Income Inequality in Metro Milwaukee

The Occupy Wall Street demonstrations have sparked a public debate over income inequality that has spread across the nation and beyond. In Milwaukee, where the city’s poverty rate has ranked among the nation’s highest for several years, the issue of income inequality is a familiar one. Could it be, however, that the Milwaukee metropolitan area actually has slightly less income inequality than the U.S. as a whole, and if so, what does that mean?

A new report from the U.S. Census Bureau analyzes and ranks states, metro areas, and even neighborhoods in terms of how evenly income is divided among the population. The method used to rank each place, called the Gini measure, is a scale from zero to one in which a measure of zero means incomes are totally equal throughout a population, and a measure of one means 100% of that population’s income is concentrated in one household. Notably, while the Gini measure captures how income is distributed, it does not take into account factors such as the relative wealth of a population or the cost of living of each place.

According to the Census Bureau study, Wisconsin has one of the lowest levels of income inequality among U.S. states. The level of inequality within the Milwaukee metropolitan statistical area (MSA), which includes the counties of Milwaukee, Ozaukee, Washington, and Waukesha, is below that of the nation as a whole and in the middle of the pack when compared with the 50 other metro areas in the U.S. with populations of at least one million. Below is a breakdown of select metro areas on the list, including those at the extremes and Milwaukee’s regional peers. Each metro area’s poverty rate and percentage of households earning at least $200,000 are also included on the chart.

Income inequality in U.S. metro areas with populations over one million, 2005-2009 (51 total)

It’s difficult to determine how to interpret the Gini measures by themselves. Because of the small difference in Gini measures found between metro areas at the extreme ends of the scale, for example, metro Milwaukee does not appear to be much different from the New York or Salt Lake City metro areas. Indeed, all of the metro areas measured fall within what appears to be a relatively narrow range.

One might logically theorize that metro areas with higher Gini measures would have higher percentages of households at the extremes – both very high-income and very low-income. Based on the data on poverty and high-income households in the chart, the Milwaukee MSA has both a lower poverty rate and a lower percentage of high-income households compared with the New York metropolitan area and the U.S. as a whole, while the State of Wisconsin has lower rates than metro Milwaukee for both categories. But perhaps most interestingly, the combined percentages of people at the extremes (poverty rate plus percentage of high-income households) follows the Gini measures almost perfectly, as shown in the chart’s final column.

While these data invoke more questions than answers, several observations can be gleaned with regard to metro Milwaukee. First, while poverty in the city of Milwaukee is unacceptably high, the poverty rate for Milwaukee’s MSA is relatively average compared with other metro areas. Thus, poverty may be less concentrated in the central city of other metro areas compared with metro Milwaukee.

Second, the Milwaukee MSA has a relatively low percentage of high-income households compared with other metro areas and the nation as a whole. In addition to the data on the above chart, a recent study by the Brookings Institution shows that metro Milwaukee is not among the 54 U.S. metro areas whose share of very high-income households (>$200,000/year) exceeds their share of all households. Some might argue that metro Milwaukee’s relatively low level of high-income households puts us at an economic disadvantage because high-income households are those most likely to create desperately-needed jobs.

Third, if income inequality is at undesirable levels in general throughout the U.S., metro Milwaukee is not significantly different. Current research has shown that the richest 20% of Americans own approximately 84% of the nation’s wealth, and that Americans across divisions of race, gender, income, and political affiliation all would prefer less inequality.

Finally, since the data used in the Census Bureau report are from 2005-2009, both pre-recession and peak recession years are included. With the economy continuing to struggle, it will be interesting to see how these numbers change over time.

Escalating health challenges for inner city Milwaukee

Two recent reports have raised concerns about healthcare access for low-income Milwaukeeans. First, The Business Journal Serving Greater Milwaukee reported on Aurora Health Care’s relocation of orthopedic and heart surgeons from its Sinai Medical Center, located just west of downtown, to a new hospital in Grafton. The transfers have caused some to fear further service reductions at Sinai, particularly in light of the decades-long trend of hospital closures in the City of Milwaukee. Days after the Business Journal article, the Center for Urban Population Health (CUPH) released a report revealing entrenched health disparities among Milwaukee residents based on socioeconomic status. With state budget cuts to Medicaid as an additional hurdle on the horizon, are the healthcare challenges facing low-income Milwaukeean’s about to get even worse?

