University of Wisconsin-Milwaukee
Employment and Training Institute

.

ConfrontingPurchasing Power of Milwaukee Commercial Districts

by John Pawasarat and Lois M. Quinn, Employment and Training Institute, University of Wisconsin-Milwaukee, June 2001.

To assist the City of Milwaukee in describing the income concentration and spending power around commercial districts, the Employment and Training Institute utilized a state-of-the-art methodology relating detailed income tax filing data and other current information on residents to spending patterns found by the Bureau of Labor Statistics for income groups in Midwest cities of comparable size to Milwaukee. In a project supported by the Helen Bader Foundation and the City, the purchasing power and economic assets of all commercial districts in the city will be plotted. This report summarizes the findings from the analysis of twelve city commercial districts. The purchasing power profile reports are posted on the City of Milwaukee's website at www.mkedcd.org/PurchasingPower. Profiles are available for every zipcode in Milwaukee County and for 39 commercial districts.

Findings

  1. Some of the strongest retail markets in the metropolitan area have been ignored in part due to misconceptions about central city income status, persistent "urban legends" about the absence of workers in central city neighborhoods, and marketing stereotypes promulgated by commercial marketing firms. See Confronting Anti-Urban Marketing Stereotypes: A Milwaukee Economic Development Challenge and the Brookings Institution discussion paper on Exposing Urban Legends: The Real Purchasing Power of Central City Neighborhoods.

    City neighborhoods show very high purchasing power for retail goods. Estimated expenditures are calculated for six major categories: food at home, food away from home, apparel and services, entertainment, household furnishings and equipment, and personal care products and services. Within a 3-mile radius of N. 35th Street and W. North Avenue, for example, annual retail expenditures total an estimated $839 million. Around a 3-mile radius of S. 8th and Mitchell streets, annual retail expenditures total $648 million (even though Lake Michigan cuts into part of the circle.)

Est. Annual Spending for Retail Expenditures
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $674,119,439 $28,851,258
Kinnickinnic & Russell $524,665,572 $30,646,354
Layton & Lincoln $786,884,388 $28,887,092
8th & Mitchell $648,428,427 $30,342,931
27th & Center $843,612,113 $32,876,544
27th & Wisconsin $793,107,938 $27,114,801
35th & North $839,565,244 $33,210,650
35th & Villard $708,508,607 $28,580,420
53rd & Capitol $917,815,165 $36,220,014
53rd & Burleigh $946,130,369 $36,001,917
55th & North $848,276,258 $32,438,863
60th & Silver Spring $637,549,294 $26,258,208
83rd & Silver Spring $578,480,608 $24,429,080
* Circles may overlap, and some circles extend into Lake Michigan.


  1. Given the large number of workers and their population density, many city neighborhoods have higher concentrations of retail spending than suburban areas. The estimated total retail spending around 35th and North averages $33.2 million per square mile. On the southside, retail spending around S. Cesar E. Chavez Drive and National Avenue totals $28.8 million per square mile. By comparison, retail spending averages $17.3 million per square mile in Greendale (zipcode 53129), $14.9 million in the North Shore (zipcode 53217) and $5.4 million per square mile in Oak Creek (zipcode 53154).

Estimated Annual Retail Spending Per Square Mile

  1. The largest retail expenditure category is for food at home. Residents within a 3-mile radius of 27th and Center streets spend about $309 million annually for food at home. On a per square mile basis, residents spend $12.2 million a year on food at home. Similarly, residents around S. 8th and W. Mitchell streets spend an estimated $11.2 million per square mile on food at home.

Est. Annual Expenditures for Food at Home
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $251,192,230 $10,734,711
Kinnickinnic & Russell $194,188,588 $11,342,791
Layton & Lincoln $290,396,776 $10,660,675
8th & Mitchell $239,496,529 $11,207,138
27th & Center $309,277,091 $12,202,394
27th & Wisconsin $294,688,764 $10,364,488
35th & North $308,476,512 $13,223,539
35th & Villard $256,935,659 $13,068,152
53rd & Capitol $335,084,480 $11,656,595
53rd & Burleigh $343,431,044 $13,068,152
55th & North $304,819,960 $32,438,863
60th & Silver Spring $232,424,699 $26,258,208
83rd & Silver Spring $209,565,116 $24,429,080
* Circles may overlap, and some circles extend into Lake Michigan.


