Hit by a global train

Milwaukee Journal-Sentinel ^ | 12/5/04 | JOHN SCHMID

[ninenot]

Job loss worse than the Great Depression's in Milwaukee's urban center

By JOHN SCHMID
jschmid@journalsentinel.com

Posted: Dec. 4, 2004

First of three parts

No major urban center in America has suffered as much as Milwaukee's from the economic upheaval of a globalizing economy, an exhaustive analysis by the Journal Sentinel has found. No other African-American community worked as intensively at manufacturing products that are no longer made here, or was less prepared for a historic shift from unskilled labor.

Still Separate and Unequal

Special Report

Photo/Gary Porter

Frank Thompson came from Alabama in 1965 to work at the industrial flagships A.O. Smith and Allis-Chalmers, until the plants shut down. Now, he owns a housing rehabilitation business, Thompson Vision 2000 Inc.

Photo/Gary Porter

Children eat lunch in the cafeteria at Lee Elementary School, 921 W. Meinecke Ave., where 95% are served free or reduced-rate lunches, making it one of the 20 poorest public elementary schools in the city of Milwaukee.

Photo/Gary Porter

Helen Fifer, who lives across the street from Lee School, came with her parents from Alabama to Milwaukee as they followed the lure of good factory jobs. Bessie Sumlin came in 1955 from Arkansas for the same reason. Both have seen the city in its boom years and bust years.

Photo/Gary Porter

Vel Moore (left) said she always manages to find work even without a high school diploma. Her two brothers, including Eddie Moore, are unemployed. Among black communities in America's largest urban centers, Milwaukee's has endured more fallout from a rapid loss of factories.

When you deindustrialize white towns, you see the same phenomenon. Earnings fall. Marriage rates go down. Out-of-wedlock birthrates rise. You see the same behavior as you would in what we normally attribute as the urban
underclass.

- Andrew Sum,
director of the Center for Labor Market Studies at Northeastern University in Boston

Statistics

Introduction
Migration
Education
Blue Collar Jobs
Family Income
Poverty Low
Manufacturing Decline
Income Drop
Poverty High
Unemployment
Not in Labor Market
Education Lag

Median Income

Poverty Rate

Manufacturing Jobs

Jobless Rate

Population vs. Jobs

Boom Years in Bronzeville

Slideshow: Historic photos of Bronzeville

About the Series

For years, folks in Milwaukee have blamed one another for the region's racial disparity and the growing gap between rich and poor. Yet, a generation ago, Milwaukee offered hope, opportunity and jobs to people of all races. What changed?

A special, in-depth report by the Journal Sentinel examines that question over the next three days.

SUNDAY: Hit by global train - An analysis of a half-century of data for the nation's largest cities shows that no urban center fell as far, as fast, as hard as Milwaukee from the upheaval of a globalizing economy. Nor was any city's black work force less prepared for the shift from unskilled labor.

MONDAY: A dream derailed - The Milwaukee Road literally encircled the perimeter of Milwaukee's black community, defining where they lived and worked. When it derailed, so did the dreams of a whole community. But now, there are signs the urban core is getting back on track.

TUESDAY: Emerging markets - A new generation of leaders is advancing market-driven 21st-century solutions for poor neighborhoods. Promise is seen in the city's central location, low transportation costs, cheap land and proximity to universities and the ideas they incubate.

Still Separate and Unequal: Brown vs. Board of Education: 1954-2004
(A yearlong Journal Sentinel series)

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In little more than a generation, Milwaukee has morphed from an El Dorado of unrivaled opportunity for African-Americans - and a beacon for their middle-class aspirations - to a locus of downward mobility without equal among other big U.S. cities.

The result: A depression in the region's urban core far more severe than the Great Depression of the 1930s.

In fact, Milwaukee's working-age black men have suffered almost twice the drop in employment that the nation endured in the Depression. The city's black male employment rate plummeted by 21 percentage points from the peak of America's industrial might in 1970 to the most recent census in 2000 - nearly double the 13 percentage point decline in the national employment rate from 1929 to the Dust Bowl trough of 1933.