Since 1977, nine hospitals have closed in Milwaukee, including the 1995 closing of the county-owned John Doyne Hospital, which had long served as a safety net for the uninsured. Initially, these losses were tied to the city’s population decline, but the most recent closings – Northwest General in 2000 and St. Michael’s in 2006 – occurred despite a stabilization of the city’s population during the past decade. Another major factor that has been linked to hospital closings in the city is a dramatic increase in poverty, which has resulted in higher rates of publicly insured and uninsured residents.

Despite the fact that Sinai has operated at a loss nearly every year over the past decade, Aurora Health Care maintains it is committed to downtown Milwaukee. But with the state’s proposed $500 million in Medicaid cuts over the next two years, private hospitals may be faced with further cuts in Medicaid reimbursement and/or an increase of uninsured patients. The details of the state’s Medicaid budget have not been announced yet, but the BadgerCare Plus Core plan for childless adults had already instituted a waiting list long before budget debates began.

Milwaukee’s healthcare safety net for the uninsured has gone through several changes over the past 20 years. The county’s John Doyne Hospital served the uninsured free of charge until it was closed by county officials in 1995. To partially replace Doyne Hospital, Milwaukee County created the General Assistance Medical Program (GAMP), which provided health coverage for low-income, childless adults – the portion of Milwaukee County’s low-income population that didn’t qualify for Medicaid at the time. When the State of Wisconsin expanded BadgerCare in 2009 to cover childless adults, the GAMP program was eliminated. Consequently, if BadgerCare eligibility is now restricted in response to the state’s Medicaid funding gap, there will be no public safety net program to provide backup.

Milwaukee’s four federally qualified health centers (FQHCs), which provide primary care services to patients regardless of their ability to pay, fill an important role in serving the city’s uninsured. All four centers are expanding their operations and together may be positioned to take on additional patients in the near future. In addition, the downtown AIDS Resource Center of Wisconsin (ARCW) clinic is working to become a fifth primary care FQHC, which would allow it to serve many more patients. These are encouraging signs, but capacity constraints remain a concern at the FQHCs and continue to be a focus of the health system leaders who comprise the Milwaukee Health Care Partnership.

As the local impacts of the state’s Medicaid budget are revealed, there may be even greater strains on the regional healthcare system. A key question is whether Milwaukee policymakers and healthcare leaders will be able to respond as quickly and effectively as the demand for services may warrant.

Despite article, some areas in the region lack banks

From the sound of this week’s Journal Sentinel article entitled, “Bank branches proliferate in state,” our community streets are being practically taken over by bank branches. The president of Community Bankers of Wisconsin is quoted as saying “There’s no doubt Wisconsin is very bank-heavy.” But count the banks in certain areas of Milwaukee, and you get a decidedly different story.

A report released just two weeks ago highlights the marked lack of banking options in northwest Milwaukee. The Federal Reserve and Brookings Institution report, “The Enduring Challenge of Concentrated Poverty in America,” includes case studies from 16 high-poverty communities across the country, each chosen to illustrate different facets of the poverty story.

The boundaries of the Milwaukee area they studied were based on Census data tracts. With a poverty rate nearly five times that of the rest of Milwaukee’s Metropolitan Statistical Area (MSA), the area includes all or part of the Sherman Park, Metcalfe Park, Uptown, Washington Park, Walnut Hill, Midtown, Martin Drive, and Cold Spring Park neighborhoods, covering parts of the zip codes 53205, 53206, 53208, 53210, and 53233.

This northwest area of Milwaukee, with over 23,000 residents, has just two bank branches (three banks lie just over borders of the study area). The area, however, is heavily populated with nontraditional financial service providers such as currency exchanges, check cashing, pawnshops, and payday lenders.

The report explains that an absence of basic banking services is linked to higher costs for financial transactions for working class and minority communities. While traditional financial institutions provide residents with access to cash, savings and capital, conducting financial transactions through nontraditional providers not only costs more, the report claims, but offers fewer ways to save money and plan for long-term financial management.

Residents in northwest Milwaukee are also likely to pay more for credit: In 2005, 65% of the area’s mortgages originated as sub-prime or other high-cost loans, compared to 26% in Milwaukee’s MSA.

The report identifies the myriad challenges related to concentrated poverty facing northwest Milwaukee, including high rates of returning ex-offenders, unemployment, and jobs that disappeared or moved to the suburbs. Local nonprofit programs working to improve the area are also highlighted along with some noteworthy successes.

While the newspaper quotes a Franklin resident exclaiming “Not another bank!,” the article’s juxtaposition with the recent Brookings Institution report underscores one of the many differences between inner city Milwaukee and other areas of southeastern Wisconsin.