Again, the concentration of purchasing power is higher than in many suburban areas. Residents of Franklin spend about $1.5 million per square mile for food at home, residents in Hales Corners spend about $5.2 million, and residents in West Allis (zipcode 53227) spend $9 milling per square mile.

Estimated Annual Expenditures Per Square Mile for Food at
Home

  1. While residents spend far less for food away from home, total spending in this category is still considerable. Residents within a three-mile radius of N. 53rd Street and W. Capitol Drive, for example, spend an estimated $122.2 million a year on food away from home, or $4.8 million per square mile. Residents within a three-mile radius of W. Lincoln Avenue and S. Layton Boulevard spend an estimated $107.6 million, or $3.9 million per square mile.

Est. Annual Spending for Retail Expenditures
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $90,222,106 $3,855,646
Kinnickinnic & Russell $71,641,110 $4,184,644
Layton & Lincoln $107,606,336 $3,950,306
8th & Mitchell $88,319,957 $4,132,895
27th & Center $111,739,617 $4,354,623
27th & Wisconsin $104,065,821 $3,557,806
35th & North $110,790,337 $4,382,529
35th & Villard $94,641,007 $3,817,709
53rd & Capitol $122,183,463 $4,821,763
53rd & Burleigh $127,427,473 $4,848,838
55th & North $115,735,225 $4,425,821
60th & Silver Spring $85,096,439 $3,504,796
83rd & Silver Spring $78,858,976 $3,330,193
* Circles may overlap, and some circles extend into Lake Michigan.


By comparison, North Shore residents (in zipcode 53217) spend about $2.3 million per square mile for food away from home. South Milwaukee residents spend $3.3 million per square mile.

Estimated Annual Retail Spending Per Square Mile for Food 
Away from Home

  1. Another important market where spending is considerable is for apparel and related services. Residents within a three-mile radius of 35th Street and Villard Avenue spend about $117 million on apparel, or $4.7 million per square mile. Likewise, residents around S. Kinnickinnic and Russell spend about $4.9 million per square mile on apparel and related services. Around 53rd and Burleigh, the annual spending for apparel is even higher -- almost $6 million per square mile.

Est. Annual Expenditures for Apparel and Services
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $109,771,972 $4,691,110
Kinnickinnic & Russell $83,148,945 $4,856,8331
Layton & Lincoln $124,354,038 $4,565,126
8th & Mitchell $104,093,641 $4,871,017
27th & Center $141,303,212 $5,506,750
27th & Wisconsin $131,665,960 $4,501,400
35th & North $140,174,209 $5,544,866
35th & Villard $116,889,805 $4,715,200
53rd & Capitol $151,467,999 $5,977,427
53rd & Burleigh $155,705,930 $5,924,883
55th & North $139,357,244 $5,329,149
60th & Silver Spring $104,299,770 $4,295,707
83rd & Silver Spring $93,280,559 $3,939,213
* Circles may overlap, and some circles extend into Lake Michigan.

Estimated Annual Spending Per Square Mile for Apparel and 
Services

  1. Spending for entertainment totals about $6.3 million per square mile around 53rd and Burleigh, $5.6 million around 27th and Center, $5.2 million around 8th and Mitchell, $4.9 million around Chavez and National, and $4.3 million around 83rd and Silver Spring Drive.

