Sunday, November 10th, 2013
I was surprised to see that last Wednesday’s post on Cincinnati’s culture of self-sabotage received such a huge response. In light of that, I want to circle back and more fully address the idea of cancelling projects.
What I do not want you to take away from that is that once started, projects should never be stopped on account of the money spent. That’s called the sunk cost fallacy. Money that’s been spent has been spent. One needs to look forward to the future expected benefits and costs. There are certainly many cases in which pulling the plug can be a good idea. For example, Indiana Gov. Mitch Daniels reversed the privatization of certain social services functions after he determined it was unlikely the contract would ever work out like originally envisioned. This an example of someone taking a risk, trying to make it work, then acknowledging it didn’t rather than continuing to double down on a mistake.
On the other hand, I do not see the majority of these rail cancellations as having anything to do with benefit/cost analysis. You may notice, it’s only transit projects that ever seem to get the ax. Since the era of the freeway revolts, it’s tough to name any governor or mayor that has ever sent back earmarks on a highway project, or ever cancelled any road project they could actually get money to build on the grounds that it’s a boondoggle. (My hypothesis continues to be that there’s no highway boondoggle big enough that even the most fiscally conservative governor is willing to kill it). Clearly, the cancellations in these cases is based on an ideological animus to transit specifically.
That is, unless it is baser motivations at play. Chris Christie’s cancellation of the ARC tunnel project enabled him to use the funds New Jersey had pledged to the project to bailout the state’s bankrupt highway fund. He’s not demonstrated any hesitancy to push even questionable and expensive transit projects when they involve Somebody Else’s Money. For example, he wants the Port Authority to spend a billion dollars on an extension of PATH service to Newark Airport, which many consider an inappropriate use of funds. Christie’s motivation appears to be bribing United Airlines to add flights to Atlantic City, whose gambling market is imploding. (Read up on the Revel Casino deal if you want to know more about this sordid story).
Meanwhile, many of these cancellations are proving to be costly in their own right. I noted before how Cincinnati had already let $95 million in contracts out the total $133 million cost of the streetcar, how it will have to repay federal grants that were going to pay for a big slug of the project, and likely end up with at best a minor financial win and potentially a loss.
It’s the same in Wisconsin. Gov. Scott Walker trumpeted that he was returning an $810 million stimulus grant for rail upgrades between Madison and Milwaukee. Apparently although the federal government was going to pay 100% of the construction costs through the stimulus bill, he didn’t want the state to have to pick up the estimated $7.5 million in annual operating costs. (How much the state actually would have had to pay incrementally is a an open point. The existing Hiawatha operating costs were being 90% paid for by federal funds. It’s by no means clear that the state would have been on the hook for the full amount anyway). The feds were actually generous enough to reimburse Wisconsin for money it had spent on the rail line it decided not to build. However, that did not prove to be the end of the matter. Train maker Talgo is planning to sue the state of Wisconsin for $66 million for breach of contract. Given that it actually built trainsets for the state, this seems like a strong case. Also, if the state does lose, it might also be forced to immediately repay an additional $70 million in loans. The state could have paid operating costs for a long time for that kind of money – and it would actually having something to show for it other than a hole in its bank account.
So from a financial perspective, it’s not even clear cancelling these projects was a good move – even if you look solely at costs and ignore benefits.
But beyond the financials, these types of things also show communities that have deep internal divides, and which as a result require businesses and residents to apply an additional uncertainty premium into investment business cases there to account for the likelihood that a) promised actions by the government may not actually occur, even if they are in flight and b) that the community may not be able to muster the staying power to make the kind of long term investments that are necessary for any community to retain marketplace relevance. Though hardly immune to infrastructure drama, New York City just put water tunnel #3 into service for Manhattan. This is a project that was started in the 1970s. That’s the type of long term thinking that has kept a place like New York on top. In short, credibility counts for something, and places like Cincinnati and Wisconsin have damaged theirs.
I want to contrast this with one of the legendary stories of Indianapolis. In the late 1980s it embarked on construction of a downtown mall. Maybe that wasn’t the best idea in the world. The city definitely didn’t have its act fully together. Two entire city blocks had been excavated and were literally holes in the ground. No anchor stores had been signed and it wasn’t clear if the project would or even could be finished. A lot of the public suggested scrapping the project. Some suggested turning the empty blocks into ice rinks. Others trying to bring in a Wal-Mart. Instead, city leaders across the board came together to commit to the project, including many of the downtown corporations investing in the project. It got built. While generally successful, the mall has certainly had its share of troubles over the years and may not even survive over the long term given the disfavor of the mall format. However, one thing that project demonstrated is that Indianapolis finishes what it starts. In short, they have credibility and an ability to execute that’s simply better than most places. I suspect that’s one of the reasons metro Indy has so outperformed Cincinnati in population, job, and reputational growth, despite having far, far fewer natural assets to start with. They aren’t constantly shooting themselves in the foot.
This is also why even though there are road projects out there I did not think were a wise use of funds – say I-69 in Indiana, to pick one I’ve criticized – once they are being built I’m all in favor of getting them done as quickly and cheaply as possible. And then letting the communities in question live with the consequences of making that choice, for good or ill. Again, that doesn’t mean no project should ever be cancelled, but you need to pick your battles. Communities are not well served when project debates turn into endless years of scorched earth politics, litigation, etc. in which neither side will ever given an inch on anything.
Monday, May 13th, 2013
Last summer I was invited to speak at a conference called “Milwaukee’s Future in the Chicago Megacity” put on by the Marquette University School of Law and the Milwaukee Journal-Sentinel. It was an interesting day of conversation about mega-regional integration between the two metros. In follow-up, Marquette Lawyer magazine asked me to write a piece for them about it. I’m including the full text of that article below. However, the current issue of the magazine has a couple of other major articles on the same topic. These are “Thinking and Acting (and Flourishing?) as a Region” by Alan J. Borsuk and “Rivalry, Resignation, and Regionalization” by John Gurda. I recommend both of these.
In the meantime, my article is below. The first part of it includes material and ideas from my “Don’t Fly Too Close to the Sun” post, but most of the article is original. Enjoy.
Milwaukee and Chicago sit a mere 90 miles apart on I-94. Growth in both metro regions has led to near-continuous development along that corridor, which is being expanded to handle the increasing traffic between the two regions. Amtrak links downtown Milwaukee with downtown Chicago in only 90 minutes, which is shorter than some Chicago commuter rail trips. The two cities share a lakefront heritage and similar industrial history.
With their closeness and parallels, the idea that there’s benefit for the two cities in mutual collaboration is almost obvious. This is particularly the case for Milwaukee as it looks to differentiate itself from peer cities. What does it have that those places don’t? Chicago. This idea was even the subject of an entire conference called “Milwaukee’s Future in the Chicago Megacity,” sponsored by Marquette University Law School and the Milwaukee Journal Sentinel. This essay further explores Milwaukee’s relationship to Chicago.
Is Proximity to Chicago a Positive?
In most discussions of the topic, the increasing integration of Chicago and Milwaukee is assumed to be a positive. But we should ask whether this is so. For other examples of close cities around the country suggest that perhaps a more cautious view should be adopted.
Indianapolis analyst Drew Klacik has suggested a reason to be skeptical about Chicago–Milwaukee. He promotes a model of the Midwest as a solar system with Chicago as the Sun. His idea is that Indianapolis is Earth—it’s the perfect distance from Chicago. A place like Cleveland is like Uranus—it’s too far away and doesn’t get enough heat and light. But in this model Milwaukee is like Mercury—it’s too close to the sun and gets burned up.
Of course, Klacik comes from Indianapolis. But is there something to this notion of being “too close to the sun”? Taking a look at other similarly situated cities suggests some indications that it isn’t always healthy to be located next to a megacity. Providence, R.I., about the same size as Milwaukee, sits just 50 miles from Boston, but shows little signs of life. Neither does New Haven, Conn., 80 miles from New York, or Springfield, Mass., 90 miles from Boston. But these post-industrial cities have struggled for reasons completely independent of megacity proximity.
A more positive example might be Philadelphia, which is 90 miles from New York and seems to be seeing a resurgence due to what we might dub the “Acela effect,” as runaway gentrification chases people from New York. Yet Philadelphia is also a near megacity in its own right. Various post-industrial cities such as Aurora, Elgin, and Joliet have seen new growth as Chicago enveloped them, but they are much closer and much smaller than Milwaukee, and in the same state as Chicago. To the extent that they’ve benefited from being close to Chicago, it’s because Chicago has turned them into suburbs.
The key takeaway might be that Milwaukee’s proximity to Chicago is potentially either a pro or con. It is something that must be studied, and managed as well as possible, to both regions’ benefit. There is no choice to grow together or not grow together. The two regions are growing together as we speak, driven purely by market forces. It is happening on its own. The real question is what, if anything, should Milwaukee’s leaders do about it.