In this 50th anniversary year of the U.S. Supreme Court's Brown vs. Board of Education desegregation ruling, as communities across the country undergo a self-examination of their racial progress, a fresh analysis of a half-century of census reports and economic data for the nation's largest cities reveals that none of their urban centers fell as far, as fast, as hard.

Visitors familiar only with Milwaukee's graceful downtown architecture, shoreline parks and clean thoroughfares might not guess that the city harbors racial disparities that exceed those in Detroit, Philadelphia and other archetypes of American urban blight. Despite its roots as a progressive Northern citythat once lured laborers of all races with a bounty of family-supporting jobs, modern Milwaukee falls to the bottom of nearly every index of social distress.

• In 1970, at the city's industrial peak, the black poverty rate in Milwaukee was 22% lower than the U.S. black average. That turned around by 2000, when the black poverty rate was 34% higher than the national figure. Among the nation's 20 most populous cities in 2000, Milwaukee had the highest rate of black poverty.

• In 1970, the median family income for African-Americans in Milwaukee was 19% higher than the U.S. median income for black families. By 2000, the black family income in Milwaukee was 23% lower than the national figure. In the 2000 census, Milwaukee fell to 49th among the nation's 50 largest metro areas in racial disparities in income.

• Milwaukee had the highest black unemployment rate of the major cities surveyed in 2002 by the Bureau of Labor Statistics. The bureau also found that 59% of Milwaukee's black males 16 and older were idle, and that the city's black unemployment rate was more than three times its white unemployment rate.

• In 2003, an estimated 48% of Milwaukee black children under age 5 lived in poverty. Nationally, the Census Bureau estimated that 39% of all black children under 5 were living below the poverty level.

• Wisconsin - where three of every four African-Americans live in Milwaukee - has the nation's highest rates of black teenage births and black incarceration, according to the Kaiser Family Foundation and U.S. Justice Department, respectively.

A growing school of sociologists traces direct links between the wholesale obliteration of blue collar opportunity and a chain reaction of collapsing social structures.

These sociologists are not measuring issues of race, bigotry or welfare culture, which have long been blamed for Milwaukee's social ills.

They use the clean, empirical metrics of economics.

What sets Milwaukee apart, they say, is the force and pace of economic change.

"I don't need arguments of racial discrimination or integration to explain why Milwaukee does as badly," said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University in Boston.

In an age of relentless global competition, Sum says, Milwaukee's African-Americans have experienced more acutely thesame dislocation that small factory towns undergo when they abruptly lose their industry.

"When you deindustrialize white towns, you see the same phenomenon," Sum said. "Earnings fall. Marriage rates go down. Out-of-wedlock birthrates rise. You see the same behavior as you would in what we normally attribute as the urban underclass."

Before he agreed to be interviewed, Sum independently analyzed Milwaukee's census data in his own computerized "regression model" that compared the city's demographic, educational, economic and labor-market variables with those of the nation's 30 biggest cities. "If you had anything like that in the rest of the country, you would call that a massive depression," Sum said.

It is not just a black problem, said Harvard University professor Michael E. Porter, a globalization economist who founded the Initiative for a Competitive Inner City, a Boston-based non-profit corporation that advises distressed cities in the United States and Britain.

Lazy traffic and a profusion of "For Lease" signs downtown reveal more at stake than the lives of those who live only a few miles away in concentrated poverty and fractured families. The crisis in the central city stunts growth across the entire region, warding off investment, keeping visitors at bay, draining the tax base, diverting resources, rendering broad swaths of the city's commercial real estate unused and its labor force idle and unproductive.

"I can tell you quite categorically: Unless Milwaukee is able to create a vital inner-city economy, it will not have a vital regional economy," said Porter, speaking last year to Milwaukee's business and political leaders.

Reliance on low-skill labor

The Journal Sentinel's economic portrait shows that black Milwaukeeans were downsized with unprecedented force because they relied more on low-skill labor than African-Americans in any other American city, North or South. They had come north from a Southern agricultural society, and many hadn't finished high school. A large number were sharecroppers. Yet they could find an abundance of work in a smokestack-and-brewery city once known as the "toolbox to the world."

