Wednesday, December 13, 2006

The Madison-Milwaukee Divide

There's plenty of speculation about why Madison is pulling ahead of Milwaukee in terms median household income in recent years. While the two cities had fairly equal median incomes 15 years ago, Madison pulled ahead during the 1990s and currently has an 80 percent lead over Milwaukee.

Some conservatives have alleged that this disparity is being driven by the fact that Madison has a higher percentage of government jobs than Milwaukee. Thus, they argue, this gap has grown on the back of tax dollars. Unfortunately for this line, the facts just don't seem to be there to support it.

I haven't seen the full report by the Wisconsin Taxpayers Alliance (WTA) because it's not available online, but the group's press release says nothing about government jobs accounting for the growing disparity in median income between Madison and Milwaukee.

After all, the release notes that Dane County is outpacing Milwaukee County even in manufacturing jobs, which used to be the bread and butter of brew-town. Surely not even the staunchest conservative could argue that this change in manufacturing is related to government jobs.

Even beyond that, the difference in percentage of government jobs in the two cities just doesn't warrant a charge that it's a driving force behind the income disparity. According to a recent Journal Sentinel article, 23 percent of Madison's workforce is in the public sector, while the same is true for 11 percent of the workforce in Milwaukee.

Is anyone really going to argue that the 12 percent difference between the two is enough to create -- or even be a significant driving factor behind -- an 80 percent disparity in median incomes over the past 15 years?

Instead, the real factor driving the growing income disparities is the one that has received the most attention thus far, which is the presence of UW-Madison.

There's no question that the knowledge that flows out of the university is driving the creation of industry and, subsequently, good-paying jobs in Madison. This is why the push by Chancellor Santiago to make UW-Milwaukee a major research center, particularly in the area of biotechnology, is so crucial for the Milwaukee metro area.

In this sense, conservatives are on the right track when pointing to the public sector presence in Madison. But they're wrong to think that it's government jobs that are the explicit driving factor behind incomes in Madison. Instead, the public sector creates the fuel that drives the Madison economy -- which is exactly how it should be, and exactly how it could be in Milwaukee.

It seems likely there are other factors that are helping to drive the income disparity between Madison and Milwaukee, factors that have received less attention, thus far.

One is the growth of poverty in Milwaukee. And this is important not only for the obvious reason that it directly drives down the median income of the city, but also because it often leads other factors that hold household income down (which is what the WTA studied) such as a growth in single-earner families.

But what's also a key point to remember is that Milwaukee doesn't only have more poverty than Madison, it also quite likely has more wealth. If you drive through Madison, there is certainly a noticeable difference in terms of wealth in many of the neighborhoods. But it's nothing near the difference you'll see driving from the northeast side of Milwaukee -- around Lake Park, that is -- into the northwest side of the city.

This point leads to some important questions about where the Wisconsin Taxpayer Alliance is getting its income figures. The group's press release vacillates between Madison/Milwaukee and Dane County/Milwaukee County.

If the income disparity figures are from the actual cities of Milwaukee and Madison, much of the gap could be attributed to the fact that most of Milwaukee's wealth has moved to the burbs over the past couple of decades, while Madison has annexed land on its east and west sides to keep much of its wealth within the city limits.

All in all, the WTA report should be a wake up call to the Milwaukee metro area that changes are needed. And it seems clear, at least to the authors of the report and other outside observers, that education must be a central part of those changes.

As WTA researcher Ryan Parsons noted: "But I think what Milwaukee needs to do if it wants to regain some of that balance that was lost in the last 50 years is more of a focus on education and retaining good college graduates. One of the reasons Madison has such an edge over Milwaukee is having people who can fill high-tech science research jobs. A lot of that work force is missing from a city like Milwaukee."

Milwaukee business leader Tim Sheehy seems to agree, stating that the report "bolsters our interest in supporting UWM's ability to grow its research muscle - not in a way to compete with Madison, but in a way to build our economic prospects, our future."

