An agenda for the Federal Reserve’s review of its monetary policy framework


An agenda for the Federal Reserve’s review of its monetary policy framework



To Build a Middle Class, Improve Quality of Life

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Rebecca Sohmer
Rebecca Sohmer Senior Research Analyst

June 16, 2004

Buffalo, St. Louis and Miami. Sounds like a list from the old bit on Sesame Street. One of these things is not like the others, indeed. But which one doesn’t belong?

Perhaps if you judge by amenities—Miami’s beaches, climate and culture attract more than 10 million visitors annually—South Florida’s largest city doesn’t deserve to be grouped with beleaguered Buffalo and St. Louis.

But some other numbers place Miami squarely in league with those Rust Belt brethren.

Additional Resources Growing the Middle Class: Connecting All Miami-Dade Residents to Economic Opportunity
PowerPoint Presentation
Living Cities Census Series

Like those two other cities, Miami is poor. Of the 100 biggest U.S. cities, Miami is the poorest. But beyond its poverty problem, Miami has a middle-class problem as well.

Miami has a proportionally smaller middle class than either Buffalo or St. Louis, and a smaller share of its households makes a middle-class income today than 20 years ago.

A new report from the Brookings Institution, “Growing the Middle Class: Connecting All Miami-Dade Residents to Economic Opportunity,” details the sweeping ramifications and origins of Miami’s meager middle class for both the city and the county.

It is stark reading.

  • Miami’s economy pays lower wages than other cities around the country, while its housing costs, both for renters and buyers, are high.
  • Miami is less educated than the national average. Only 16.2 percent of residents over 25 have completed higher education, ranking 94th out of the 100 largest U.S. cities. As a whole, Miami-Dade County ranks 85th out of the 100 biggest counties on higher education.

And education is a key ”tell,” as stockbrokers and card sharks would say, on economic health: It tells business and institutions how and where to bet. The result is jobs and tax revenues and the ripple effect of those investments. (Hint: New $325 million baseball stadiums are generally not part of this equation.)

Many of these bleak trends are all subject to, or products of, policy. The fact is that the city of Miami does create wealth. It is not a statically poor place. Beneath the veneer of the lousy statistics is the churn of immigration, small-business creation and the pursuit of a better life. Though immigration does explain some of the low-income numbers, it doesn’t explain the whole story.

Once immigrants establish themselves in Miami, grabbing a rung on the ladder to the middle class, they often leave. Between 1995 and 2000, more than 300,000 people left Miami-Dade County. Adjacent Broward County was the most popular destination for these movers. Those who moved to Broward, about 90,000 people, were diverse both racially and by country of birth, more highly educated than average and tended to be in the top half of the income distribution of the entire Miami-Fort Lauderdale metropolitan area.

In essence, middle-class people are moving from Miami-Dade to Broward. The question for the city of Miami, and the county, is how to keep them and build upon them. In that regard, the Brookings report outlines some key policy directions.

Already, the Greater Miami Prosperity Campaign is working to better connect working families with existing benefits—the Earned Income Tax Credit, the State Children’s Health Insurance Program, etc.—to give them a boost upward. Miami Dade College, too, serves as a stepping-stone for many, graduating more associate degree holders than any other community college in the nation.

These efforts must be maintained and expanded upon, creating a concerted policy for enlarging the middle class. For example, increasing access to mainstream financial institutions, such as banks and credit unions instead of check-cashing stores, helps build wealth and frees workers from exorbitantly high fees.

Because of the sheer geographic size of the region, more attention has to be paid to transportation so that people and jobs can connect more easily.

By working on the ”push factors” that lead to relocation and building quality neighborhoods that keep people in place, Miami and Miami-Dade can retain and grow their middle class, birthing a place where more people truly belong.