To show the double-edged sword of proximity, consider the case of General Mitchell International Airport. How is service at this airport, and thus for Milwaukee generally, affected by Chicago’s proximity? There are many ways. For example, to the extent that it is more convenient or has lower fares, Mitchell Airport can draw from the Northern Chicagoland region, becoming a de facto third airport for Chicago. This is a positive for Mitchell Airport and Milwaukee. However, to the extent that Chicago has better nonstop flight options, especially internationally, people may choose to drive from the Milwaukee region to O’Hare for a nonstop flight rather than connect. This potentially suppresses Milwaukee air traffic, particularly for international flights. Among metro areas with more than a million people, Milwaukee ranks only 41st in the United States in originating international air passengers per capita, according to Brookings Institution research. This is a negative for Milwaukee. But the flip side is that Milwaukeeans, by driving to O’Hare, have access to many nonstop flights that aren’t options for people in other small cities.
In short, the dynamics are complex and cut both ways. That’s why simple surface thinking will not suffice to manage this problem. It requires a lot of careful analysis and new types of thinking.
Milwaukee Must Go It Alone
Additionally, in its attempts to manage the increasing integration of Chicagoland with Milwaukee, Milwaukee should expect largely to have to go it alone. People from Chicago may come to the occasional conference, but it’s unlikely that Milwaukee will capture much time and attention from Chicago’s leadership. Milwaukee is much smaller. Chicago already has all the scale it needs to compete in its chosen global-city strategy. And Chicago and Illinois both have serious near-term problems that must urgently be addressed. The leadership of the Chicagoland region is mostly Chicago-focused. It can even be difficult to get Chicago and its suburbs to pay attention to each other or get on the same page—how much more so Chicago and Milwaukee. Thus the next key question to ask is this: What can Milwaukee do by itself for itself, without much help from its larger neighbor? What should Milwaukee do to try to shape its future in the Chicago megacity?
A Plan of Attack
Here are some potential ideas to explore.
1. Think “Different.” Milwaukee is similar to Chicago but smaller; hence it can at times view itself as a little brother or “Mini-Me” version of the Windy City. But the approach of being like Chicago is not a positive for integration. Economic gains come from specialization and the division of labor. You can only take advantage of this to the extent that you are different. On a football team, not everybody can be a quarterback or a linebacker. Everybody has to know his role on the team. Milwaukee would be much better served to be a starting wide receiver to Chicago’s quarterback than to settle for second-string QB.
Mike Doyle illustrated the downsides of thinking too much like Chicago in his critique of a local tourism campaign aimed at Chicagoans. One tagline from an outdoor ad was “Beer. Brats. If you had another hand, we’d go on.” But, as Doyle notes, Chicago is arguably already as good a beer and brat town as Milwaukee. Why would people make the trip for something they can already get at home?
Milwaukeeans instantly understand that you go to Chicago to get what you can’t get at home. The city needs to invert that thinking to figure out what it is that you can get only in Milwaukee and not in Chicago. That is where you market your city.
Similarly, in thinking about the best way to relate to Chicago economically, Milwaukee should sort out how the two cities can have complementary specialties.
2. Promote an Expanded Labor Market. Another area of integration is to better market the two cities as an extended labor market. This could take place in various ways. Naturally, making the sale to talent you are trying to attract to Milwaukee that Chicago is a piece of Milwaukee’s value proposition is a given. There may also be people who want to live in Chicago but could potentially be attracted as employees in downtown Milwaukee. This is particularly true if a person needs to be on site only part-time, such as a software developer. Many people reverse commute from the city to the suburbs of Chicago on Metra. There’s no reason they can’t do it on Amtrak as well. Figuring out the addressable market and how to sell it on Milwaukee is the “to do” here.
3. Market Nearshore Outsourcing. The move from Chicago to Milwaukee provides a steep cost gradient while maintaining good physical proximity in a way that provides opportunities for periodic face-to-face interactions. The globalized economy appears to be currently rewarding two models. The first is the “flat world” model of Tom Friedman in which work travels to wherever in the globe it can be produced most cheaply. The second is the “spikey world” model of Richard Florida in which intensive face-to-face collaboration is so valuable that it forces clustering of people and businesses in locations such as downtown Chicago.
Is there an intermediate model where reducing costs is important for certain activities, but face-to-face meetings are still valuable? If so, this is where Milwaukee–Chicago would have a very strong play. Examples may be various types of legal work or business-process outsourcing. For example, Walgreens maintains an operations center in Danville, Illinois, some 135 miles to the south of Chicago along the Indiana border. This is not only lower-cost than Chicago, but it allows executives from Deerfield to make day trips, enabling much better oversight and collaboration than an overseas location would, particularly with the time zone commonality. These types of applications would be something that could be highly beneficial for economic development in Milwaukee.
4. Eschew the Amenity Arms Race. Many cities of the same general size as metro Milwaukee spend much of their time trying to produce amenities that prove they are a “big-league city.” For many of these—stadiums, hotels, convention centers, department stores, high-end restaurants—there is a sort of “nuclear arms race” between cities in which one city after another pumps large subsidies into bolstering these high-end sectors in order to try to distinguish itself from the pack.
For Milwaukee, proximity to Chicago reduces the ability of the city to attract and support these types of amenities. Consider one example: high-end department stores. An analysis by David Holmes discovered that Milwaukee had fewer high-end department stores than regional peer cities. He also noted that when plans for a Nordstrom in Milwaukee were announced, it was reported that the city was the largest in America without one.
This is unsurprising. The incredible wealth of high-end amenities in Chicago siphons off money from high-end consumers by shifting it south. This reduces the effective capacity of the Milwaukee region to support amenities. This might be seen as a negative. However, the situation holds two key positives that also should be mentioned. The first is that, again, Milwaukee can take advantage of everything Chicago has to offer, which is something other places can’t. This is vastly more than Milwaukee could ever support by itself. And, secondly, many other cities give a lot of subsidies in attempts to lure these types of amenities. That’s money Milwaukee can keep in its pocket.
5. Avoid Other Sectors Where Proximity to Chicago Is a Disadvantage. Consider where Milwaukee’s proximity to Chicago is a disadvantage, and avoid those sectors. This is particularly true when solutions targeting these sectors are popular and thus tempting for Milwaukee to try. For example, both Indianapolis and Columbus have focused on building tons of bulk distribution space. But because of Chicago’s terrible traffic and Lake Michigan as a barrier to the east of Milwaukee, Milwaukee may not be as good a fit for that type of business, which is a low-wage industry in any case.
6. Improve Rail Connectivity Between the Cities. The highway linkages between Chicago and Milwaukee are already being upgraded, but the rail system requires improvement. The cities are currently linked via Amtrak’s Hiawatha service, which is subsidized by the state of Wisconsin. As noted, it provides a 90-minute journey time with seven trips per day. This route has received little investment compared to similar types of corridors, such as the Keystone route linking Harrisburg, Pa., to Philadelphia and on to New York.
Unfortunately, the state and federal political climates are not favorable to significant rail upgrades at this time. Ideally, the route would have hourly frequencies and shorter journey times (though true high-speed rail along the lines of that found in Europe is not needed). In the meantime, Milwaukee leaders should look to explore ways to better manage the existing service. Ideas include Metra-style boarding in Chicago instead of making passengers queue in a waiting room, variable pricing to better utilize and allocate capacity, and amenities such as Wi-Fi.
Milwaukee should also establish policies favorable to curbside bus operators such as Megabus that might provide additional connectivity to Chicago.
Milwaukee Is Blazing the Trail
There has been a lot written about so-called mega-regions, from people such as Richard Florida to the Regional Plan Association of New York. The concept is that cross-regional collaboration such as between Milwaukee and Chicago is the next level of regional economy that will become a basic competitive unit in the global economy.
There’s just one problem: other than building high-speed rail in these mega-regions, there’s a paucity of ideas about what one would actually do to make these mega-regions work. The public policy ideas for this are few.
Milwaukee and Chicago provide an excellent test bed for the mega-region concept. They are close enough together to be nearly an economic unit in formation already, but far enough apart to truly be two metro areas with two centers of gravity. If Chicago and Milwaukee can’t figure out how to generate value from the mega-region concept, it’s unlikely many other people will, apart from pure market forces.
This means Milwaukee has the exciting opportunity to be a trailblazer. Given that the regions continue to grow together day by day with no intervention from the outside, this is a challenge that is coming Milwaukee’s way whether Milwaukee wants it or not. Chicago may be able to ignore it, but Milwaukee has no such luxury.
This article originally appeared in the Summer 2013 issue of Marquette Lawyer magazine.
Thursday, December 20th, 2012
[ I am going to take a break until early 2013. See you folks in the New Year. In the meantime, I'll leave you with this piece by David Holmes that follows up on my "Don't Fly Too Close to the Sun" piece. He makes some of the same points I did at the conference, as well as some new ones I found interesting. Bye for now! - Aaron. ]
I was intrigued by Aaron’s recent post “Don’t Fly Too Close to the Sun Piece” which focused on the relationship between Milwaukee and Chicago and the notion of whether “proximity to Chicago or another mega-city represents an unambiguous good,” or – as posited by Aaron – may actually be more of a curse than a blessing, and something that drains vitality instead of increasing it. This is a topic that interests me both from the perspective of a long-time resident of Milwaukee and as a long-time fan of the City of Chicago. There are likely unique combinations of factors to consider in this type of evaluation for every city pair – including the distance between the cities, the presence or absence of high speed and/or low cost transit options between the cities, and the relative size. Although I did not comment on Aaron’s post at the time of publication, I thought it would be useful to consider some specific examples of ways in which Chicago enhances or decreases Milwaukee’s economic vitality as both the article and many of the comments on Milwaukee-Chicago and other city pairs, seemed to lack specific examples of both positive and negative impacts.
