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UW-Milwaukee - Center for Economic Development

Policy Research Report Abstract

The Economic State of Milwaukee's Inner City: 1970-2000, by Marc V. Levine

Executive Summary

Milwaukee's inner city has experienced a grim thirty-year period of economic decline since 1970. Despite the national economic boom of the 1990s, and some misleading research purporting to show a Milwaukee inner city economy "rich with opportunity," the problems of poverty, joblessness, and slowing business activity persisted through the 1990s. At the beginning of the 21st century, a cluster of daunting issues face policymakers seeking strategies to revive Milwaukee's inner city neighborhoods and improve economic opportunities for residents:

Demographic Decline: During the 1990s alone, the population in the city's "Enterprise Community" dropped by 24 percent. Between 1970-2000, it fell by 45.2 percent. In the 1990s, every single City of Milwaukee "NSP Area" experienced a decline in population;

Unemployment and Labor Market Exclusion: Manufacturing employed around 41 percent of inner city workers in 1970; by 2000, only 19 percent held industrial jobs. The inner city labor market has not recovered from this deindustrialization, and unemployment in the inner city in 2000 was four times the metro Milwaukee average. In the city's "Enterprise Community," 59 percent of the working age population was either unemployed or not in the labor force, twice the suburban average. In the census tracts around 27th Street and North Avenue-an important inner city redevelopment zone-54.9 percent of prime working age males (ages 25-54) were either unemployed or not in the labor force in 2000.

Poverty: The poverty rate in the city's "Enterprise Community" was 44.3 percent in 1999 (down from 57.1 percent in 1989, but higher than the rate twenty years ago). In neighborhoods such as King Drive, the poverty rate was 50 percent in 1999, five times the metro area average. Although poverty rates declined in inner city neighborhoods during the 1990s, this was due mainly to a massive out-migration of poor residents (and some gentrification). Many of these poor residents apparently moved to neighborhoods such as the Northwest Side and Lincoln Park, where poverty (as well as unemployment and labor market exclusion) increased in the 1990s. There was a spatial "rearranging" of poverty in Milwaukee in the 1990s, rather than a meaningful reduction in poverty rates (the city-wide poverty rate declined only slightly, from 22.1 to 21.3 during the 1990s).

Income: Real median household income in the city's "Enterprise Community" fell 13.7 percent between 1979-99; by 1999, the income of the median inner city household in Milwaukee was less than 40 percent of the metro area median, and less than 30 percent of the median household in the suburbs. Real household income did increase during the 1990s in many inner city neighborhoods (such as King Drive) but again, mainly because of massive out-migration by poor households (and a smattering of gentrification). In other neighborhoods, such as the Northwest Side, incomes fell sharply in the 1990s as the number of poor residents increased and middle-class residents shrank. Consequently, real median household income for the city as a whole rose by only 1.5 percent during the "roaring 1990s" (compared to 12.1 percent growth in the suburbs).

Stagnant Economic Activity: At the peak of the national economic boom (between 1994-1999), the number of business establishments fell by 9.1 percent in Milwaukee's inner city, and the number of retail establishments declined by 14.0 percent. Other indicators, such as employment and annual payroll, registered very modest gains in the inner city during the late 1990s, but still lagged far behind the growth in business activity in the suburbs. City officials in Milwaukee tout the "competitive advantages" of the inner city, flowing from density and greater "purchasing power" than suburban communities. But, inner city purchasing power (measured by aggregate household income) has declined precipitously since the 1970s, while suburban income has skyrocketed. On every indicator of economic activity examined in this report, the gap between the inner city and Milwaukee's suburbs widened significantly in the late 1990s.

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