By 1970, 43% of black Milwaukeeans drew paychecks as industrial laborers - punch press operators, riveters, assembly-line workers, forklift drivers. The work was unglamorous but paid the mortgage and, on occasion, the children's college tuition, as well. Only Detroit, with 39%, came close to Milwaukee's blue collar bonanza for black workers.

Milwaukee was a phenomenal job machine. Cleveland, the 34th most populous city and Milwaukee's closest peer today in terms of economic disparities in its urban core, didn't employ as large a share of its black population in its industrial heyday.

Thousands of black Milwaukeeans, many just out of the Army, worked their way toward the middle class in the decades that followed World War II. They held jobs at blue chip stalwarts such as Allis-Chalmers, Briggs & Stratton, Schlitz Brewing, A.O. Smith and American Motors.

In the 1980s, however, the boom gave way to a scorched-earth bust. Milwaukee lost more than two out of every three factory jobsit had in 1970 - a disappearance of more than 80,000 jobs. The number of lost jobs amounts to more than one-third of the city's current black population.

Today, retired laborers struggle to perpetuate the vision that carried them from the fields to the factories, the dream that they had hoped would lift their children from the factoriesto the universities. Those first-generation laborers see their sons and grandsons in a different world - more than half of the city's working-age black men are idle - without work, not looking for work, disabled, retraining or behind bars.

Men who cannot put dinner on the table also cannot be role models, fathers or husbands, said Sum, at the Center for Labor Market Studies. The crucial years when a young man leaves home, makes a living and gets married are postponed indefinitely. Men are more likely to live at home, less likely to get married and more likely to associate in local groups of similarly idle working-age men.

More success for women

Black women in Milwaukee historically have relied to a lesser degree than men on manual labor and managed a more successful transition into today's economy. As a result, black men operate in a labor market statistically distinct from women, even within the same city. For every seven black Milwaukee men who hold a job, there are 10 black women with work. It's the most lopsided man-to-woman employment ratio for the black population of any big city in the nation, according to Sum's analysis of 2000 census data.

"I can always find work, and I don't have a high school diploma," said Vel Moore, 46.

She relies on temporary agencies to help cover medical costs incurred by her 15-year-old son, Marcel, who was struck by a car and has needed three brain operations. Moore herself suffered a stroke and has had heart surgery. And yet neither of her two older brothers, who had more education than she did, holds a job. The extended family lives together with its 73-year-old mother on the northwest side and shares the same bus pass.

Her brother Edgar refuses to give up. His resume is polished, touting recent training in Microsoft skills and an employment history assembling hydraulic parts (1997-2000) and working at a Golden Chicken restaurant (1976-1993). As Vel Moore speaks on a recent November day, Edgar hustles out of the house to catch the bus for a job interview. He walks with a cane because of leg and spinal injuries from a 1996 accident.

Her other brother, Eddie, meanwhile, cuts a neighbor's lawn.

College-educated African-Americans bemoan the lack of opportunity and hurry to leave Milwaukee as soon as they're old enough, said Margaret Henningsen, co-founder of Legacy Bank Corp., a black-owned central city bank.

"Economically, this is not a good place for blacks," Henningsen, 57, said. "It's a perception and a reality. I'm the oldest of 10 kids, and the rest couldn't wait to get out of here."

The Great Migration that carried millions from the rural South to the industrial North began early in the last century. By a quirk of history, however, African-Americans began to arrive in Milwaukee in large numbers only decades later. Their arrival mostly coincided with the 1946-1973 Golden Era of the American economy, defined by economists as the post-World War II period of unprecedented prosperity. Migrants who found work in Pittsburgh, Chicago or Detroit during the first half of the century had decades of steady work to secure homeownership and get their children educated before the nation began hemorrhaging heavy industry.