I will begin by presenting several examples of ways in which Chicago’s proximity appears to negatively impact Milwaukee’s economic vitality. I will then consider the impact of Chicago’s proximity on professional services, which Aaron evaluated in his recent series of articles on Chicago as a potential key growth area for Chicago’s economic future. Finally, I will conclude with examples of ways in which I believe Chicago’s proximity adds to Milwaukee’s economic vitality and/or quality of life.
Ways in Which Chicago Drains Vitality from Milwaukee
1. Competition for High End Specialty Retailers and Restaurants. The first specific example of a way in which Chicago drains economic vitality from Milwaukee is in the competition for certain types of high end retailers or restaurant chains that have a national presence, but one that is limited to perhaps 30 or 40 locations. When I travel to other Midwestern cities that are more geographically isolated or more dominant in their geographic region (such as Kansas City or Indianapolis) I am usually surprised by the number of high end specialty stores or restaurants that have a presence in those cities but none in Milwaukee. Chicago’s proximity is almost certainly a major factor in this dynamic, and a perception (rightly or wrongly) that either the business can’t sustain two locations in SE Wisconsin/NE Illinois, that residents in Milwaukee could be served by a Chicago location. A good recent example was the announcement approximately two weeks ago that: (a) Nordstrom is planning to open a store in Milwaukee in 2013, and (b) Milwaukee is the largest city in the U.S. that does not currently have a Nordstrom store. Chicago is almost certainly a major factor in Milwaukee’s status as the last metropolitan area of its size to get a Nordstrom store.
In researching this point, I came across a research article titled “Can We Have a High-End Retail Department Store? How to Tell if Your Region is Ready” which presented a formula for predicting the number of high end department stores (defined as Macy’s Bloomingdales, Nordstrom, Neiman Marcus, and Saks) that could be supported in a metropolitan area based on its population, land area, and the percentage of households with at least $150,000 of income per year. Although the article did not present the findings for Milwaukee, I followed the researcher’s definition of high end department stores, and reviewed the current number of locations for these five stores that are in Chicago, Milwaukee, and several peer Midwestern metropolitan areas, using data available at www.mystore411.com. The findings generally confirmed my impression that Milwaukee is underserved by high end department stores – with 38 of these stores being located in the Chicago metropolitan area, 8 in both Kansas City and Columbus, 6 in Indianapolis, but only 2 in Milwaukee. Although the research study did not consider proximity of a metropolitan area to a neighboring larger metropolitan area, I think it likely that this is a factor, and one in which Chicago’s proximity negatively impacts Milwaukee.
2. Competition for Federal Offices Another example where I believe Milwaukee loses out economically due to its proximity to Chicago is in serving as a location for regional federal offices. I know this from personal experience in developing business plans for pursuing federal work, and discovering that in terms of regional facilities (versus those that are present in nearly every major city such as postal service, federal courts, social security offices, etc.), Milwaukee is pretty much limited to a Forestry Service Regional Office and a Veterans Administration Regional Headquarters. Although I don’t have any detailed data to back me up, I did review the locations of regional offices for five agencies, including the IRS, U.S. Army Corps of Engineers (USACE), U.S. EPA, Small Business Administration (SBA), and the Federal Reserve Bank (FRB), and determined that Chicago has regional offices for 4 of these 5 agencies (the USACE, U.S.EPA, FRB, and SBA). Among peer cities, Kansas City has regional offices for all five agencies, followed by Minneapolis/St. Paul (with regional offices for three agencies); and Cincinnati, Memphis, and St. Louis (each having two regional offices for these agencies).
What this means economically varies from agency to agency, but for Kansas City, the office for the IRS regional service center reportedly occupies an 11-story building with 900 employees (based on data from Emporis). In addition to direct economic benefits to cities that host a greater number of regional federal offices, there are likely significant indirect benefits as well, as consulting firms are more likely to establish locations in cities that host federal regional offices, as there are benefits to engineering firms from being in the same cities as USACE regional offices, benefits to accounting firms from being near IRS regional offices, benefits to financial firms being near FRB regional branch offices, etc. Although there may be other major cities in the Midwest that are also losing out in the competition for regional federal offices, I believe that Chicago’s proximity puts Milwaukee at a particular disadvantage, and my impression is that on a per capita basis, Milwaukee has fewer federal offices than almost any of its peer cities.
3. Ranking as a Metropolitan Area A third example of a possible negative impact from Chicago’s proximity on Milwaukee’s economic vitality occurred to me as I was researching the example presented above on the competition for high end retailers. In trying to confirm that the Indianapolis and Kansas City metropolitan areas are in fact comparable in size to Milwaukee, I noticed that both are ranked ahead of Milwaukee – with Kansas City currently ranked as the 29th largest metropolitan area (with 2,052,676 residents) and Indianapolis ranked as the 35th largest metropolitan area (with 1,778,568 residents) versus the Milwaukee-Waukesha-West Allis MSA’s ranking as the 39th largest metropolitan area (with 1,562,216 residents). This size difference could provide an explanation as to why Milwaukee would be chosen after these cities as a regional location for certain businesses.
However, Milwaukee’s ranking below Indianapolis and Kansas City is arguably more of a statistical artifact than reality, and due to Chicago’s proximity and the manner in which the U.S. Office of Management and Budget choses to split the two metropolitan areas. Indianapolis and Kansas City, which are more geographically isolated than Milwaukee, have MSAs that extend over approximately 3,200 and 8,000 square miles, respectively, whereas the Milwaukee-Waukesha-West Allis MSA is defined as a much more compact 1,500 square mile area. If Chicago was not located in as close proximity to Milwaukee, Racine and Kenosha Counties would almost certainly be included as part of the Milwaukee MSA. Adding the 361,000 residents in Racine County (defined as a separate metropolitan area) and Kenosha County (defined as part of the Chicago MSA) would result in a Milwaukee metropolitan population of 1,920,000 residents in a land area of 2,100 square miles – in theory, a market greater in population than Indianapolis and only 5% smaller than Kansas City, in a far more compact land area than either MSA.
Competition for Service Businesses
A fourth potential negative influence of Chicago on Milwaukee’s economic vitality that I considered (but rejected) is the competition for serving as a location for professional service firms. I considered this factor partly in response to Aaron’s recent series of articles on Chicago, which noted Chicago’s status as the Midwestern center for professional services such as management consulting, technology consulting, business process outsourcing and legal services. In theory, large firms with greater resources based in Chicago might out compete smaller firms based in Milwaukee. While I am not familiar with all categories of professional services, for law and engineering firms with which I am familiar, Chicago’s proximity and large pool of major firms appears to have no negative impact on the vitality of similar firms based in Milwaukee. This is probably most surprising with law firms, given that Chicago not only has 17 of the top 250 largest law firms in the U.S., but has an even more impressive 5 of the top 13 firms (based on data at Internet Legal Research Group). Milwaukee has 5 of the top 250 firms (including Foley and Lardner at No. 29), which not only compares favorably with Chicago on a per capita basis, but compares even more favorably with cities such as Charlotte (with 2 of the top 250 firms), Cincinnati (3 firms), Columbus (2 firms), Indianapolis (3 firms), Kansas City (4 firms), and even Houston (5 firms). None of these cities has a firm ranked as highly as Foley and Lardner at 29. The main point is that in spite of the incredible concentration of major law firms in Chicago, there is no evidence that this has negatively impacted Milwaukee’s vitality as a center for legal services. The fact that this is the case is significant for Milwaukee’s downtown, as nearly every major office building proposed or constructed in the last decade in the downtown had one of these major law firms as its anchor tenant.
Examples of Ways in Which Chicago Increases Vitality
Having considered some of the ways in which Chicago’s proximity drains vitality from Milwaukee, following are several examples of significant ways in which I believe Chicago increases Milwaukee’s economic vitality and/or the quality of life for residents of Milwaukee:
1. Enhanced Travel Connectivity. It takes 60 minutes to drive from downtown Milwaukee to O’Hare International Airport. For all intents and purposes, residents of Milwaukee have two airports – one (General Mitchell International Airport) that is 10 minutes from downtown, and the other (O’Hare) that is 60 minutes from downtown. Which airport is used for a particular flight is a choice made by Milwaukee residents on a flight by flight basis, based on the most favorable combination of price, availability of direct flights, and/or preferred departure or arrival times. Quite often, General Mitchell International Airport is the choice because similar flights from the same airlines are actually cheaper than from O’Hare (a competitive pricing factor that is almost certainly due to the Chicago’s proximity and the presence of O’Hare as an alternative airport for Milwaukee residents). Even excluding Midway Airport from the discussion (which is appropriate as Midway is not convenient for routine use by residents of Milwaukee), Milwaukee residents through the combination of General Mitchell International Airport and O’Hare have better air travel options than residents of almost any other major metro area in the U.S. (New York City, Chicago, and perhaps Atlanta, being possible exceptions). Another benefit related to air travel that Milwaukee residents take for granted is the convenience for visits by friends from other countries. Chicago will almost always be one of the lower cost U.S. travel options for foreign travelers.