Est. Annual Spending Per Square Mile for Entertainment
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $115,079,462 $4,917,926
Kinnickinnic & Russell $91,806,304 $5,362,5181
Layton & Lincoln $138,256,594 $5,075,499
8th & Mitchell $112,185,476 $5,249,671
27th & Center $144,267,422 $5,622,269
27th & Wisconsin $134,497,162 $4,598,194
35th & North $144,079,613 $5,699,352
35th & Villard $124,639,270 $5,027,804
53rd & Capitol $160,756,411 $6,343,978
53rd & Burleigh $166,210,754 $6,324,610
55th & North $150,487,789 $5,754,791
60th & Silver Spring $112,737,237 $4,643,214
83rd & Silver Spring $103,293,553 $4,362,059
* Circles may overlap, and some circles extend into Lake Michigan.


Estimated Annual Spending Per Square Mile for 
Entertainment

  1. Another lucrative market for retailers tapping into central city buying power is for household furnishings and equipment. Residents within a three-mile radius of 55th and North spend an estimated $106 million each year for household furnishings and equipment, or $4 million per square mile. Around 27th and Wisconsin, residents spend $3.3 million per square mile.

Est. Annual Expenditures for Household Furnishings and Equipment
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $83,629,945 $3,573,929
Kinnickinnic & Russell $64,534,914 $3,769,563
Layton & Lincoln $97,332,015 $3,573,128
8th & Mitchell $80,389,367 $3,761,786
27th & Center $104,967,714 $4,090,714
27th & Wisconsin $98,174,741 $3,356,401
35th & North $104,063,419 $4,116,433
35th & Villard $88,821,253 $3,582,947
53rd & Capitol $113,704,682 $4,487,162
53rd & Burleigh $117,923,357 $4,487,190
55th & North $106,591,795 $4,076,168
60th & Silver Spring $79,141,526 $3,259,536
83rd & Silver Spring $72,102,115 $3,044,853
* Circles may overlap, and some circles extend into Lake Michigan.


Estimated Annual Spending Per Square Mile for Household 
Furnishings and Equipment

  1. While smaller than the other categories analyzed, expenditures for personal care products and services still represent a major retail market. Expenditures for personal care items exceed $1 million per square mile in most city commercial districts analyzed, while they total less than $300,000 per square mile in Oak Creek and Franklin, and less than $600,000 in Hales Corners and the North Shore.

Est. Annual Expenditures for Personal Care Products and Related Services
Commercial District Within a 3-Mile Radius* Per Square Mile
Chavez & National $26,223,724 $1,077,937
Kinnickinnic & Russell $19,345,711 $1,130,006
Layton & Lincoln $28,938,629 $1,062,358
8th & Mitchell $23,943,457 $1,120,424
27th & Center $32,057,057 $1,249,301
27th & Wisconsin $30,015,490 $1,026,171
35th & North $31,981,154 $1,265,077
35th & Villard $26,581,613 $1,072,272
53rd & Capitol $34,618,130 $1,366,146
53rd & Burleigh $35,431,811 $1,348,242
55th & North $31,284,245 $1,196,338
60th & Silver Spring $23,849,623 $982,274
83rd & Silver Spring $21,380,289 $902,884
* Circles may overlap, and some circles extend into Lake Michigan.


Estimated Annual Spending Per Square Mile for Personal 
 Care Products and Related Services

Methodology

The purchasing power of residents in Milwaukee County is calculated using annual income tax data from the Wisconsin Department of Revenue, current estimates of the elderly population from the federal Health Care Financing Administration, and detailed studies of consumer spending patterns based on the Bureau of Labor Statistics Consumer Expenditure (CEX) Surveys of residents in large Midwest cities. The methodology was developed by Frank Stetzer and John Pawasarat of the University of Wisconsin-Milwaukee after consultation with BLS staff regarding strengths and limitations of the CEX Survey data and review of methods used by national marketing firms to estimate spending.

The research in Milwaukee utilizes current income tax filing data by zipcode and block for all of Milwaukee County. The data considers total adjusted gross income by zipcode and block, as well as income ranges by types of households at the zipcode level. Spending patterns are calculated for elderly persons and for four types of working age income tax filers: married filers with dependents, single filers with dependents, single filers without dependents, and married filers without dependents. To insure confidentiality of all tax data, detailed statistics are analyzed at the zipcode level, while summary statistics (total AGI, number of married and single filers, EITC claims) are reviewed at the block level.

