Small businesses in Wisconsin have expanded rapidly after the pandemic but lag the nation in longer-term job growth, a recent report by the Wisconsin Policy Forum found.
The number of small businesses in the state expanded by 20.2% between 2020 and 2025 – a sharp jump from the 6.9% increase recorded both between 2010 and 2015 and between 2015 and 2020, according to the report, which was released on May 28.
“I think that small businesses are so consequential to our regional economies and our state’s economy, and even more so than many people realize,” Joe Peterangelo, the policy forum’s research director, said in an interview.
“I think seeing the findings around net job growth and how critical small businesses are to net job growth in Wisconsin and in our metro areas just shows how important it is for us to support them and help them grow.”
Wisconsin small business growth improving after a slow stretch
The state’s overall increase of small businesses at 37.3% between 2010 and 2025 is “nearly identical” to the nationwide rate of 37.2%, according to the report.
But the state’s small business employment growth between 2010 and 2025, at 17.8%, lagged behind the national rate of 23.8%, the report found, although Wisconsin is more reliant on small businesses for job growth than the nationwide level. While small businesses were responsible for 72% of the nation’s net job growth, 95% of Wisconsin’s job growth came from small businesses during that period, the report says.
The report, which is titled “Small Businesses, Big Stakes,” defined small businesses as private establishments with fewer than 500 employees.
Micro-businesses with fewer than 10 employees accounted for an overwhelming share of small business growth in the past decade, while small businesses with 100 or more employees expanded more slowly, the report also found.
“This difference suggests that Wisconsin entrepreneurs are succeeding in starting businesses but often face difficulties scaling them into larger, more sustainable enterprises,” the report reads.
Peterangelo said that this difference is “problematic” because larger small businesses employ more people and drive job growth “much more.” He attributed the discrepancy to Wisconsin’s challenges in attracting and retaining people, as well as declining birth rates, which is “harder to control.” He also noted firms’ inability to access funding to expand their businesses.
The report analyzed data from both federal and private sector resources, including the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.
Room for diversification
Wisconsin continues to maintain its stronghold in manufacturing, which supports relatively high wages but opens up risk to sector-specific turbulence, according to the report.
Small businesses in the health care sector saw particularly strong growth, reflecting an aging population and an increase in service demand, the report says. In Milwaukee, total net jobs would have, in fact, declined between 2010 and 2024 without gains in the health care industry, the report also found.
“It shows some of the vulnerabilities if we’re not seeing growth in other sectors,” Peterangelo said of this finding. “We might expect health care to continue to grow as the population continues to age, but at some point, we probably can’t expect the health care sector to carry the economy on its own.”
The report further highlighted the need for sectoral diversification among Wisconsin’s small businesses, noting that the state’s job share in “higher wage, knowledge-intensive sectors – such as professional, scientific, and technical services, and information” is lower than the national average.
The authors of the report made three recommendations for policymakers and economic organizations:
“By addressing the challenges identified in this report, Wisconsin can build a more resilient and competitive economy in which small businesses continue to serve as a key driver of employment, innovation, and economic opportunity across the state,” the report says.
The Office of Business and Entrepreneurship at the Universities of Wisconsin commissioned the report, with financial support from the Wisconsin Economic Development Corporation.
This story has been updated to add new information.
This article originally appeared on Milwaukee Journal Sentinel: Small business job growth in Wisconsin lags behind U.S., report finds
Reporting by Jaeha Jang, Milwaukee Journal Sentinel / Milwaukee Journal Sentinel
USA TODAY Network via Reuters Connect
By Jaeha Jang, Milwaukee Journal Sentinel | USA TODAY Network