2. Enhanced Entertainment and Recreational Amenities/Opportunities. It is nice to be located adjacent to a city that has some of the best museums and cultural institutions in the US. Although there is some inconvenience in driving 90 minutes to downtown Chicago, there is the option to take Amtrak, or even Metra ($5 from Kenosha). I’ve thought about this when visiting geographically isolated cities with great (and often deserved) reputations such as Denver, Salt Lake City, Phoenix, Seattle, etc. I would even add some sizeable (>5 million resident) metro areas to the list such Miami, Dallas, and Atlanta. The cultural attractions in these cities do not match those present in Chicago, such as the Museum of Science and Industry, the Field Museum of Natural History, or the Chicago Art Institute. For friends and family travelling from other countries, a trip to Milwaukee means they get a trip Chicago thrown in for free. It also means that these visitors will never run out of interesting places to explore available through the combined attractions in Milwaukee and Chicago. For visitors to other even fairly large metro areas in the U.S., the entertainment options for out-of-town visitors will typically be exhausted within a week or less. Not so in Milwaukee, thanks to Chicago. This is a quality of life factor more than an economic vitality factor, but one that should be a consideration in businesses trying to recruit employees from other major metropolitan areas to Milwaukee. Although I think Milwaukee has a pretty large and attractive set of amenities on its own, due to the proximity of Chicago and the amenities available in our mega-city’s “southern” downtown, residents in Milwaukee have access to amenities that are matched by few cities in the world, and this has economic value in the increasing competition for highly skilled and mobile workers.
3. Enhanced Business Expansion Opportunities. For businesses based in Milwaukee, having a metro area with 9.5 million residents an hour away is a significant plus. For entrepreneurs based in Milwaukee, Chicago presents an exceptional opportunity for expansion, as the cities are close enough together that it is possible for someone living in the Milwaukee area to oversee branch offices or locations in both the Milwaukee and Chicago metropolitan areas. Although one could argue that businesses in Milwaukee have additional competition from businesses in Chicago, this type of analysis varies greatly from business to business with no consistent rule. For major businesses located in Milwaukee, if they need access to some very specialized consulting expertise, if it isn’t available from firms based in Milwaukee, it will almost certainly be available from one or more firms based in Chicago, providing a very deep business support talent pool and a competitive advantage for firms based in Milwaukee relative to those based in more geographically isolated cities.
4. Enhanced Global Mindset. This is a little more subtle advantage, and a quality of life enhancement versus an economic vitality enhancement. Even if I don’t go to Chicago for several months, I like having Chicago nearby. I’m conscious of it. It is definitely one of the reasons I like living in Milwaukee, even if it is impossible to precisely quantify this aspect. In my mind, I always know that I have all of Chicago’s assets readily available to me, whenever I might feel inclined to “imbibe” (but without the hassle of actually having to live in Chicago, as well as not having to live in a state that is currently ranked 49th or 50th in most financial health measures). When I travel (and I suspect this is the case for most people) I almost always measure the city I am visiting in my mind to my hometown of Milwaukee. Whenever I visit some nice, but geographically isolated metropolitan area, the quality of life in that city is frequently downgraded in my mind as I can imagine how quickly the interest of living in that city would wear off once I exhausted the list of unique attractions in those cities. Chicago is a component of how I measure Milwaukee against those cities, as all of its attractions are in fact readily accessible to residents of Milwaukee. I suspect there are many other cities where a similar dynamic plays out – such as for residents of Baltimore including the attractions and opportunities available in Washington DC in their similar assessments.
5. Increased Groundedness. This is a subtle point and one that occurred to me only recently. Milwaukee is a city that definitely does not have an inflated view of itself. I think part of this is the result of its proximity to Chicago, and knowing that by a hundred different measures, Milwaukee does not match Chicago. If there were fifty new 50-story skyscrapers constructed in downtown Milwaukee over the next 100 years, I am pretty sure that our skyline would still fall short of Chicago’s. I think there is a tendency of other somewhat “successful” cities (Charlotte and Indianapolis come to mind) to always be chasing some grand ambition. Although there are definitely positive aspects to ambition, there can also be a tendency to pursue goals that really aren’t important, as well as a greater reluctance to realistically address obvious shortcomings. Milwaukee, through its proximity to Chicago, is relieved of this aspirational burden, and can simply go about its business in a quiet, but usually highly effective way.
David Holmes is an environmental consultant focused on brownfield redevelopment issues. He is also a co-author of a book on the history of the Chinese community of Milwaukee: “Chinese Milwaukee” (published by Arcadia Publishing in 2008).
Sunday, October 21st, 2012
I was honored to speak at a conference in Milwaukee over the summer called Milwaukee’s Future in the Chicago Mega-City. Chicago and Milwaukee are about 90 miles apart on I-94. There’s an Amtrak link that makes the journey in about 90 minutes. The two cities have been sprawling such that there’s now more or less continuous development along the lakefront between the two cities. Milwaukee has been a challenged city economically and demographically. Chicago has had its own serious problems, but has seen its already muscular core boom in terms of residents and investment. High end business seems to be doing well in Chicago, and the city gets pretty good press nationally.
If you are Milwaukee, the idea of somehow tapping into Chicago naturally presents itself. Local leaders clearly see Milwaukee’s future as, if not a giant suburb of Chicago, at least a city for which Chicago’s cachet and prosperous zone somehow provides them with a leg up. As Richard Longworth put it, “Once an independent economic power of its own, Milwaukee now belongs to Greater Chicago.”
The notion that proximity to Chicago or another mega-city* represents an unambiguous good seems nearly universal. While the mechanics and value basis of greater collaboration are often illusive, it’s assumed that such value must be present and such collaboration desirable. Not just Milwaukee, but places like South Bend, Indiana and Grand Rapids, Michigan look towards Chicago as an economic engine for them.
But what if it this is actually backwards? What if proximity to Chicago or another mega-city is actually a curse, not a blessing?
My friend Drew down in Indy has a model of this, clearly targeted as his own city but relevant to the discussion. He says that the Midwest is like a solar system with Chicago as the sun. As he see is it, Indianapolis is Earth – it’s the perfect distance from Chicago. A place like Cleveland is too far away – it doesn’t get enough heat and light. But Milwaukee is like Mercury – it’s too close to the sun and gets burned up.
I suggested at the conference that one reason Milwaukee should want to active engage in shaping the interaction between the two regions is that the natural development could actually be negative. I had in mind here Providence, which is in a similar situation. Providence is 50 miles from Boston – that’s closer than Milwaukee is to Chicago, but Boston is also smaller than Chicago. Like Milwaukee, there’s a rail connection between the cities, with commuter service taking a bit over an hour.
Providence, like Milwaukee, has struggled. In fact, it’s struggled far worse. Sticking with solar system thinking, my immediate gut take here has been that Providence is a brown dwarf of a city. Maybe at one time it generated real economic life force, but today is a shell of a metro region in many ways.
Another similar example is New Haven, Connecticut, which is about 80 miles from NYC, and is a notoriously troubled city. And even being in the same state hasn’t helped Springfield, Mass at 90 miles from Boston. It too has struggled.
Is this actually the pattern? Is proximity a negative indicator not a positive one? Does proximity drain vitality instead of creating it? Let’s consider further.
I believe a lot of the thinking that being close is positive comes from the example of two very successful twin cities: Dallas-Ft. Worth and Minneapolis-St. Paul. Two things jump out at me about these, however. One, in both cases the cities are significantly closer than Milwaukee and Providence are to Chicago and Boston. Dallas is about 35 miles from Ft. Worth. Minneapolis and St. Paul actually abut each other, and the downtown-downtown trip by freeway is 14 miles. These actually are part of the same metro area by any standard.
Two, the cities in these cases are reasonably balanced in size. Dallas is bigger than Ft. Worth and Minneapolis bigger than St. Paul, but it doesn’t have the feel of the vast disparity of say a Chicago vs. Milwaukee. Indeed, the difference is clear in how we compare the cities. With a Chicago and Milwaukee, metro area seems the way to go, but with the others municipal population seems a reasonable proxy.
Another positive example might be Washington-Baltimore. The distance here is about 40 miles. These are separate metros, but overlap considerably and could potentially be combined. Also, Washington is only about twice as big as Baltimore, which is pretty hefty in its own right at 2.7 million people. Contrast Chicago at over six times as big as Milwaukee and Boston at almost three times as big as Providence, a number I think is understated since part of Southern Massachusetts that’s in Providence metro arguably has a strong Boston orientation as well. In any case, while the city of Baltimore remains infamous in many ways, the overall metro area has done well.
So the idea that proximity is a positive could have originated in models that aren’t applicable. Being close works: but only if you are really, really close – say about 40 miles or better – and your size ratio is no more than about 2:1.