These are words that need to be kept in mind come budget time.

3 Comments:

Blogger Fletch said...

Proposals to enhance the research performance of U.W.M. are nothing new, of course, and indeed will consume a lot of taxpayer dollars. However, I don't see where this support will come from. It is one thing to shake your fists and proclaim that Milwaukee must do better at retaining (much less attracting) high-tech industry. It is another thing entire to marshal the real resources to make it happen.

One lesson the people of this state must understand is that, in order to compete successfully for leading-edge industry, some sacrifices have to be made - hundreds of millions of dollars will not simply appear from the feds, from research endowments, etc. A complete overhaul of the U.W.-System is the only viable course, and that means at least a partial reduction in access to higher education.

With the current political climate, at least temporarily, favoring "big ideas," why hasn't a concrete proposal to shut down forever some marginal players in the U.W.-System been floated? Why hasn't a serious run at closing U.W.-Superior not been made yet? It comes down to priorities. If you want to continue down the road with a pork-laden higher ed. system resulting in brain drain, then the status quo is for you. If you want an alternative, let's start talking.

December 13, 2006  
Blogger proletariat said...

For me its much more about trying to keep government out of the way vs government having a positive role in the economy and making sure its a fair playing field.

There are more than a few citizens that commute as far away as Dallas and LA to work so their kids can attend Madison schools. I think its much more of a world view thing than just the University. The university has a role not in itself but within the context of that world view.

That you pointed out that this organization is pretty much low tax, free market wackos is kind of funny. Clearly the neo liberal economic, not even mentioning the neo conservative politics, is whats dragging them down.

December 13, 2006  
Blogger Seth Zlotocha said...

Fletch,

The research initiative I discuss for UWM is actually very new. It's called the Research Growth Initiative (RGI), and it was ushered in by Carlos Santiago when he signed on as UWM's chancellor a few years ago. In fact, increasing the research stature of the university is precisely why Santiago was brought to UWM, and it's about all he's talked about since getting there.

I've written more about the RGI here, here, and here so I won't get into it much in this comment, but suffice to say it marks a stark departure from past practice when it comes to encouraging research on campus. The drive now is toward funding research that is aimed at forming public-private partnerships that can lead toward spin-off companies, which, in turn, creates jobs. Of course, this means research in the liberal arts isn't as supported on campus, which was demonstrated in the first round of RGI grants awarded this past spring (which I write more about in the second of the posts cited above).

Whether the RGI is able to continue and reach the potential Santiago envisions is dependent upon special funding in this upcoming budget, which is what I'm alluding to in the last line of the post. Santiago went to the legislature and asked for the funding last winter, and the chances of its ultimate approval -- which would come in the upcoming 07-09 budget -- are improved by the fact that influential business leaders around Milwaukee -- such as Sheldon Lubar, Dennis Kuester of M&I, Edward Zore of Northwester Mutual Life, and others -- are fully behind it; of course, they want in on the action that a vibrant university can create.

Proletariat,

I agree that keeping a level playing field plays an important part in the Madison-Milwaukee divide. I got into that a bit when I talked about the great income disparities within Milwaukee, much more so than anything you'd find in Madison. I wanted to discuss more how the progressive policies established in the city of Madison make this happen -- contrary to the harpings of the right that any regulation of the free market will stifle innovation and growth -- but my post was already getting a bit long (and I was running out of time before work), so I had to just touch on it a bit.

Your point about worldview is also a good one. The fact that many people want to live in Madison plays an important role in the economy (although I moved from Madison because I prefer Milwaukee...I suppose that's more of a hometown thing, though), and the university is just one factor in why people like Madison. But what I was getting at was not so much why people want to live in Madison, but what allows Madison to create the means that allow people to stay, and, based on what I can tell, what helps to create the means the most is the UW.

December 13, 2006  

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