Economy

The Early Years

In many ways Milwaukee is a metropolitan area typical of the industrial Midwest. The arc of its development and growth mirrors the arc of other cities in the region, including Chicago, Cleveland, and Detroit. Milwaukee had its beginnings in the 1830s when a few settlers established residence on the western banks of Lake Michigan.[1] At the time of its settlement Milwaukee lay in the outermost territories of the United States, the Michigan Territory, and it would not be until 1848 that the state of Wisconsin was established. Various people were important in its earliest years, among them Solomon Juneau, Morgan Martin, and Byron Kilbourn, all of whom were very ambitious young men.[2] Juneau specialized in the trading of furs with the local Indians while Kilbourn became more involved in the development of commerce and especially railroads in the region.[3]

The economic development of the small village initially took place very slowly. More people came into the area, and settled in and around the area’s two major rivers—the Menomonee and the Milwaukee—that flowed into Lake Michigan. In the 1850s and 1860s, as in other places in the Midwest, the pace of growth picked up markedly. By 1862 Milwaukee had become a leading grain center in the nation, taking advantage of the nearby farmlands as well as its location on the banks of Lake Michigan.[4] For example, in 1845 95,510 bushels of grain were exported from Milwaukee. Just fifteen years later the city exported 7,568,608 bushels of wheat, cementing its position as the leading exporter of wheat in the country. Countless new settlers entered the region, many coming from the regions of Germany where various political revolts and revolutions had taken place in the late 1840s. Among those prominent in this first wave of German immigration were a number of people who would become central to the economic growth of the area. They included men like Franz Falk, August Krug, and Frederick Pabst. These men plus others brought with them the skills and crafts they had learned in Germany. They were especially adept and interested in brewing as well as in the sale and manufacture of leather goods. Milwaukee provided a natural home for their talents. Other figures came as well during this early period, among them a Scottish immigrant, Alexander Mitchell, who became a major banker and spearheaded the growth of railroads both in Milwaukee and Chicago.[5]

The Industrial Boom

By the 1860s an entrepreneurial spirit clearly had gained a foothold in the small village. It was during this time that a number of other key figures settled in the area. They included people like Guido Pfister and Frederick Vogel, who soon would become partners in the manufacture of leather goods in the city, and also a young Edward Allis, who would help to found the eventual industrial powerhouse, Allis-Chalmers.[6] As happens today in so many expanding urban centers, a certain economic synergy came to be characteristic of the principal figures settling in the town. Other new firms were established as well, including those that built equipment for related industries, such as textiles, leather, and metal-bending. Momentum and the growth of the specific plants soon drew in greater numbers of immigrants, many of whom sought escape from poverty and politics in Europe. Many were Germans, making Milwaukee, as the historian Kathleen Conzen noted, the “German Athens” of the United States.[7] Eventually such groups laid the groundwork for a rich and vibrant cultural life in the German community of Milwaukee. But other nationality groups from Europe entered as well, including many from Poland, Scotland, and Ireland. Milwaukee would become a mix of peoples from across Europe. And over time Milwaukee expanded from merely a small village approaching two thousand people in 1840 into a thriving urban area of 285,315 by 1900.

As in other urban industrial centers in the Midwest like Chicago, the period roughly dating from 1870 to 1920 represents the heyday of industrial expansion for Milwaukee. Allis-Chalmers, for example, helped to spawn the development of businesses in allied industries. The firm developed cranes that originally were powered by a system of ropes. New technology was developed that led to the creation of electric motors for the cranes, and eventually this led to the creation of a new company, Pawling & Harnischfeger. Labor-saving technologies were introduced by other industries across the city, especially during the 1870s.[8] Firms also arose for the tanning of leather goods as well as for new forms of heavy machinery. The goods produced in Milwaukee eventually were shipped not only to other sites in the United States but in some instances to countries abroad that required heavy machinery for their own construction projects.

With the continuing influx of more and more immigrants to the area, a sizeable class of laborers grew too. Many of these early migrants came from Germany as well as areas now known as Poland. They were lured by expansion of manufacturing jobs—especially after the 1870s—that were to be found in the plants producing beer, leather goods and electrical motors. Workers lived near the plants in the central city along the banks of the rivers, and a sizeable number of laborers lived in homes and cottages that arose in and around the downtown area.[9] Simultaneously a radical brand of European politics—that of the Social Democrats—took root. Two recent immigrants, in particular—Victor and Meta Berger—became the leaders of this new brand of revolutionary politics, each contributing in important ways to the growth of the city’s economic and political infrastructure.[10] Meta Berger, for example, took a strong interest in the educational opportunities for Milwaukee’s young people. The burgeoning Socialist movement began to color the politics of Milwaukee deeply red, leading it to become one of the only cities in America that would elect a Social Democrat as mayor over the course of almost a half-century—from the election of Daniel Hoan in 1916 to that of Frank Zeidler in the 1940s and 1950s.