Or maybe the latter might not even be necessary. There are a few examples of old industrial cities turned into suburbs in Chicago – Aurora (41 miles), Elgin (42 miles), and Joliet (44 miles) being the prime examples. These were once independent cities of sorts, and now are clearly suburbs. They aren’t nirvana yet, but proximity to Chicago has clearly invigorated them to a certain extent. The size ratio vs. the overall Chicago region or even just the city would obviously be huge. So perhaps the only question is whether you could plausibly be a true suburb.
Interestingly, Detroit and Ann Arbor fit this and are only a bit over 40 miles apart, so also follows this rule. It may seem ludicrous to credit Detroit with injecting life into Ann Arbor, but I don’t think it would be as successful if it were isolated in the middle of the state. (Madison, Wisconsin succeeded on its own, but is a bit bigger and also the state capital).
But it may even be worse than this. Back to my provocation a few paragraphs back, is it possible that not only does anything other than true suburban style proximity not help you, it might even hurt you? The examples of Milwaukee, Providence, New Haven, and Springfield suggest it’s at least possible. Now all of these are post-industrial cities that have clearly struggled for reasons other than proximity to a mega-city. Many similarly situated places (or even more badly troubled ones) are not near a much bigger city. But it’s worth considering the point.
I hypothesize about it in terms of attempting to reboot a high value economy. If you are a high value business – say a biotech startup or some such – looking to locate in New England, why would you ever pick Providence over Boston? You wouldn’t – not unless they paid you a ton of money a la 38 Studios (a Curt Schilling backed video game company that went bankrupt after receiving $100 million in loan guarantees from Rhode Island). Not only is Providence itself an expensive place to live and do business, it’s talent and ecosystem disadvantaged. Why subject yourself to that when you can move 50 miles up the road to one of the world’s premier innovation areas? The kicker is that this applies to business ideas in Providence as well. You can launch your business in Boston and still basically stay where you live.
I’m not a believer in the oft-repeated claim that these tier one cities are sucking all the talent out of smaller places. The numbers don’t back it up. Chicago has the second highest college degree attainment among large Midwest cities, but at 34.2% hardly towers over other regional cities, most of which are at least in the 30s, including Milwaukee. And Chicago’s growth in population with degrees is actually in the bottom half of large Midwest metros.
However, perhaps there is a “dead zone” of sorts around mega-cities. This zone extends from the edge of their suburbs to some unknown outer radius. In that zone, perhaps black hole like, high value functions really are sucked into the mega-city. Or perhaps negative aspects of the mega-city like traffic and pollution act like kryptonite on the economy of cities in this zone. I don’t know for sure. It’s just a hypothesis to consider based on a few observations. I would love to see some research done into this. In the meantime, small cities near a very large one shouldn’t be too quick to celebrate their location as boon.
Update: Somebody mentioned Philadelphia in the comments. I’d forgotten that it was only about 90 miles from New York. I think it’s a great example. I do think some of the uptick in the city of Philadelphia can be attributed to its location on the prime NYC-DC axis, and NYC proximity especially with fairly rapid train service has created a sort of sixth borough effect. But, Philadelphia is basically a mega-city in its own right. It has a large, dense, urban core with great transit, etc. I’d argue that given those assets, Philadelphia has really underperformed peers. If you look at other cities like that – New York, Chicago, Boston, and San Francisco – they have all had a massive transformation of their urban environment and economies. Philadelphia has not. I can’t help but wonder if proximity to New York is part of the reason why. If Philadelphia had switched places geographically with Chicago, where it was the capital of a huge region, I can’t help but think the city would have experienced that massive transformation and would be seen in the public mind like a Chicago is. So perhaps in Philly’s case, proximity has both hurt and helped.
* I use the term “mega-city” loosely to refer to a tier one type American city, not specifically as a region with greater than 10 million residents.
Tuesday, January 3rd, 2012
[ Houston is a city that isn't widely regarded in urbanist circles, but some folks like it just fine the way it is. One of them is the blogger behind Keep Houston Houston, who recently resumed posting after a hiatus. He enjoys putting out the other side of the case, so I though I'd share a piece with you. This one examines whether or not the era of the freeway is over in light of a number of recent freeway removals. Even if you don't agree, I hope you enjoy - Aaron.]
I think this is probably the third article I’ve read in the last month asking: “Are Freeways Doomed?” “Is THIS the post-freeway age?” “Are Urban areas moving on?”
All of these pieces work like any “bogus trend” piece – string together a few anecdotes, posit a trend, quote a couple authoritative-sounding people, call it a day. And indeed, more than one freeway has been removed in this country. But there’s no trend toward de-freewayization; quite the opposite in fact. What’s missing, then, is the underlying reasons for the changes.
Fundamentally, there are two reasons for US freeway closures:
(i) The freeway was replaced by a newer and bigger freeway, built to better design standards, at which time the old facility was abandoned.
(ii) The freeway was part of a link in a grand “master plan” that was truncated by the “freeway revolts” of the 70′s. In other words, it was pre-obsolesced by non-completion of the network.
Tom McCall Waterfront Park, Portland, Oregon
Berkeley’s “Preservation Institute” says: “When Portland decided to tear down the Harbor Drive freeway, the city made one of key decisions that transformed it into a national model for effective city planning.” Well… maybe. What actually happened was that they had one freeway built to 1942 standards, and in 1964 they opened up another freeway half-a-mile away built to 1964 standards. That was I-5 – the Eastbank Freeway – and it’s still truckin’ almost 50 years later.
Now it’s true that some traffic engineers freaked out about the idea. Even if Harbor Drive only had 24k ADT (which is well down into arterial territory), it was still predicted the city would grow. And considering how slowly traffic crawls across the Marquam Bridge today, you know, there was probably a grain of truth in the forecast. But what the engineers didn’t predict was that Portland would soon enact a ridiculously strict downtown height and FAR ordinance in an effort to ward off further skyscrapers in favor of the existing Glazed Terra Cotta building stock. This essentially killed office development downtown and pushed the region’s employment base into an intensely suburban, office-park-dominated form. In fact, low-rise office parks are the very first thing you see when you cross the UGB into Greater Portland, whether you’re coming in on 26 East or I-5 North.
Those silly traffic engineers thought Downtown office space would keep expanding, like any American city. Instead the downtown office market was frozen in time, new construction confined only to condos and fair trade vegan clothing boutiques. But what really cinched the deal was when they went and built yet another freeway less than a mile away. Sandwiched by parallel north-south freeways of (then) modern design, serving a downtown whose development would be forever stunted, there would never be a need for the widened and straightened Harbor Drive.
Park East Freeway, Milwaukee, Wisconsin
Milwaukee is a case where the infrastructure was obsolesced by the freeway revolts. In the original plan for Milwaukee’s freeway system, there were two north-south trunk highways – one inland, and one along the lake. While the inland route got built as planned (and is now signed as I-94 and I-43), the Lakefront route was only half finished. Thus the Park East Freeway – which, as designed, would’ve been an important connector distributing traffic between Lakefront and Inland routes – was rendered a fairly truncated spur. Not really necessary in its original form. And while Milwaukee gets New Urbanist props for killing the spur, it’s instructive to note what they replaced it with.
A brand-new surface street, striped for four lanes but obviously designed for six, got put right in its place. Now, from my perspective, as an infrastructure guy, I think this is pretty sweet. The original freeway was designed primarily as a connector (with distribution functions secondary), so it didn’t utilize a lot of the Milwaukee grid. A proper downtown highway spur should crap traffic out onto every surface street in sight, like 527 does. Thus the new surface street does a better job at fulfilling its primary raison d’etre, since it was actually designed for that purpose. It’s also more amenable to condos than an elevated highway is, which can be good for property values – and good for the local government, if they don’t piss it all off into 20- and 30-year tax abatements like PDX does.
But a green eco-symbol this is not; it’s just the engineers replacing a middling facility with a better one.
Claiborne Expressway, New Orleans, Louisiana
This one is actually still there, although there’s a good chance it’ll disappear in the next decade. If you’ve read Divided Highways you’ve read the tales of Claiborne’s vibrant business and music scene before the coming of the elevated. The pictures I’ve seen show a mostly auto-oriented strip of gas stations and buy-here-pay-here lots. But these also have their charm, and I’m sympathetic to the argument. Perhaps it shouldn’t have been put there.
What we do know for certain is the Claiborne didn’t last ten years before it had been supplanted with I-610, which cut several miles off the route for through-traffic. At this point the Claiborne became essentially just a spur, albeit one masquerading as a through route.
Even just as a spur, there would be a pretty decent argument for the Claiborne’s continued existence… except that the downtown NOLA office market isn’t exactly booming. In fact the consensus is, during times when a surface-street Claiborne would be slow, all the extra traffic could just be routed up the Ponchartrain, which is a solid eight lanes with full-width shoulders and feeder roads. Even CNU proposes that they add a direct connector for this purpose.
Transportation improvements are GREAT. Just don’t try to front like it’s some sort of repudiation of the basic need to move large quantities of cars in and out of a city.
