Bruce Murphy
Murphy’s Law

New Study Shows Milwaukee’s Income Inequality

Research shows huge and probably growing gap between high and low incomes in Milwaukee County.

By - Mar 27th, 2014 11:43 am

A new study by the UW-Milwaukee Employment & Training Institute puts into stark relief the problem of inequality in America, dramatically localizing the problem in Milwaukee County. Using data from the most recent state tax filings, the study finds that working families in the county’s wealthiest zipcode averaged just over $253,000 in annual income in 2012, or 12 times more than working families in the county’s poorest zipcode, who averaged slightly more than $20,000 that year.

Fox Point

Fox Point

The county’s most wealthy zipcode, 53217, including Whitefish Bay, Fox Point, Glendale and River Hills, is located just a few miles northeast of the poorest zipcode, 53206, which includes the inner-city area between North Ave. and Capitol Dr. and between I-43 and 27th St. Yet the latter zipcode is as downtrodden economically as it’s possible to be in Milwaukee County.

It’s not for want of people working. Indeed, the study found by far the county’s highest concentration of working families in dense inner city neighborhoods on the near south and north sides, including the 53206 zipcode. “It’s an urban myth that children in these neighborhoods don’t see people going to work,” says ETI Senior Scientist Lois Quinn, the study’s principle author. “They see thousands of people going to work. They just don’t see many who are earning a good living.”

Many of these households are single parent families. The study found that over half of the county’s single tax filer families earned less than $25,000, “suggesting low wages, part-time jobs, high job turnover, and less than year-round employment.”

The problem of an economy where many jobs pay less than a family supporting wage is compounded by the negative impact of recent changes in state policy by Gov. Scott Walker and Republican legislators. The study found that reductions in the Earned Income Tax Credit caused a loss of $17.2 million for lower income Milwaukee County families in 2011 and 2012. About 42 percent of that money — $7.2 million — was lost in just six inner city zipcodes, the study found. This means there’s less money circulating in poor neighborhoods and may help explain a counter-intuitive finding of the study: even as the economy was on the upswing in 2012, there was an unexpected drop in employment for single parent families in Milwaukee County.

Just as surprising, employment for single parent families in this county had actually remained steady during the economic meltdown: from 2007 to 2011 there was little change in employment. “Because of their concentration in lower-paying service and retail industry jobs (in child care, nursing homes, food service, part-time retail, temp work), it appears that many single mothers were able to ‘ride out’ the recession,” the study notes.

But in 2012, when the economy was on the upswing nationally, the number of employed single parents in Milwaukee County dropped by 4.6 percent, the study found. Why the reduction in employment?

One contributing factor may be a decline in “Wisconsin Shares” child care subsidies going to Milwaukee County families, “which dropped by 36% — from $199.9 million in 2009 to $127.6 million in 2013, with the cumulative loss of child care funds over the last four years totaling $228.5 million,” the study notes. In response to complaints of abuse of this program, the state has tightened up eligibility requirements. While that may have yielded a leaner and better-run program, this change, too, means less money circulating in the inner city. When combined with the reduction in earned income tax credits, this might have depressed consumer spending in the city, which can ultimately have an impact on jobs.

The recent admissions by Wal-Mart that its revenues declined after Congress cut back funding for food stamps gives a good example of how cutting subsidies for the very poorest has an immediate downward impact on consumer spending.

Quinn notes that as employment for single parents in Milwaukee declined in 2012, that meant less of them were eligible for subsidized child care, which likely led to a drop in the employment of child care workers.

A big part of the inequality story in both America and Milwaukee revolves around single parent families. Nationally, the proportion of families headed by a single parent has grown from 8 percent in 1960 to 33 percent today, and single mothers in particular have typically earned less.

In the black community, skyrocketing rates of imprisonment have drastically reduced the number of African American men who could help support a family. A previous study by Quinn and ETI on this problem has gotten considerable media attention, including from Urban Milwaukee. While some of the policies (such as   the “war on drugs”) causing this problem have changed, the reform came too late for many: “more than half of African American men (ages 30-44) from Milwaukee County” now have prison records, ETI’s new study notes and “many ex-offenders have difficulty finding sustained employment after release.”

The gulf between one and two-parent families in Milwaukee is made crystal clear by this study, which finds that “the vast majority (83%) of working-age family filers (with dependents) who earned $50,000 or more in 2012 were married couples, while the vast majority (90%) who earned less than $10,000 were single filers.”