The "Late Migration," as local historians call Milwaukee's influx, meant blacks needed to bridge the cultural chasm from sharecropping to a new era of perpetual economic change with exceptional speed. Few were fast enough. "Unfortunately in Milwaukee, that transition didn't occur," said Cory L. Nettles, the state's commerce secretary. "Many kids got jobs that were more similar than dissimilar to their parents'."

The later the arrival, the tougher the circumstances.

"Black men came here with no education, from out of the fields, and worked in the tanneries until they closed their doors. And then they were left with no job and no education," said Bessie Sumlin, who worked for five years in a Milwaukee tannery.

Her husband, James Sumlin, also ended up on the short end of the late migration. A native of Charleston, Miss., James Sumlin arrived in 1968 without a high school education. He landed a job at Blackhawk Leather Ltd., where he worked for 32 years until it shut down four years ago. Blackhawk, like dozens of other tanneries, couldn't compete with cheaper Chinese rivals that are nearer to the world's biggest footwear factories.

Bessie and James Sumlin raised four children in Milwaukee. "Everyone I know who came from the South is struggling," Bessie Sumlin said.

Quotable

Black men came here with no education, from out of the fields, and worked in the tanneries until they closed their doors. And then they were left with no job and no education.. . . Everyone I know who came from the South is
struggling.

- Bessie Sumlin,
who worked for five years in a Milwaukee tannery

In the commemorative year of the 1954 desegregation ruling, most attention has fallen on schools, not economics. The attention on education is natural: Without schooling, chances are slim of succeeding in a First World economy.

That helps explain why the notion of using economics to understand Milwaukee's racial inequalities remains novel.

"Many liberal explanations of social inequality cite race to the exclusion of other structural variables," argues Harvard University sociologist William Julius Wilson, one of the first scholars to link globalization with the economics of the nation's inner cities.

Sociologists such as Wilson assert that economic evolution and rapid-fire deindustrialization set in motion a domino effect.

It starts as one household after another loses income and cannot patronize neighborhood merchants, who go out of business. Storefronts become vacant and unlighted, inviting crime. Housing prices plunge, or stay depressed, leaving owners without inheritance or equity for loans. In the U.S., those who lose their jobs also lose their medical insurance. "We die from more preventable and treatable conditions," said state Rep. Barbara Toles, a Milwaukee Democrat, echoing statistics from the Washington-based National Institutes of Health.

Chronic financial uncertainty brings family tension. Families go into economic survival mode. Medical care, dental care, schoolwork, social activities fall by the wayside.

Children who hear gunshots or fierce arguments at night have trouble concentrating in school the next day. Life-and-death distractions pose an acute factor in Milwaukee, where the per-capita homicide rate is almost 2 1/2 times that of New York City.

Affecting outlook

The uncertainty of living with day-to-day risk takes a toll of its own. The National Bureau of Economic Research concluded in March that poor urban African-Americans, mindful of their statistical life expectancy, lose the incentive to invest in their own education or physical well-being. They become nihilistic.

"You tend to underinvest in yourself," Sum said. "You get this fatalistic view on life. There's a perception among some young inner-city guys that it doesn't make sense to stay in school because they don't expect to be around long."

And then there's a final twist: Children who fail to get degrees can't even get the menial, low-skill jobs that lured their ancestors north.

"Poverty is the biggest influence in student achievement," said Deb Lindsey, director of assessment and accountability for Milwaukee Public Schools. Citing decades of consistent findings from a spectrum of national think tanks and local school boards, Lindsey added, "It's not a notion, but a fact."

In his book "When Work Disappears: The World of the New Urban Poor," Wilson argues, "Many of today's problems in the inner-city ghetto neighborhoods - crime, family dissolution, welfare, low levels of social organization, and so on - are fundamentally a consequence of the disappearance of work."

Economic upheaval also intensifies pre-existing urban ills, such as racial segregation, said William Frey, a research fellow at the Center on Urban and Metropolitan Policy at the Brookings Institution in Washington.

A reflection of the world

Milwaukee's urban center lies at the forefront of a historic shift that is reshaping the global economy, widening income gaps and fostering a state of permanent insecurity.