By the early years of the twentieth century Milwaukee had risen to become a major industrial center in the United States—actually by some metrics, like that of the value-added measure of the economy, ranking as one of the top ten to fifteen such centers.[11] Times were good, local industries were booming, and it looked as though the future would be extremely bright for the city and its residents. Companies like Allis-Chalmers and Pawling & Harnischfeger ranked as some of the very best in America.[12] But then, as in the case of so many other urban places in the United States, events outside of the city’s own control intervened. World War I helped to enhance the fortunes of the city’s manufacturing industries, but it also began to reshape the local ethnic landscape. The Germans, for example, who had until that time been so influential for the economic fortunes of the city, now came under some attack because of their suspected sympathies for the German war effort abroad and were compelled to rebrand their local institutions in ways making them more acceptable to their fellow Americans.

The Great Depression and World War II

The years of the Great Depression, from 1929 through the 1930s, affected the lives of Milwaukee residents in dramatic ways. In a very short period of time, the city lost a great number of jobs in manufacturing. By 1933 the number of wage earners numbered 66,000, a decline of 50,000 jobs since 1929.[13] As in other industrial centers, deep splits broke out, and in Milwaukee they likely were exacerbated by the political divisions already evident between the Social Democrats and the wealthier conservative segments of the population. Socialism in Milwaukee and the effort to improve the fortunes of many in the working classes of the city gained some added momentum during the 1930s. Various riots and strikes took place on the streets of the city, only deepening the divisions and adding to the despair of many. One report by Frank Sinclair in the Milwaukee Journal noted that between January 1, 1934 and October 1935 there had been a total of 138 strikes in Milwaukee involving 30,000 workers.[14] In retrospect, it seems, if there were a particular historic moment when the fortunes of the city began to sour this was the moment.

A temporary halt to the clashes between classes—and to the declining fortunes of all—came in the form of World War Two, and the demand for machinery and the instruments of war that could easily be produced by such local manufacturing firms as Allis-Chalmers. For example, by 1944 Milwaukee plants, like Allis-Chalmers, benefited from defense contracts that totaled over $2 billion, up sharply from only a few years earlier.[15] The war effort became a boon to local residents, putting people back to work and reviving the fortunes of many. The effort was not merely something that enhanced the economy but it also fashioned important social bonds and brought people together in ways that the economy had not. The strong sense of local well-being and revived good fortune continued in the period immediately after the war. Veterans came home and were now able to gain low-interest federal loans on new housing that sprang up in the areas surrounding the city of Milwaukee.[16] A host of such small suburbs began to appear in the 1940s and 1950s, in places like Brookfield, among others. The exodus from the city to its outer regions had been unleashed and would only accelerate in coming years. For example, at its peak in 1960 the central city counted 741,324 residents and 408,6773 in the rest of the metropolitan area. By 2000 the comparative size of the two areas had become reversed: only 596,974 people resided in the central city while 711,939 lived in the outlying areas of the metropolitan region.

Industrial Decline

The 1960s was a time of deep and seemingly irrevocable changes in Milwaukee and its region. A number of local firms came to face fierce competition from the emerging economies of Japan, Korea, and Taiwan. As those fast-rising economies grew, they not only produced goods that would rival the quality of those in the United States, but their labor costs were considerably lower than in cities like Milwaukee. Among other things, such countries possessed no labor unions and thus the costs of production were considerably less.[17] Companies that had anchored the Milwaukee economy soon began to pull up roots. If they wished to survive, they were compelled to move to other places in the United States where no unions existed, as Schlitz Brewery did by moving to Dallas, Texas in the 1950s. Some did not, as for example the Albert Trostel & Sons leather company: it simply decided to close its doors for good.[18] All told, Milwaukee lost a total of 42,000 manufacturing jobs between 1960 and 1973; and the percentage of the workforce holding jobs in manufacturing would be cut almost in half, from 42 to 23 per cent by 1990.[19] Replacement jobs typically occurred in the service sector, in which the average hourly pay was considerably less than that in manufacturing.