You can find more examples wherever you look. The Embarcadero Freeway in San Francisco was supposed to have been a vital shortcut between the Bay Bridge and the Golden Gate, providing a downtown through route to complement the east bay’s 580. In fact they only got it about 1/3rd built before they ran into rich white people neighborhoods and the rest of it got canceled. The truncated version lasted until an earthquake killed it, at which point it was deemed not worth saving. But what if they’d finished it?
It’s not too hard to figure out what would’ve happened, since basically the same freeway got constructed in Seattle – the Alaskan Way Viaduct. When that freeway got wounded in a quake, they just patched it up with duct tape and JB Weld and set about planning Seattle’s Big Dig as a replacement. If the Viaduct had been cut off halfway – say, if it never went north of the Seneca exit – well, it’d probably have been torn down by now and replaced with a tourist trolley. Conversely, if the Embarcadero had been completed as designed, San Francisco would have almost certainly embarked on its own “Big Dig.”
The West Side Highway in New York… are you kidding me? New York was broke in the 70′s. The highway collapsed because there wasn’t enough money to do even preventive maintenance. And certainly not enough to rebuild. In fact, they didn’t even tear it down for another 15 years – it just sat up there, closed to traffic. Yet even this gets spun as some sort of “cities transcending the freeway” narrative.
The Freeway Revolts Are Over
Assuming our economy doesn’t implode into one big Teapartian circlejerk, we’ll continue to build newer and better highways that obsolesce old ones. And when that happens, those old ones will make great spots for redevelopment. If I was Houston, I’d seriously be looking at I-10 between Crockett and Jensen – which has, by far, the worst geometry of any of the downtown freeways – and moving it about a half a mile north, opening up more of the north side of the Bayou to development.
What’s not going to happen anymore are the truncated spurs, the freeways rendered obsolete by revolts. It’s not because the concerns over freeways – legitimate and NIMBY alike – have gone away. It’s just that engineers have become sensitive to them.
The master freeway plans of the 40′s and 50′s were models of rationality and efficiency. But they didn’t really account for anything besides rationality and efficiency. Houston largely followed theirs and it’s one of the reasons the place is so easily navigable today. But the original plans also sliced right through parks, forests, wetlands, whitepeople neighborhoods. And thus the revolts.
It’s arguable that we’ve lost something. Newer highway alignments are no longer quite the paragons of scientific virtue they were in the drafting easel era. In a smaller, newer city like Tulsa, you can see the difference between 50′s and 60′s alignment studies versus modern ones.
I look at the alignment for SH 130 south of Austin and I has a sad. So many squiggles. “YO DAWG, WE HEARD YOU LIKE CORNERS SO WE PUT A 3-DEGREE REVERSE CURVE IN HERE SO YOU CAN AVOID ANY TAKINGS FROM DA MOBILE HOME PARK.” This doesn’t necessarily result in better highways. What it does result in is highways that will be built.
And this is where the post-freeway era ends. There’s a very limited supply of highways that are “overbuilt” as a result of their connections never materializing. New construction isn’t going to provide us with any more because they’ll detour and slosh around anything that might have put up a fight 40 years ago. As time goes on, the pace of freeway removal will *slow*, not increase.
Clickbait article writers, take note.
This post originally appeared in Keep Houston Houston on December 7, 2011.
Tuesday, October 4th, 2011
It has been suggested that education is the civil rights issue of our time, and there is no question that the black community continues to lag behind when it comes to all matters of education. This is especially so here in Milwaukee, where MPS reading scores lag behind those of other major urban school districts, state black reading scores are the worst in the nation, and the percent of blacks with a college education is lower here than it is in most other places. These are crisis-level facts.
This has not completely escaped the community’s notice. Everybody understands the importance of improving Milwaukee Public Schools. And while massive disagreement concerning proposed changes ultimately resulted in the prevailing of the status quo, rather than some sort of meaningful compromise or reform, at least the community showed that it was energized and willing to fight for local education.
But one thing that seems to continue to escape notice, maybe since the time that Chapter 220 was created, is the impact that segregation has on education.
Segregation and 4th Grade Reading Scores
The landmark study on segregation by the U.S Census Bureau ranked several dozen metro areas in terms of how segregated each is. Meanwhile, the Trial Urban District Assessment ranked 18 participating urban school districts in various standardized test scores. In total, 14 metro areas, including Milwaukee, were included in both studies. Each of these urban school districts contends with the issues of poverty and parenting that are frequently cited as the primary reasons for MPS’ struggles.
The graph below shows the level of segregation and the 2009 black 4th grade reading scores of the 14 districts that were included in both studies.
The link between segregation and black 4th grade reading scores is “significant“ at the 99% level, and segregation “explains” 45% of the variance in the reading scores. Note also that the link between segregation and overall reading scores (for all races) is significant at the 95% level and explains 37% of the variance in the reading scores. Milwaukee black 4th grade median reading score was second worst, ahead of only Detroit.
Segregation and Bachelor’s Degrees
The yearly American Community Survey keeps track of how many people ages 25 and older have acquired a bachelor’s degree. The graph below shows metro area segregation and the percent of the black population within the metro area that has a bachelor’s degree, averaged from 2006 to 2008. The correlation is significant at the 99% level and explains 32% of the variance in the percent of the black population that has a bachelor’s degree.
In this time, 12.3% of the black population in metro Milwaukee had a bachelor’s degree, the worst out of all of the metro areas included in the segregation study.
The graph below shows metro area segregation and the white/black bachelor’s degree disparity, defined as the ratio of percent of white people with a degree divided by percent of black people with a degree. Once again, correlation is significant at the 99% level and this time explains 30% of the variance in the white/black disparity.
Metro Milwaukee’s white/black degree disparity of 2.79 (34.3%/12.3%) was the worst out of all the metro areas in the segregation study.
What Does It Mean?
It is pretty clear that segregation and poor education outcomes correlate with one another. This does not prove that segregation causes poor education outcomes, or even that poor education outcomes cause segregation. But, as is the case with other socioeconomic indicators, segregation can be tied to the problems of Milwaukee that we all experience and are concerned with. It will be hard to move Milwaukee forward in jobs and education without impacting our segregation. With all of the talk about jobs and education during this election season, this is something that ought to be kept in mind.
This post originally appeared in The Milwaukee Drum on September 29, 2010.
Tuesday, September 27th, 2011
Racial segregation is one branch in a thicket of economic and quality of life issues that together form the challenges of the day for Milwaukee. As Part 2 of the series suggested and as various researchers have shown, segregation is both cause and effect of such challenges as income disparity, wealth accumulation, brain drain, unemployment, education disparities, health disparities, and so on.
Oftentimes it seems that civic leaders don’t talk of the problems of racial segregation, and instead focus on non race-centered issues that relate to it, such as jobs and education. These are more tangible and politically sensible, but the fact of the matter is that Milwaukee’s thicket of issues is a package deal, and ignoring racial segregation imperils efforts to attack the issues that relate to it. Jobs aren’t gained or lost in a vacuum, and our childrens’ education can’t be separated from the structure of the communities that our children reside in. For Milwaukee to truly move on its issues, the battle against segregation has to be waged alongside the battle for jobs and education.
To make this point clear, information on segregation and income described in earlier articles in the series can be viewed together to see how they are connected. The metric used for segregation in the graphs below is the average metro black/white segregation ranking, which was taken from the U.S Census Bureau’s study on segregation (see Part I). In this metric, recall that metro Milwaukee was ranked as #1, the most segregated metro area in the country.
In the graphs below, each blue dot represents a different metro area and the trend line shows the overall correlation between segregation and the other statistic. Also, each graph can be clicked on to see a larger view.
Segregation can most easily be connected to black family income. As previously discussed, low average incomes in the black community bring about segregation. Meanwhile, segregation decreases black income in part because it limits access to employment.
The connection between segregation and black income is significant. If a city were to improve by ten spots in the segregation rankings (e.g. going from 1st to 11th), that would correlate to a rise in black median family income of over $3,800 per year.
This is not surprising. In the famous Gautreaux housing mobility experiment, statistically identical groups of low income families were either assigned to live in low-income housing in segregated areas or were given vouchers to live in mostly white suburbs. Those families that moved to the suburbs saw higher employment, higher income, and better results in education compared to the families that remained in segregated environments.
Segregation decreases the black community’s piece of the pie. Seven of the top ten metro areas that had the worst income disparity were also in the top ten for most segregated metro areas. One of the three exceptions, Kansas City, is just outside of the top ten, at 11th most segregated. If you want the black community to stay poor relative to whites, keep the black community highly segregated.
Gross Domestic Product
While decreasing segregation correlates with higher black income, what needs to be emphasized is the fact that decreasing segregation benefits the entire metro area. Gross domestic product (GDP) is a measure of economic activity for a metro area. Since metro areas with larger populations will naturally have more economic activity than metro areas with smaller populations, GDP per capita* can be used to make apples-to-apples comparisons between metro areas. When politicians talk about growing the economy, they are talking about increasing Milwaukee’s GDP per capita.
Less segregated places tend to have stronger economies than more segregated places. For the average metro area, a ten spot improvement in the segregation rankings correlates with a GDP per capita increase of over $1,600 per year. Suburban communities suspicious of any talk of decreasing segregation should be apprised of this.