But the inequality story is not just about single parent families. The study also found a vast gulf in income between two-parent families in Milwaukee County. In the county’s wealthiest zipcode (once again, 53217) for two parents families, their average income was $328,329, or about 9.4 times more than the county’s poorest zipcode (53204) for two-parent families, whose average income was $34,856.

“Within the small geographic area of Milwaukee County,” the study notes, “children have access to vastly different economic supports for their housing, food, clothing, health and other basic necessities as well as for educational resources and social opportunities.” And that problem, to judge by 2012 income tax data, is actually getting worse.

Short Takes

-The study found the county’s highest concentrations of working families in the heavily Hispanic south side zipcodes 53204 (2,629 income tax filers per square mile) and 53215 (2,171 per square mile). The next two highest concentrations of working families were on the near North Side in the predominantly African American zipcodes 53210 (1,827 income tax filers per square mile) and 53206 (1,478 per square mile). The lowest density of family supporting workers was in the south side zipcode of 53132 (136 income tax filers per square mile), while the most wealthy zipcode of 53217 had 322 per square mile.

-Most of the comments in my recent column on Congressman Paul Ryan concentrated on the last few paragraphs, regarding his comments on inner city males “not even thinking about… or learning the value and the culture of work,” and which in context seemed aimed at black males.

But most of my column actually dealt with his slap at parents of children who get free or reduced price lunches. Ryan’s contention that this proves these parents don’t care about their kids — an opinion he has never retracted — encompasses a much wider swath of America. As I noted, 52 percent of all students in Ryan’s home town of Janesville get free or reduced-price lunches and state statistics show that less than five percent of the district’s enrollment is black. It would appear that families of all races and creeds don’t care enough to give their children a brown bag lunch.

And statewide, as a Legislative Audit Bureau study found, 52.5% of all food share (food stamp) recipients are white. In a country and a state where inequality reigns, such government subsidies are the only way for many families to eat a decent meal.

Categories: Murphy's Law

24 thoughts on “Murphy’s Law: New Study Shows Milwaukee’s Income Inequality”

  1. Andy says:

    There’s a lot to comment on here… but one of my favorite paragraphs is the one saying that a contributing factor to unemployment in the inner city was the loss of funds from the Wisconsin Shares program after they significantly reduced fraud and abuse. As if it would be a good thing to continue rampant fraud in order to increase the circulation of money in the inner city. Along that same line of thinking, perhaps we should promote other illegal activities so they too can bolster the micro economy in the inner city?

  2. bruce Murphy says:

    Andy, that’s your conclusion, not mine. I’m simply trying to understand an unexpected decline in employment for a group of workers at a time when the economy was improving. I support cracking down on child care fraud, but I would add that the reduction in Wisconsin shares funding involved more factors than simply cracking down on abuse.

  3. Wisconsin Conservative Digest says:

    Bruce, it is very easy to understand. If you adopt no growth policies cause you are worried about some mythical polar bears not having enough ice and ruin the jobs for the middle class and the working poor but make tons of money for the guys that gave you 1 billion dollars you get inequality. Who’s in charge guys???
    If they followed Clinton’s advice when he is not busy chasing skirts they would have been better off. The combo of Reagan/Tip and Clinton/Newt did the job.

  4. mobsarebad22 says:

    Maybe making the personal decision to check out of the educational system by the 6th or 7th grade might have something to do with it.

    The people I know who have the Fox Point kind of household income worked their butts off in public school, had all kinds of crappy jobs as kids to pay for college, and had student loans to pay off for many years after that.

    Hanging out on street corners does not result in a high SAT score or a scholarship.

  5. Casey says:

    @mobsarebad22 I believe ONE problem with our culture and education is our inability as a society to delay gratification inorder to reap better rewards later (Stanford Marshmallow Test). The people that worked their butts off and made obviously knew how to control this.
    So the question is how can we get youth to resist the urge to screw up their lives for short term benefits?
    Alot of it should come from family training but if you have generations with out this control it would have to be instilled in the edu system. That would require a massive overhaul of our test test test score score score system to one that teaches how to learn instead of what to learn.

  6. Bruce says:

    Milwaukee is a microcosm of the United States. The national policies have been directed at rescuing or funding friends in high places and speculative “green” projects that do nothing to create jobs for those in the middle class. Rather than focusing on policies that make manufacturing or real energy development that lead to good, high paying jobs, we just get more wasteful programs that line the pockets of Nancy Pelosi, Harry Reid, and those on the inside.