Coupled with these losses there was a continuing decline in manufacturing production and in manufacturing jobs across the region. Beyond that the loss of such industries resulted in a growing population of older people who could no longer find employment. Some companies that left the city pleaded that they simply had insufficient funds to pay pensions to their older workers, and some of those companies, like Pabst, simply refused to do so. Thus by the 1980s Milwaukee was a city facing several key challenges to its future: a growing population of impoverished residents living in the central city; a sharp loss in the well-paying jobs in manufacturing; a growth in the segregation of the poor from the more advantaged classes of people moving and settling into the suburbs; and a deepening tension between the wealthier and poorer residents of the city.[20] These changes were evident as well in the racial make-up of the local public schools, soon leading to legal challenges to school segregation as well as to protests on the streets of Milwaukee in the 1960s led by Father James Groppi.[21]

On top of these challenges the city also was facing the issue evident in the broad demographic shifts of the population nationwide. More and more people were leaving the Rustbelt, as it became called, and moving to the Sunbelt, to cities in California, Florida and Texas, among others.[22] Here the real challenge for the city lay in the number of young people who were moving away and finding opportunities in cities like Dallas, or Atlanta, or Raleigh-Durham. Such cities, lacking the kind of industrial past of Milwaukee, were far more able to make the transition to the new post-industrial economy easily and quickly.

Nevertheless, the city housed some important institutions that could help the rebuilding effort and take it forward into the post-industrial economy. For one thing, it possessed two fine universities—Marquette as well as the University of Wisconsin-Milwaukee—that educated new generations of young residents. These schools not only furnished educational opportunities but also a means for retaining young talent. As Robert Bishop, Dean of Engineering at Marquette University, recently observed, “it is my sense that we need to build an intellectual community in Milwaukee that is attractive to businesses, that would make them want to move here. And that means that it’s got to be us and [the Milwaukee School of Engineering] and [the University of Wisconsin-Milwaukee] and the technical colleges all working together.”[23] Yet it is worth noting that these schools could not rival those in some of the faster growing urban centers in the Midwest. For example, the University of Minnesota in Minneapolis was a far larger and more important anchor to the economy of that region. And the University of Wisconsin-Madison, always a rival to the University of Wisconsin-Milwaukee, helped to anchor the explosive growth of new industries and the retention of talent in Madison.

Looking Forward

Today it is abundantly clear that Milwaukee lies at a very critical juncture in the development of its economy. The central city itself continues to lose jobs while seemingly all the new jobs have become available in the outlying areas of the metropolis. The degree of racial segregation ranks as one of the worst, if not the worst in the United States.[24] Large numbers of African-Americans in the central city live in poverty, and, as economists note, such poverty coupled with the limited levels of educational achievement are a severe drag on local economies.[25] Milwaukee’s leaders, like Mayor Tom Barrett, are nevertheless optimistic that Milwaukee’s economy eventually can be revived, and they have turned, for example, to economic strategies that rely on the development of the entire region as a means of jump-starting Milwaukee’s efforts.[26] Longtime observers of the Midwest like Richard Longworth praise these efforts as a step in the right direction.[27]

Local leaders obviously are keenly aware of the challenges they face. They must retain more of the young people who have left to pursue their fortunes elsewhere. And they must work hard to develop the local culture and the elements of a creative economy that are so attractive to young people. Various reports underscore the importance of these and other measures as a means of reviving local fortunes.[28] Moreover there has been a new effort to exploit the local water resources in the area as a means of tapping into the region’s natural strengths. Clearly such a strategy mimics an earlier economic era when, drawing on its natural advantages and resources, Milwaukee rose to become one of the leading manufacturing centers in the United States.

Furthermore, there are some urban success stories that Milwaukee could try to emulate. Buffalo is an example of an older industrial city that has begun to turn around its fortunes by relying on the development of new forms of wind turbine technology that benefit from the winds blowing off Lake Erie.[29] Milwaukee clearly is in a similar position to take advantage of its location along the shores of Lake Michigan. In addition, the city has already taken certain other steps to improve the fortunes of its central city. The spectacular addition to the Milwaukee Art Museum designed by Santiago Calatrava attracts thousands of people annually to the city. And the old downtown area itself has become radically transformed over time, now a lively place of small shops and restaurants plus upscale residences in buildings that once housed the smokestack industries of Milwaukee—all of which should increase the vital foot traffic and the popularity of living in the heart of the city.

Given the transformation of the American economy from one based on industry to one based on new technologies, the future of Milwaukee clearly lies in its ability to attract but also to nurture its own talent. Part and parcel of that effort must be a clear and widely embraced plan to educate and to furnish the job skills—as well as the jobs—for the many poor black residents living in the city. Unless some such effort is made to do so, Milwaukee’s general economy is likely to stall, if not continue its decline of recent decades. Surely the grandeur of its industrial past can serve as inspiration for the economic ambitions of Milwaukee’s future.