This analysis of city purchasing power uses income tax data as the primary source of current information about the annual income of city and suburban residents. Tax data have important advantages: they are available annually, they provide a more comprehensive listing of income than may be typically volunteered during the U.S. Census or on survey research projects, and they can be used to compare city and suburban neighborhoods on a common measure. The data understate total income for upper and middle-income residents, given tax law provisions regarding reporting of rental property, self-employment business expenses, tax-deferred annuities, etc. The data also understate income in lower-income neighborhoods where some workers may not file tax returns. Across all income groups the tax data do not capture unreported earnings from the "cash economy."

Current income tax data appear far preferable to the ten-year U.S. Census reports that are used as the primary basis for spending estimates by most commercial marketing firms. The Employment and Training Institute found substantial undercounts in both population and income sources in the 1990 Census in Milwaukee County. Data on household income obtained by the Year 2000 Census may be even more problematic, given the growing resistance of residents to complete these surveys. Also, while many city neighborhoods showed significant increases in numbers of workers and income during the economic growth of the 1990s and early 2000s, these changes will not be reflected in most marketing company projections until after the 2000 Census. Yet, by the time the Census 2000 data on 1999 income are released and analyzed, they will be 3 to 4 years old.

City Strengths: Dense Population, High Concentration of Workers and Income

The major factors contributing to the strong purchasing power of central city neighborhoods are their population density and concentration of workers. While average household income may be lower than in suburban neighborhoods, the total income per square mile exceeds that of many suburban areas. Some of the strongest retail markets in the metropolitan area have been ignored in part due to misconceptions about central city income status, persistent "urban legends" about the absence of workers in central city neighborhoods, and marketing stereotypes promulgated by commercial marketing firms.

A clear economic strength of Milwaukee's central city is it population density. When the Year 2000 Census population counts are mapped by block, they show the high concentration of residents in the city. Population maps, prepared for each commercial district, show this concentration.

Map of Population Around 27th & Center

An examination of the number of working age income tax filers (married and single) finds very high concentrations of tax filers in central city Milwaukee neighborhoods. In zipcode 53206, for example, on Milwaukee's northside, the number of 1999 working age tax filers totaled 4,376 per square mile. By contrast, the number of working age tax filers in Greendale totaled 1,071 per square mile.

Working Age Tax Filers Per Square Mile

The total adjusted gross income of working age tax filers is also strong in the central city and comparable to many suburban neighborhoods. Income reported by working age tax filers in zipcode 53204, for example, on Milwaukee's southside totaled $67 million per square mile in 1999. This is higher than the income reported by filers in Hales Corners ($54.4 milling per square mile), Cudahy ($59.6 million), Franklin ($20.3 million) or Oak Creek ($20 million).

Adjusted Gross Income Per Square Mile: Working 
Age Tax Filers

Detailed analyses of household spending patterns conducted by the Bureau of Labor Statistics consistently show that lower income households spend a larger portion of their income on retail expenditures than upper-income households. When the income by neighborhood is translated into purchasing power per square mile, central city neighborhoods show considerable strength.

Estimated Annual Retail Expenditures Per Square 
Mile


Funding for the Milwaukee Purchasing Power Project was provided by the Helen Bader Foundation, the Milwaukee Neighborhood Improvement Development Corporation, and the University of Wisconsin-Milwaukee. For more information, contact the Employment and Training Institute, 161 W. Wisconsin Avenue, Suite 6000, Milwaukee, WI 53203. Phone (414) 227-3385.


To Top | Marketing Stereotypes Paper | Employment and Training Institute Home Page

Page updated 2009
Employment and Training Institute
School of Continuing Education
University of Wisconsin-Milwaukee

Direct comments to: eti@uwm.edu