    BTW, Nancy’s net worth was last estimated at around $59 million. Not bad for a congresswoman. Harry Reid is not doing bad at upwards of $10 million. And “green” Al Gore saw his net worth skyrocket under “green” policies to 9 figures. Those good ole boys and girls are really taking care of the working stiffs.

  7. Jeff says:

    Thanks for another interesting analysis, Urban MKE

  8. 2fs says:

    When did The Onion change its name to “Wisconsin Conservative Digest”?

    (note: polar bears actually do exist outside of Coca-Cola ads)

  9. Sven says:

    “Mythical polar bears”? Wow. Really? I’m missing the supposed motive for creating such a myth. Is it so difficult to care?

  10. Isn’t it interesting that Mr. Murphy can cite Walker’s punitive tax hikes on the poor, but completely fail to mention Abele’s refusal to allow county workers and contracted workers to earn a living wage? I wonder if the omission was intentional and if so, why.

  11. tim haering says:

    This affirms the natural mechanics of trickle-down economics. Money begets money. NO matter how high up the economic hills you distribute wealth, it always flows back to the sea, to those who own and operate the means of production, the captains of industry. Trickle down economics has been wrongly depicted since the term was invented. The rich are not on top in the natural model, the rich are at the base. Trickle down IS the hydrologic cycle. Money, like water, always flows back to the creators of wealth.

    This will change – IF it can ever change – when we humble folks on the hillsides become savers and investors, not merely spenders – which might be contrary to our natures. But the natural system recognizes erosion, so that eventually in theory all things crumble to sea level. So there is hope for a liberal vision of equality – in several billion years.

  12. Andy says:

    OK, so admittedly I do have some sympathy for Bruce Thompson and others who find it difficult to differentiate the difference between conservatives who say “there’s a cultural problem in the inner city that holds people back, what can we do about it?” vs. those who say “there’s a cultural problem in the inner city, why bother trying to do anything about it?”

    I’m all about personal responsibility and pulling yourself up and being responsible for your actions… but I also recognize that sometimes people need help, guidance, or inspiration to do so. Even if it’s only a fraction of low income people, there ARE people in poverty who would love to get out of it but just don’t know how.

    Casey- If you don’t already, I invite you to get involved in the community and show people what they can achieve if they can resist eating the marshmallow… You can have a powerful influence, especially on the young before they’re jaded!

    “Bruce”- We can complain about the hypocrisy of the left till we’re blue in the face… but that doesn’t do much good if we don’t personally get involved ourselves to help make a difference in real peoples lives.

    All that said, we really do have a system that enables people to live somewhat comfortably. One in which earning more gives only a small marginal gain. The misquoted brown bag story was supposed to be about how government programs were only supposed to be a safety net and it was a matter of pride to work your way off of them… but we certainly are missing that pride these days. All our programs were created with the best of intentions… it’s just that life (and people) never react to things the way we always expect.

    So access to jobs is important.. but until we remove disincentives, improve our schools, restore the family unit (sorry that seemingly came out of nowhere, but its’ another big one), and improve the culture of our poorer communities… nothing much will change.

  13. Dave Reid says:

    @Chris Bruce Murphy can speak for himself, but I think when actually reading the story it is pretty clear why Abele’s veto of the living wage legislation wasn’t include. Because it isn’t addressed by the study (not really sure how it could be actually) Bruce is referring to.

  14. iLOVEthiscity says:

    LOL! Wisconsin Conservative Digest get’s me every time. He’s just an old man who is stuck in his ways… and who hate’s Milwaukee.

  15. Duncan says:

    The economy is set up to highly reward those who are highly educated. 53217’s population is 87% college educated.

    In contrast, 53206’s is under 20%, with high levels of high school drop outs.

    It should be no surprise the income inequality is high. It’ll be higher next year, and very much higher next decade — until such time the economy stops rewarding education, which will be never.

    So, Bruce, you can dust off this article again in 5, 15, 30 years, if that floats your boat.