* The number used here is the average metro GDP per capita between 2001 and 2008, in chained 2001 dollars.
Those who have put in hard work trying to uplift the black community often run into resistance from suburbs that consider community uplifting proposals to be a direct attack on their own quality of life and well-being. However, it has to be stressed that decreasing segregation benefits everyone, this doesn’t have to be a zero sum game. Good strategies that reduce segregation would directly benefit white households as well as black households. A ten spot improvement in the segregation rankings translates to an increase in white median household income of over $1,300 per year.
Advancing mutually beneficial policies that would decrease segregation requires the entire community to understand that they have something to gain from this effort. Unfortunately, in a catch-22, metro Milwaukee’s segregation separates people and makes it difficult for us to see our shared fate.
Ever since the Milwaukee Journal-Sentinel opened up comments on its online articles, there have been many examples of the sorts of outrageously ignorant, racially-tinged comments that could only be made by individuals who have no understanding or experience with people who don’t look like them. Here are a few unedited examples:
I suggest building an enormous wall with borders of 43 to the east, 94 to the south, 84th st to the west and brown deer to the north and then pull all city services out of that area and let the inhabitants figure it out for themselves. I’m so sick of hearing how bad they have it and about the terrible crime it is such BS. Stop making excuses for your inability to pull yourselves up by your bootstraps like every other immigrant that came to america over our 235 year history. Even the mexicans have made something of themselves, they might be just as violent but at least they aren’t lazy and many of them can’t get welfare so they bust their asses trying to make a better life for their families.
-poundsb27, 2/27/2010, City’s mean streets hard on young blacks
This is a character issue and all about common decency; a civil society must follow the rules that are in place. It just so happens that the people in this society that have the most problem with common decency are black. Its just a fact, society has to deal with this every day.”
-OneTug, 3/1/2010, MPS, Ald Will Wade butt heads over hat removal policy
Get all these stupid liberals together in one spot, load them on a bus, and ship them all out of town. When the hell are blacks gonna stop ruining the city and get their crap together?
-SkylarTatlock, 3/1/2010, MPS, Ald Will Wade butt heads over hat removal policy
We can only work together on our problems when we can look at our fellow citizens and see a reflection of ourselves. Decreasing segregation would help increase this sort of shared understanding, but increasing the shared understanding is required to collectively agree to do something about segregation. It’s a chicken and egg problem.
With good reason, Milwaukee’s most preeminent civic leaders are falling over each other talking about jobs. Whether by advocating for the magic of tax cuts or by celebrating the bribery of businesses, jobs are the main issue. But in case we start losing sight of the forest for the trees, or the rhetoric and ribbon cutting for the reality, we need to note that metro Milwaukee lost over 30,000 civilian jobs from December 2007 to December 2009. Jobs are obviously critical. Creating them and obtaining the socioeconomic benefit that comes with higher employment will be fleeting at best if Milwaukee’s segregation is not addressed.
Milwaukee’s job loss since the beginning of the recession (December 2007) represents a 3.85% decrease in the number of civilian jobs in the metro area. Most communities have been hit hard by the Great Recession, but as always seems to be the case, Milwaukee has been hit harder than most others. No local politician can control local job growth. The global economy can and does overwhelm even the best laid local plans at a moment’s notice. Local leaders can only be responsible for ensuring that Milwaukee fares better through the ups and downs of the global economy than other metro areas. Instead of making promises that only an uncontrollable global economy can make good on, our local leaders should be working on ensuring that metro Milwaukee outperforms our competitors.
In this effort, our local leaders have failed. Metro Milwaukee had the 6th worst civilian job loss amongst the 36 cities that were measured on segregation. Using a different metric and comparing metro Milwaukee to the 38 areas that have a workforce of at least 750,000, Milwaukee had the 3rd worst job loss in 2009.
The reasons for this are surely complex, but what has to be understood is that Milwaukee’s segregation puts it at a competitive disadvantage in today’s global market. Until it is adequately addressed, we will continue to see metro Milwaukee underperform relative to other cities.
This post originally appeared in The Milwaukee Drum on March 8, 2010.
Tuesday, September 20th, 2011
[ This week we continue with our Race Matters in Milwaukee series by Nathaniel Holton. Please keep in mind when viewing that they do not have a zero origin - Aaron. ]
Racial segregation is a phenomenon with complex historical roots. The legacy of slavery, discriminatory housing policies, redlining, employment discrimination, tax inequity, racist covenants, and a wide variety of other practices swirled together to create a segregated Milwaukee. For an exhaustive documentation of Milwaukee’s history of segregation, I highly recommend “A Report on Past Discrimination Against African-Americans in Milwaukee, 1835-1999,” by Ruth Zubrensky (available in most Milwaukee Public Libraries). We won’t know where to go until we understand how we got here, and Zubrensky does a wonderful job of tracing that path.
While Milwaukee’s history is unique, social forces and government policies created and fortified residential segregation throughout the country. So why is it worse in Milwaukee than most anywhere else?
Income Disparity and Housing Disparity
On average, housing in the area’s suburbs is considerably more expensive than housing within the City of Milwaukee. In looking at the ten biggest municipalities in metro Milwaukee, the recent median selling price of housing in the City of Milwaukee was well below every other municipality.
That suburban housing is more expensive than city housing isn’t unique. What distinguishes metro Milwaukee from other areas is the incredible racial disparity in median household incomes in metro Milwaukee, which prevents many minorities from being able to afford suburban housing. According to the most recent American Community Survey, metro Milwaukee has the 2nd worst black/white household income ratio amongst the country’s 50 largest metro areas. The median white household earns $79,145 while the median black household earns $33,273. This amounts to black households earning 42 cents on the white dollar.
Riverside, CA had the best ratio at 85 cents on the dollar, twice as good as Milwaukee. The bottom of the chart was dominated by Midwest cities, who tend to have relatively similar socioeconomic issues. However, even amongst this less competitive group, Milwaukee is still underperforming.
The income disparity reveals Milwaukee’s unique racial issues. One explanation for it is the education disparity. Just in the city alone, blacks are about twice as likely as whites to not have a high school diploma, and are almost three times less likely to have a college degree.
Worse yet, metro Milwaukee has the largest disparity between black and white unemployment in the country! This disparity can be partly explained by the spatial mismatch between black residents and jobs (which, in a circularity, is largely a result of racial segregation). Literally all of the net job growth in metro Milwaukee over the last several decades has taken place outside the City of Milwaukee. Meanwhile, black residents are concentrated in the city’s northside and are far less likely to own a car. This is especially important because public transportation in metro Milwaukee is sorely lacking. It’s hard to have a job when you can’t get to it.
(from Milwaukee Urban Atlas)
Yet another reason for the racial income disparity is brain drain. Many of black Milwaukee’s brightest young minds leave the city to pursue an education and never come back, resulting in the cream being continuously skimmed off the crop. Oftentimes, they wind up in the south, where racial income disparities are less extreme and where educated blacks can feel at home in many cities. Many educated blacks look at Milwaukee as a city in decline, a city with awful race relations, and a city where educated blacks have few peers and fewer opportunities for career advancement (I know folks in this boat, and I was formerly in this camp as well). In yet another circularity, segregation is bred by income disparity which is bred by black brain drain which is bred by a negative racial climate which is bred by segregation.
Just this cursory look hints at the complexity of Milwaukee’s racial income disparity. Each of the mentioned elements, along with others unmentioned, cause and affect each other and perpetuate segregation. But even this web of income disparity-linked socioeconomic issues cannot fully explain the extreme degree of Milwaukee’s segregation. Higher incomes for minorities do not protect against segregation, as segregation nationally among blacks with incomes over $60,000 is almost as large as the overall racial segregation that persists.
Much of the area’s segregation is the result of personal preference. The Public Policy Forum conducted a local survey on housing preferences in 2004. Significant majorities of whites, blacks, and Latinos agreed that “most people” take racial characteristics of the community into account when deciding where to live. When speaking for themselves, the survey revealed that the racial or ethnic makeup of a neighborhood was of great importance to 32% of blacks, 25% of Latinos, and 12% of whites.
A majority of whites who gave an answer said that, in their ideal neighborhood, nearby black families would be less than half of the population, only a few in number, or nonexistent. A majority of blacks who gave an answer said the same thing about nearby white families.
A separate 2006 survey found that a majority of whites and 60% of blacks believe it is common sense for whites to avoid non-white neighborhoods. On the flip side, over 40% of both blacks and whites believed it was common sense for blacks to avoid white neighborhoods.
Just as with the income disparity, personal preference is a cause and an effect of segregation. It shouldn’t be a surprise that people who grow up surrounded by people who all look like them end up preferring to live amongst people who look like them.
Milwaukee Residency Requirement
Both the City of Milwaukee and MPS require their employees to reside in the City of Milwaukee. While metro Milwaukee is only about 16% black, the city and MPS workforce are each around one-quarter black. The residency requirement disproportionately impacts black residents.