The city became a blue collar boomtown because it was once a hotbed of industrial innovation, a sort of heavy-manufacturing version of Silicon Valley. But when the industrial combines went out of business, the Midwest economy splintered into a spectrum of smaller, more agile high-skill firms that no longer rely on migrant or immigrant labor.

Gov. Jim Doyle, laying out his economic vision, implores the state's firms to "compete on the high end" of technology, trade and global sophistication.

Some of those jobs percolate downtown. But mostly they flourish in suburban office parks built on green spaces with ample parking near freeway bypasses. Suburban counties registered a 200% job expansion during the 1970-2000 period of the city's deindustrialization.

By 2001, according to the Census Bureau, 75% of all manufacturing jobs in the four-county metropolitan area were in Milwaukee's suburbs, which represents a reversal from 1963, when 60% of all manufacturing jobs were inside the city limits.

In theory, unemployed blacks simply need to uproot from the city and follow the trail of opportunity. Yet few have left the city because they lack the education, skills, income and, in many cases, means of commuter transportation.

Globalization is hastening a polarization into two distinct labor markets: A First World market of skilled and white collar positions is concentrated in downtown high-rises and suburban business parks, while a 20th-century urban work force competes for jobs with Chinese peasants willing to work for as little as 25 cents an hour. "It leads to cultural and economic isolation," said Nettles, the commerce secretary.

American jobs in the 21st century increasingly demand a college degree or other high skill set. Only 39% of black men in the U.S. without a high school diploma had a job in 2000; of those who had a college degree, 79% had a job.

In Milwaukee, only 8.4% of the adult black men hold a four-year college degree - the lowest rate among major U.S. cities.

Educational barriers don't stop there. About one-third of the city's black adults are high school dropouts - an estimated 35,000 people. Milwaukee's percentage of African-Americans without diplomas is the second-highest among the 20 largest U.S. cities. And Wisconsin last year recorded the highest percentage of black eighth-graders who fell into the lowest category of reading and math performance, boding poorly for their future.

Jobs of a different sort

"The character and quality of American job creation is changing before our very eyes," argues Stephen S. Roach, chief economist for the Morgan Stanley investment banking group.

The transformation manifests itself in the abundance of low-end jobs that the current recovery has created, Roach found. With the 2001 recession decimating both professional and manufacturing jobs, a disproportionate number of the emergent jobs in the recovery lies in restaurants, temporary service agencies, courier services, hotels and social-work agencies. "The great American job machine is not even close to generating the surge of the high-powered jobs that is typically the driving force behind greater incomes and consumer demand," Roach found.

Milwaukee's urban center, in particular, remains vulnerable to further restructuring. As recently as 2000, Milwaukee retained the highest percentage of black residents employed in blue collar jobs among the 20 largest cities.

The central city isn't alone. The Milwaukee region lags behind the rest of the nation in the metamorphosis to a high-skill, post-industrial economy. The Progressive Policy Institute in Washington ranked metro Milwaukee No. 40 among 50 U.S. cities in its broad Metropolitan New Economy Index, which measures the overall number of technology jobs, scientists, engineers, patents, schools and venture capital. It trails Chicago (19), St. Louis (27), Detroit (28) and Cleveland (33). Meanwhile, the California-based Milken Institute last month reported that the Milwaukee-area economy slid to No. 163 among 200 cities in an annual job-creation ranking of best-performing cities.

Even Alan Greenspan, chairman of the U.S. Federal Reserve Bank in Washington, sounds worried. The central banker, perhaps one of the last to raise alarms about poverty, sees a worsening nationwide labor-market mismatch. "The effect of increasing concentration of incomes is not desirable in a democratic society," Greenspan told a congressional panel in July.

It's a challenging environment for a new generation of civic leaders. One thing that unites the new leadership is a general awareness that the old models of urban rehabilitation don't work.

"When you start to look at several generations relying on welfare, it's safe to say that welfare is not a viable option or solution for helping people climb out of poverty," said Nettles, who calls himself "a poor black kid from Milwaukee," but one who earned a law degree.