  16. Janet Doe says:

    It is hard to understand the plight of living beneath the poverty line if you have never been there. I am discouraged by many of the comments above. I feel that we are quick to make judgements about those who we do not understand. History dictates that it is not easy as it may seem for an economically depressed people to “pull up their boot straps” and just work hard, get through college, and be better off. Maslow’s hierarchy of needs, a tried and trusted methodological approach to understanding the possibilities of achievement, dictates that basic needs must first be met before other personal gains can be made. How can a child who is not well fed, goes home to a cold house, lives with a family who works long hours just to keep the lights on, be expected to have the same jump start in life (and education for that matter) as a child who has every need met, a warm snuggly bed, and no worries to distract from learning. I will never discount working hard to put yourself through college and taking out loans to fund your education. I did the same myself and was a first generation college student. However, I realize that the color of my skin has automatically granted me privileges in life that I did not earn. Yes, I said it–I am white, and that automatically brings me privileges that should not be granted. I didn’t ask for it, but it is the reality and our country’s history has brought us to this point. Racism still rampantly exists, and it is affecting the children and families from these zip codes more than many of you realize. So, please…I ask you this. Before you make judgements about how hard others work, stop. Literally. Stop. Then ask yourself this–have I personally lived in this environment? Have I personally lived these experiences? Have I gone through advanced training (i.e. master’s degree or Ph.D.) that affords me more expertise on the socioeconomic issues of our city? If you answer no to any of those questions, I encourage you to not post a comment. If you do, you are posting based on assumptions and second-hand knowledge. Please do not speak for others.

  17. Bruce Thompson says:

    I think you make an important distinction “between conservatives who say “there’s a cultural problem in the inner city that holds people back, what can we do about it?” vs. those who say “there’s a cultural problem in the inner city, why bother trying to do anything about it?”” To nibble away at any problem it is important to have a candid discussion about possible causes. But that discussion is hard enough without people on the fringes eagerly waiting for any excuse to say the problem is insolvable or, worse, that it is all the fault of poor people.

    There were two reports issued earlier this year with almost identical titles: “The War on Poverty 50 Years Later: A Progress Report” from the Coundil of Economic Advisers in January and “The War on Poverty 50 Years Later” from the House Budget Committee earlier this month. I confess to only skimming them.

    But the Budget Comm. starts with 3 statements:
    1. Poverty declined from 17.3 percent in 1965 to 15% in 2012. The CEA calculates a decline from 25.8% in 1967 to 16.0% in 2012.
    2. “Deep poverty” reached the highest level in history over the past 3 years. The CEA 5.3% in deep poverty after government benefits were included.
    3. 21.8% of children live below the poverty line. CEA calculates that at 18.0%.

    The difference seem to largely stem from the Budget Comm using a measure that does not count the EITC and other benefits such as food stamps, while ignoring medical costs. So one could postulate that this choice could have been motivated by a desire to prove that the programs were not working. Certainly that is the message that a lot of its readers carried away.

  18. Andy says:

    “Janet Doe” thank you for bringing white guilt into the conversation. That was an aspect that is regularly seen in discussion about poverty that we were missing thus far.

    Bruce Thompson, I’ve only got a few minutes, but in this short time just wanted to ask… do we count poverty before or after government programs? I believe we should have assistance for those who need it… but ultimately if our goal is to get as many people off of those programs as possible, shouldn’t our benchmark be set at what people earn before that assistance? So where do we stand with poverty before and after we’ve created all these programs? Where/when we count income is an important distinction… if we have just as many in poverty (or more) now but somehow they are lifted up by the programs… are we really serving them as best as we possibly can?

    I’m not using those thoughts as a bolster to any opinion on where poverty stands now… I really just want your (and anyone else who wants to chime in) perspective on it.

  19. East Slider says:

    This study is totally flawed, right from the beginning because they apparently completely left out a very important piece of the economics of Milwaukee’s inner city, a piece which makes up a large part of the economic activity in the inner city and the piece which explains why so many people are able to live or at least get by on what looks like so little money. The giant missing piece here is the underground cash economy and I’m not surprised that the “ivory tower” types at UWM missed it completely. If you actually get to know some residents of the inner city and their extended families, you’ll find out that the people in the poorest areas of this or any other big city rely on a cash economy and all sorts of “off the books” arrangements that often provide them with their living space, food and many of their other needs and wants.