More to the point, black city and MPS employees represent a sizable share of black residents with enough income to afford to live outside of the city. According to the American Community Survey, there are approximately 16,000 black households with an income over $50,000 in metro Milwaukee, a range that will capture most public employee households. According to the above sources, the City of Milwaukee and MPS collectively employ somewhere around 3,500 black residents. If one assumes that some of these employees are married to each other, such that 3,500 employees make up 3,200 households, this means that 20% of metro Milwaukee’s mobile black households are forced by their employer to live in the City of Milwaukee.
These are “back of the envelope” calculations, but it wouldn’t be a surprise to find that Milwaukee’s residency requirement is a contributing factor to segregation in metro Milwaukee.
Of course, direct discrimination still has a negative impact on segregation. Exclusionary zoning, predatory lending, and discrimination in homeowners insurance are all causes of Milwaukee’s segregation.
Employment discrimination persists. People with “white-sounding” names on their resume are 50% more likely to get a call back from an employer than those with “black-sounding” names on an otherwise identical resume. A study done in Milwaukee showed that white felons were more likely to get a call back from a potential employer than black applicants who have clean records. Those that blame black people exclusively for Milwaukee’s income disparity should mind these examples of overt and explainable-only-by-racism discrimination that persist in our society. That said, focusing too much on discrimination makes it acceptable to avoid personal responsibility in the black community. Things won’t improve until personal responsibility is broadly embraced.
The above list of segregation causes is not meant to be exhaustive or authoritative, but it’s enough to provide a framework for further discussion. Feel free to add in other causes and elements of Milwaukee’s segregation in the comments section.
This article originally appeared in The Milwaukee Drum on February 1, 2010.
Tuesday, September 13th, 2011
[ You can read Part 1A of this series here. ]
It turns out that Milwaukee is not the most segregated metro area after all.
(Both graphics by Eric Fisher)
The landmark report on segregation by the U.S Census Bureau published five measure of segregation. As previously discussed, this report ranked metro areas with a sufficiently large black population on how racially segregated they were. Then, the U.S Census Bureau averaged these rankings, and used that average to conclude that Milwaukee was the most segregated metro area in the country.
After all of the sophisticated statistical analysis that went into the production of the five segregation measures, it is surprising that the U.S Census Bureau would produce an overall segregation rank by averaging the segregation measure ranks, and not the measures themselves. As the following example shows, this distorts things.
Imagine three people whose wealth is measured in three different ways. You want to rank them in overall wealth by averaging their wealth from each measurement. In parenthesis below is the rank of how wealthy each person is compared to the other two people.
If you’re just averaging the money in each measurement, Aaron is the wealthiest person and would rank number one. But if you average the rankings, Brett’s average ranking (the average of 1, 1, and 2) is better than Aaron’s average ranking (the average of 1, 2, and 2).
Detroit is like Aaron. It has the worst segregation measures, but not the worst average ranking. Milwaukee is like Brett. We do not have the worst segregation measures, but we do have the worst average ranking.
When the segregation measures are standardized and averaged, Detroit comes out as the most segregated metro area in the country. Milwaukee comes out at number two. Here are the top five segregated metro areas using this way to measure:
The U.S Census Bureau may have had a good reason for going with their method. And, none of this changes the fact that Milwaukee is highly segregated, and that this remains a central challenge to our future. There’s little excitement in knowing that Milwaukee is “second only to Detroit” in yet another measure of socioeconomic health. At the same time, the stigma of being the most segregated place in the country is a damaging one. As it turns out, it’s not necessarily legitimate.
Sometime next year, the 2010 Census should be completed and we will be able to see how Milwaukee stacks up in segregation and many other areas. In the meantime, it is still important to look at the impact that segregation has on our health and our future.
This article originally appeared in The Milwaukee Drum.
Wednesday, September 7th, 2011
[ Over the next few weeks I'm going to be presenting an important series called "Race Matters in Milwaukee." Written by Nathaniel Holton, this series originally appeared in The Milwaukee Drum. Here is the first installment, which examines the question of how segregated Milwaukee actually is - Aaron. ]
9/27/2010 update: When properly standardizing and averaging the U.S Census Bureau’s five published segregation measures, Milwaukee goes from being the most segregated metro area to the second most segregated metro area, behind Detroit. Read more.
Milwaukee is a wonderfully diverse city full of unique cultures and a broad array of worldviews and life experiences. But like many cities, these cultures and worldviews are too often walled off from one another due to the effects of segregation. Such segregation, and the racial climate that is part and parcel to it, create challenges and inertia that reach every significant issue that the city ever faces. Issues of citizen empowerment, education, economic development, poverty, public service levels, and countless others are all intimately impacted by the state of Milwaukee’s racial climate. The poor racial climate makes collective action difficult and sometimes impossible, burdens business attraction, fosters brain drain, and reduces quality of life in the entire region. If it doesn’t improve, the city’s potential will forever be constrained. While there’s commendable activity taking place at the individual and grassroots level to improve racial climate, civic leadership in this fundamentally important area tends to be absent.
Residential segregation is a worthwhile starting point when examining Milwaukee racial climate and what can be done to improve it. The following is the first in a multi-part series that will take a look at the prevalence and impact of segregation in the Milwaukee area. The meaning of segregation, its causes and effects, how it can be addressed, and how it impacts racial climate are all issues that will be examined in this series.
It’s commonly accepted that Milwaukee is very segregated, but how segregated is it really? First, most information on this involves not the City of Milwaukee itself, but rather the Milwaukee Metropolitan Statistical Area (“metro Milwaukee”), a region that includes the entire counties of Milwaukee, Waukesha, Ozaukee, and Washington. Second, there are lots of ways to measure segregation, and it’s not easy to tell which measures are better than others. Third, the mainstream measures of segregation can only handle two races at a time. The publicized segregation claims tend to involve only white and black populations, excluding Latinos, Asian-Americans, and Native Americans entirely.
So when it is said that “Milwaukee is the X most segregated city in the country,” what is really meant is that “the area comprised of Milwaukee, Waukesha, Ozaukee, and Washington counties is the X most segregated area in the country when it comes to black and white residential patterns based on some measurement of uncertain quality.”
Maybe the most respected measures of segregation are drawn out in a study done by the U.S Census Bureau. This study focused on five measures of segregation: dissimilarity, isolation, delta, absolute centralization, and spatial proximity (for descriptions of these measures, see U.S Census study, pages 8-10).
The study analyzed data from the 2000 census, compared metro areas that had a large enough minority population to analyze, and then ranked these metro areas in terms of segregation, with a ranking of 1 being the most segregated. The following table displays metro Milwaukee’s segregation rankings in terms of black/white segregation and Hispanic/white segregation. It also shows metro Detroit’s black/white segregation rankings for context. Metro Milwaukee did not have a large enough Asian-American or Native-American population for analysis, so there aren’t rankings for those populations.
|Metro Milwaukee||Metro Detroit|
There is a user-friendly website that focuses on the dissimilarity index. This website ranks metro Milwaukee 3rd, behind Detroit and Gary, IN in the black/white category.
In response to the U.S Census rankings, researchers from UWM created their own ranking system based on the number of blocks in an area that had populations that were both at least 20% black and 20% white. They created their rankings “not as a competitive model for ranking cities and metro areas, but to expose the biases and limitations of the segregation indexes” (which they describe in their report). Metro Milwaukee ranks 43rd in this ranking system, substantially better than its rank in any of the Census’ measures.
The publication of the UWM report created an impassioned debate, with various individuals and groups coming out in support of or in opposition to UWM’s rankings. Marc Levine, a highly respected UWM social scientist, slammed the UWM report as “a blend of shoddy research and specious analysis” in an op-ed that systematically critiqued the report. John Gurda, Milwaukee’s foremost historian, wrote that the UWM report confirmed his firmly held impression that Milwaukee was “somewhere in the middle of the pack” when it comes to integration.
When the UWM report questioned the severity of metro Milwaukee’s segregation, some politicians and business leaders took this as an opportunity to gloss over the area’s racial issues for the purposes of improving the city’s image, an image that consistently makes business and talent attraction difficult. Some black leaders expressed outrage at the UWM report and responded by citing racial disparities and using those disparities to reaffirm the victimization of the black community in Milwaukee. If the UWM report placed segregation into question, the response to the report left no question that the city’s racial climate is poor.
This spring, the 2010 census process will begin. The result will be an updated view of Milwaukee’s demographic and socioeconomic standing. This sharing of new information and insight will provide Milwaukee the perfect opportunity to reassess its level of segregation, what it means for us, and what can be done about it.
Confronting metro segregation is critical, as Milwaukee’s economy spans across municipal and county borders. Action here involves heavy cooperation between the City of Milwaukee, its suburbs, surrounding counties, and the State of Wisconsin. Historically, such cooperation has been difficult to sustain (to say the least).
Almost as importantly, Milwaukee must examine the level of segregation that exists in the city itself. Such segregation works to frustrate cooperation and unity of purpose amongst the city’s population. As a result, the city often is not able to put up a united front when seeking action and cooperation with surrounding suburbs and the state. Before the City of Milwaukee can secure this cooperation, it first needs to get its own house in order.
This post originally appeared in The Milwaukee Drum on January 24, 2010.