opportunities for displaced workers.

Demographic and Social Changes (1990-2025)

Wisconsin's demographic trajectory changes substantially as a result of its economic transformation:

The state experiences higher population growth, reaching approximately 6.5 million residents by 2025 (compared to approximately 5.9 million in our timeline).
The "brain drain" of college graduates to other states is significantly reduced. By 2010, Wisconsin retains approximately 68% of its public university graduates (compared to around 55% in our timeline).
Urban areas, particularly Madison, Milwaukee, and the Fox Cities, experience more robust growth, while rural population decline is somewhat mitigated by improved telecommunications infrastructure enabling remote work.
Madison grows more rapidly, reaching approximately 300,000 residents by 2025 (compared to about 260,000 in our timeline), becoming known as the "Boulder of the Midwest" for its combination of technological innovation, outdoor recreation, and cultural amenities.

Wisconsin in the 21st Century Economy (2010-2025)

By 2025, Wisconsin's position in the national economy differs substantially from our timeline:

The state ranks 15th nationwide in per capita income (compared to 26th in our timeline), with a more balanced economic structure that has better weathered various economic storms.
Wisconsin becomes recognized as a surprising technology hub, particularly in healthcare IT, biotechnology, and advanced manufacturing technology. Epic Systems employs over 15,000 people in the Madison area (compared to approximately 10,000 in our timeline).
The state develops a significant renewable energy sector, particularly in biofuels (leveraging its agricultural base) and energy storage systems (building on expertise in advanced materials and electronics).
Milwaukee successfully repositions itself as a center for water technology, building on its historical strengths in water management and creating a globally recognized cluster of companies focused on water purification, monitoring, and conservation technologies.
Tourism remains important but evolves to include more technology and business travel, particularly to Madison and Milwaukee, which develop more robust convention and business meeting infrastructures.

Educational System Evolution (2000-2025)

Wisconsin's educational system continues evolving to support its diversified economy:

The UW System develops more specialized campuses, with UW-Madison focusing on biotechnology and computer sciences, UW-Milwaukee emphasizing industrial technology and water research, and UW-Stevens Point becoming a leader in sustainable materials science.
The Technical College System becomes a national model for workforce adaptation, developing pioneering programs in digital manufacturing, healthcare informatics, and renewable energy technology.
K-12 education incorporates more technology and entrepreneurship curricula, with Wisconsin's high school graduation rates and college attendance rates exceeding national averages.
Private-public educational partnerships become common, with companies like Epic, Johnson Controls, and various biotech firms developing extensive internship programs and curriculum input.

Challenges and Limitations

Despite its success, Wisconsin's alternative path is not without challenges:

Economic inequality increases somewhat, with significant disparities between those employed in the technology sector and those in traditional industries.
Rural areas still experience challenges, though less severe than in our timeline due to better digital infrastructure and more deliberate efforts to distribute economic development.
Wisconsin remains affected by broader national economic trends, experiencing manufacturing job losses, though at a lower rate than in our timeline.
The state's transformation requires substantial public investment, necessitating higher taxes during certain periods and generating political tension about spending priorities.

Nevertheless, by 2025, Wisconsin in this alternate timeline stands as an example of successful economic diversification in the Midwest, demonstrating how deliberate policy choices and strategic investments can reshape a state's economic trajectory, even in the face of powerful global economic forces.

Expert Opinions

Dr. Jennifer Morales, Professor of Economic Development at the University of Wisconsin-Madison, offers this perspective: "What's fascinating about imagining Wisconsin pursuing diversification in the 1970s is that the seeds were actually there in our timeline too. UW-Madison has always been a world-class research university, but the mechanisms to translate that research into local economic development came decades too late. The counterfactual Wisconsin shows us how important early action is – economic transformations require decades, not years. By starting a comprehensive strategy in the 1970s rather than piecemeal efforts in the 2000s, Wisconsin could have positioned itself more like Minnesota, which did diversify more successfully into medical technology and services, than like its more manufacturing-dependent neighbors."

Robert Atkinson, founder of the Information Technology and Innovation Foundation, suggests: "The Wisconsin counterfactual highlights what I call 'the path not taken' by much of the Midwest. Rather than primarily trying to preserve traditional manufacturing through tax incentives and trade policies – which at best slowed decline – regions that succeeded recognized manufacturing would transform, not disappear. The alternative Wisconsin strategy represented true industrial policy: identifying future growth sectors, aligning education systems, providing early-stage capital, and creating the infrastructure for new industry clusters. This approach worked for Research Triangle in North Carolina and the Route 128 corridor in Massachusetts. There's little reason it couldn't have worked for Wisconsin, particularly given its educational assets and quality of life advantages."

Sarah Thompson, former Wisconsin Secretary of Commerce and economic historian, provides a more nuanced view: "While this alternate Wisconsin scenario is compelling, we shouldn't underestimate the structural challenges facing Midwestern states in the late 20th century. Global economic forces were powerful, and even states that pursued aggressive diversification faced significant headwinds. The Wisconsin that might have been would likely still have experienced manufacturing job losses and economic disruption – just with better alternatives emerging simultaneously. The key difference would have been preserving the state's store of human capital by creating reasons for educated young people to remain in or return to Wisconsin. In our actual timeline, too many of Wisconsin's best and brightest built their careers elsewhere, creating a significant opportunity cost beyond just the jobs directly lost in manufacturing."