In an age of record federal deficits, few expect relief from taxpayer-funded programs. And with an abundance of cheap labor in Mexico and China, no one expects to lure major new factories to Milwaukee and re-create the old model of big industrial combines.

More than ever before, America's urban communities are left to their own devices in a global economy that rewards the strong and agile at the expense of those who stand still.

In this hypercompetitive environment, the seeds for Milwaukee's rejuvenation are being sown.

NOTE: The statistics included in this story and the accompanying graphics come from a variety of federal and state reports released since 1960 on the social and economic conditions in Milwaukee, other major cities and the United States. In developing this report, Journal Sentinel database editor Mark Maley analyzed data on jobs, income, education, poverty and other areas from the U.S. Census Bureau, the Bureau of Labor Statistics, the Wisconsin Department of Workforce Development and other government agencies.

From the Dec. 5, 2004, editions of the Milwaukee Journal Sentinel

[Whispering Smith]

"Mercantilist nations" What does this term mean? It appears to be central to your discussion and I'll need to understand it prior to structuring a reply.

[WRhine]

"Mercantilist nations" What does this term mean? It appears to be central to your discussion and I'll need to understand it prior to structuring a reply.

Mercantilist nations are those nations that erect trade barriers, subsidies and other protectionist measures to shield their industries from international competition while pursuing export "dumping" policies (selling at or below cost) to destroy and take over industries of the nations they export to.

Exhibit A: China. Exhibit B: Japan. China is just taking Japan's trade mercantilism to new heights.

Does this sound like "free trade"?

[Chummy]

"...a production manager/ME manager...worked in 5 different manufacturing plants in the Mke area.

"FOUR of the five plants had outstanding labor relations with unions--no problems whatsoever. (emphasis added)

"Painting with a broad brush is not real smart...."

I concur.

Offering as an example five manufacturing plants in one area, one plant of which had apparent labor relations troubles, is also "painting with a broad brush", is it not?

I did not mean to suggest the problem be tied to "labor relations" per se but rather more with the challenges of trying to manage in the 21st Century while having to deal with a dinosaur that too often is the union-controlled dictates one finds in such workplaces.

Right, wrong or indifferent, did businesses not consider relocating facilities or other means of reducing labor costs, particularly those which may be higher in an environment in which a labor union represents its workforce?

Even in a swath of color placed by a broad brush one may find details that stand apart from the underlying tones.

[ninenot]

As a matter of fact, several of the Allis-Chalmers businesses moved to Southern plants (non-union). Many other firms have moved manufacturing to the South, or Mexico (e.g., Evinrude/Johnson) and have abandoned Mexico for PRChina.

I can name dozens of other Wisconsin businesses who have mirror plants (some smaller) in Mexico and/or China--or who have plants ONLY in Mexico or China--or just China.

One can legitimately argue that unions have caused trouble (and still do in some places, notably Detroit.) One can legitimately argue that enviro, safety, wage/hour, pension, and health-care costs are high in the US.

What one can NOT argue is this: PRChina is hellbent to eviscerate the manufacturing sector in the USA, and is doing a good job of it, while the Bush Administration sleeps.

Meantime, if you think that you could reduce the enviro, safety, health-care, pension, or tax burdens placed on American industry--propose a plan!

No doubt it will get through Congress quickly, right?

[Whispering Smith]

"Mercantilist nations"
Do you have a reference I could read on this subject? I thought merchantilism featured a vertically integrated mother country to and from colony trade structure. Not predatory monopolistic policies you are describing.

[WRhine]

Do you have a reference I could read on this subject? I thought merchantilism featured a vertically integrated mother country to and from colony trade structure. Not predatory monopolistic policies you are describing.

That probably is the truest definition of mercantilist. The term today is often used to describe nations that follow predatory trade practices to help build their industry at the expense of a host country. Try googling for more details.

[Whispering Smith]

I googled. This is what I got. http://www.infoplease.com/ce6/bus/A0832738.html
Looks like I was wrong. Merchantalist nations were apparently obsessed with the balance of trade. However, with captive colonies you could probably assure a positive balance of trade.