    To put it into clearer terms, look at employment in the poorest parts of our big cities, quite a bit of the employment is all done for cash, so no official government records are kept, no taxes are withheld or paid and the people with these cash only jobs show up as unemployed on the government’s books and aren’t counted in research like this, which of course is based on the records kept by the IRS and the WI Department of Revenue. Besides the legal jobs that are off the books and paid in cash, there are the illegal “jobs” that are of course all cash and have no records kept on them either. How many of Milwaukee’s drug dealers, from the guys selling small bags on the street all the way up to the high level dealers that bring the large quantities into town are keeping records and filing their taxes each year??? Now, of course the underground cash economy extends into every neighborhood, rich and poor, but in the middle and upper-class areas, its a tiny fraction of the overall economy, very few, if any residents of River Hills work cash jobs! So, when you look at this data, a sizable number of the people in the poor zip codes who are listed as being unemployed are actually making a living, some at legal jobs working for cash and some in illegal careers like the drug dealers who are actually making moderate or even large incomes but show up as unemployed with zero income on the IRS’ books.

    Its not just off the books employment, you also have the people who are living for free somewhere, once again totally off of the books. If you talk to anyone who’s been a landlord in one of the poorest areas, you’ll learn all about how its very common for one person who rents the apartment and signs the lease to have someone else or even several other people then move in “off the books”. The usual example that’s got to be the most common is the female who has some sort of low paying job who then rents the apartment, (usually partly or mostly subsidized by programs like rent assistance) and then also lets her drug dealer boyfriend (often the father of at least one of her children that were all born out of wedlock) move right in with her. So, the dealer boyfriend “official profile” as far as the government knows is unemployed with zero income, even though he’s always rolling around town with a large wad of cash in his pocket and who never has to go hungry at all. Add on to this the fact that the female will also qualify for food share for herself and her kids as well as other government handout programs, when in reality, between the two of them they’re likely pulling in a decent, middle class income!

    If you spend some time getting to know the inner cities and the poorest areas, you’ll learn that the underground cash economy makes up a large part of the overall economy in those areas, percentage-wise its a much larger part of the overall economy than it is in wealthier areas, where it is a tiny fraction of the overall economy. Since this study seems to ignore the underground cash economy, it is seriously flawed from the beginning!

  20. wisconsin Conservative Digest says:

    East sider, I have never heard such a well done piece on the inner city. I have followed it closely for 30 years as I have apt. and also work in the inner city. I challenged the Journal on several occasions to do a piece like this on how the inner city works, it was just like Russia, 50% is cash and black market. The Journal has never done it.

  21. Bruce Thompson says:

    I am not an expert on how to count poverty but my understanding is that the Official Poverty Rate counts some government transfer payments (such as social security) but not more recent programs, such as the EITC and SNAP. This helps account why the official poverty rate among seniors declined rapidly during the 60s when SS benefits were raised, but helps explain why the overall Official rate did not decline much since.

    Both reports criticize the Official Rate for leaving out these transfer payments, among other problems. There are two other rates: the Official Supplemental rate, which among other things includes these transfer payments and the Consumption Poverty. Both reports discuss the strengths and weaknesses of these measures. The Ryan report seems to conclude that the Consumption calculation is the most accurate and the Official the least. But this is in an appendix and doesn’t carry over to their summary at the beginning.

    In answer to your philosophical question, I would think a realistic measure of poverty should account for all government transfer payments.

  22. Wisconsin Conservative Digest says:

    Bruce, I must ask this question. In 50 years we have spent trillions on this problem but in Milwaukee it gets worse. In last ten years of Barrett’s regime very indicator has gotten worse. Barrett and school boards had been backed up by Journal. Does anyone have nay answers that are real?

  23. East Slider says:

    WCD, I appreciate the compliment! Yes, ANY discussion of inner city poverty that doesn’t take into serious account the underground cash economy is totally and irreparably flawed from the beginning and is useless! Any research on poverty in the inner city that doesn’t take the underground cash economy into serious account is totally flawed and worthless! In the inner cities, we have a sizable number of people who exist solely on cash, they use cash to purchase everything they buy, pay their rent in cash, etc, etc These people show up as having zero income as far as the government is concerned, so basing your research on gov’t numbers means you’re basing that research on totally incorrect data.

  24. Andy says:

    Bruce Thompson, all of those variables create an interesting case regarding what true poverty is… and east sider brings a whole new dynamic that I really don’t generally think about when talking about the data.

    But I think you and I have a fundamental difference in how we look at this issue that will always put us at odds. I believe that if we measure poverty after ALL assistance programs like SNAP and EITC we are only masking the real issue of people having the ability, or in some cases choosing, to support *themselves*.

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