University of Wisconsin-Milwaukee
Employment and Training Institute

Brief Summary

Jobs, Skills, Location and Discrimination: An Analysis of Milwaukee's Inner City and Metro Areas

by Robert Drago, Department of Economics, University of Wisconsin-Milwaukee, April 1994

This report uses the 1990 PUMS data, drawn from the U.S. Census, to analyze the labor market circumstances facing women and people of color in the Milwaukee metropolitan area. We focus on the employment and earnings effects of race and gender within the broader context of where individuals live and work and the skills they bring to the labor market. The race-gender groups considered in the study separate men and women according to whether they are white, black, asian, native american or latino. These groups are examined in a sample of the potential labor force.

The general pattern of the results is as follows:

  1. Milwaukee is segregated by race. Estimates identify over one-third of Milwaukee's black potential labor force as residents of the inner city, and less than 3 percent of this group as residing outside of the city of Milwaukee. Over one-quarter of the asian and latino potential labor force lives in the inner city, while less than half of the asian, native american, and latino potential labor force resides outside the city of Milwaukee. By way of contrast, over two-thirds of all whites reside outside of the city of Milwaukee, and less than 5 percent live in the inner city.

  2. Residence outside the city and county of Milwaukee is associated with advantages in the labor market, while residence in Milwaukee and particularly the inner city is connected with disadvantages. Workers residing outside the county of Milwaukee earn around $6,000 more per year than workers living inside the county; employment among the potential labor force rises from 55.6 percent in the inner city to over 80 percent for metro area residents living outside Milwaukee County; and unemployment falls from over 18 percent to less than 3 percent as we move from the inner city to the suburbs outside Milwaukee County.

  3. Women and people of color in the metropolitan area experience adverse labor market circumstances relative to whites and males. Unemployment rates for black men are over five times as large as those for white males, and rates for black females are over five times as large as the rates for white females. Asian, native american and latino men are over twice as likely to be unemployed as are white males, and this same relationship holds among asian, native american and latino females relative to white females. Earnings differentials are also significant, with black, native american and latino men experiencing earnings over $4 an hour below those for white males. Regardless of race, females were estimated to earn an average of over $5 an hour less than white males.

  4. Part of the reason for the adverse effects discovered here lies in the lesser average skill levels found among residents of the inner city and people of color. Non-whites from each race group are at least twice as likely not to have completed high school compared to whites in the sample. Relatedly, over 40 percent of inner city residents in the sample had not completed high school, while less than 14 percent of residents outside the city of Milwaukee were similarly educated. Compared to white males, education differences are not projected to account for almost $1 per hour of the lower earnings experienced by black males and females, and over $1 per hour in terms of the lower earnings received by native american and latino males, and native american females. Also compared to white males, these education differences account for an increase of over one percentage point in the unemployment rates experienced by black males and females, latino males, and asian, native american and latino females.

  5. Location of residence and location of job have distinct effects. That is, after controlling for a wide variety of relevant factors (e.g., education, experience, etc.) we find that the average worker in the Milwaukee area labor market experiences a 15.5 percent wage disadvantage for residence in the inner city, while a wage advantage of 6.9 percent accrues for holding a job inside as opposed to outside of Milwaukee County. Simulations reveal that if the location of housing and jobs for minority groups were switched to mimic those for white males, hourly earnings would increase an average of over $0.50 for black males and females, and for latino males. Simulations from the unemployment analysis reveal that altering the residence of other race-gender groups to that for white males would further reduce measured unemployment rates for the following groups by over one percentage point: black males and females, latino males and females, and native american females.

  6. Discrimination may play a role in the Milwaukee area labor market. Again controlling for a wide variety of factors, including education and location, we find that white females earn over $4 per hour less than comparable white males in the area, that asian males earn around $0.50 per hour less than comparable white males, and that black, native american and latino males earn at least $1 per hour less than similar white males in the area. Further, white, black, asian and native american females are each estimated to earn at least $3 per hour less than comparable white males. Considering unemployment, rates for blacks male and females, for asian men, and for native American women are projected to fall by over one-half of they were treated the same as white males. Looking at both earnings and unemployment, the evidence supports the contention that the average non-white or non-male individual, be he or she black, asian, native american or latino, or if the individual is a white woman, experiences measurable and significant disadvantages which may be due to discrimination in the Milwaukee area labor market.

There are two general caveats to the study. First, it is possible that many of the advantages which the analysis attributes to education and particularly high school graduation are in fact related to apprenticeships, specific vocational training, and on-the-job training. To the extent this is true, it may be that part of the reason people of color and residents of the inner city experience adverse economic outcomes is not so much due to their unwillingness to obtain formal education as perhaps to the lack of access to these alternative forms of skill acquisition. Second, while the PUMS provides a relatively comprehensive picture of the Milwaukee area labor market during 1990, it cannot inform us of the dynamic influences changing the nature of this market over time. It is suggested below that two such influences may be active at present: the experiences of black and white women may be converging, and jobs, particularly of high quality, may be moving out of Milwaukee County to the suburbs.

Given the empirical analysis, the following policy conclusions seem reasonable:

  1. Education and training levels for inner city residents and people of color in the Milwaukee area should be improved. While the relative contribution of formal schooling and alternative forms of training cannot be separated in this analysis, it is clear that formal schooling improves both employment opportunities and earnings for those who are employed. To the extent some of this return is due to unmeasured (but associated) apprenticeships, vocational training programs and on-the-job training, enhanced opportunities for the relevant groups to obtain these types of training would also be warranted.

  2. Affirmative action policies would improve the position of inner city residents, people of color, and women. While the analysis in this report does not identify specific goals or targets for such purposes, it does make clear that discrimination in the labor market affects blacks, asians, native americans, latinos, and women in the Milwaukee area labor market. By virtue of the close identification of minority race groups with the inner city, such programs would necessarily improve conditions for inner city residents.

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