RNC bust shows that tourism and entertainment alone won't transform Milwaukee's economy

It’s now clear that the claims of an economic windfall for Milwaukee from the RNC were greatly exaggerated.

The failure to deliver for most small businesses and all but a few service workers, however, points to an even larger and longer-term failure by Milwaukee’s civic elite: until these leaders promote Community Benefits Agreements that guarantee living wages and the right to a union, economic development in our city will be thwarted by the extreme poverty of the working poor.

Gary Witt, President and CEO of the Pabst Theater Group, summed the RNC up in The Recombobulation Area: “It’s 100% a case of ‘overpromise, underdeliver,’ on all parts, by everybody.”

Tourism and entertainment alone will not revitalize Milwaukee

This is just the latest example of local leaders failed economic response to the deindustrialization and de-unionization that has ravaged the city and its people, a strategy that assumes increased tourism and entertainment alone will revitalize the city.

That strategy dates back to the late 1970’s when city leaders bought into real estate developer James Rouse’s vision of reviving downtowns as festive marketplaces. Accordingly, precious public resources were invested in the Grand Avenue Mall, which, like the RNC, failed to deliver on its promises. A study by the UWM Center of Economic Development’s Marc Levine found that most of the mall’s high paying jobs were held by people who lived outside the city while most of the jobs held by city residents paid poverty-level wages.

Despite the Grand Avenue’s failure, city residents were called on to subsidize the mall two additional times. Since then, significant taxpayer dollars have been invested in many other downtown projects including the redevelopment of the Pabst site, the Couture, several corporate headquarters relocations, and the Convention Center twice.

On one level, these projects are highly successful. Downtown and the Third Ward have thrived with condos, high-end apartments, restaurants and shops. The owners of these businesses, many from outside the city and state, have prospered.

But the vast majority of Milwaukee’s citizens can’t afford those apartments and restaurants. Milwaukee continues to be one of the poorest cities in the country and is consistently rated as one of the worst cities for African Americans on a range of measures.

The RNC illustrates why this approach has failed. While downtown and suburban hotels were filled and increased their revenues significantly by raising prices, we’re not aware of any of them sharing their largess by raising wages or offering bonuses to their employees. Trickle-down economics is a hoax, both in individual business sectors and the economy in general.  Yet, “trickle-down” clearly describes Milwaukee leaders’ approach to its loss of unionized manufacturing employment.

Union jobs key to reverse deep poverty in community

In 1969 Milwaukeeans enjoyed the nation’s second highest median household income. The Black poverty rate was 22% lower than the US average, and African American median family income was 19% higher than the median because 54% of black males were employed in manufacturing. The Wall Street Journal dubbed the city the “Star of the Snowbelt.” This was the product of high rates of unionization for workers laboring in Milwaukee’s foundries, tanneries, breweries, meatpacking plants, and at manufacturing firms like A.O. Smith and Master Lock.

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Now, almost all the city’s unionized manufacturing jobs are gone. Job growth is concentrated in the service and hospitality sectors with low wages, inadequate and unpredictable hours, and few if any benefits. As a result, while hundreds of millions of dollars invested in downtown Milwaukee have made ours a lovely, vibrant city to visit, we remain one of the nation’s poorest, plagued by racialized inequality.

This history and the RNC’s failure should point city leaders towards a different approach to economic revival. Luckily, we have a home-grown model to follow, and RNC delegates could have discovered it in the unlikely event that any of them asked the people serving them in the Deer District if they had a union and how it had affected their lives.

Milwaukee Bucks set a standard that should have been followed

The Milwaukee Bucks also received significant public funding that helped transform and energize downtown. However, unlike all the other downtown development projects, Bucks management signed a Community Benefits Agreement ensuring that the people who work in the district’s hourly-wage jobs benefited as well. Signed in 2016, the agreement established a wage floor of $15 an hour when the state minimum wage was a starvation-level $7.25. Even more important, the agreement included a fair process for union recognition and contract bargaining.

This ensured that in addition to Bucks owners and players, the district’s cooks, security guards, bartenders, housekeepers, ushers, and servers benefited as well. According to a study by the Center on Wisconsin Strategy, “Since 2020, wages have more than doubled for workers represented by MASH,” the Milwaukee Area Service and Hospitality Organization that represents workers in the Deer district. The study concludes that the contract “provided better benefits, more predictable scheduling, and longevity for hundreds of Milwaukee’s service workers.”

MASH even negotiated a contract supplement covering the week of the RNC, resulting in $4 per-hour wage premiums, an additional $2 per hour for late-night and early-morning hours, time-and-a-half pay after 8 hours in a day, and pay for the time workers spent in transit and security screening. A union contract channeled some of the convention money into the hands of MASH-represented service workers, while workers doing the same jobs in the rest of the area got nothing extra from the highly-subsidized RNC.

That’s the secret sauce for a new Milwaukee development model in the post-Rust Belt economy: union representation and strong contracts for service and hospitality workers.

In the 1920’s and early 30’s manufacturing jobs paid poverty-level wages just like most service workers get today. The Congress of Industrial Organizations changed this by organizing the nation’s industrial workers into unions that raised wages, won benefits, and established labor standards, turning low-wage insecure employment into stable, family-supporting jobs. This unionization was a major contributor to Milwaukee’s post World War II economic boom and to the great American middle-class expansion of the 1950’s and 60’s.

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Milwaukee leaders need to adopt the Deer District model for all future downtown projects. Community Benefits Agreements between developers, labor organizations, and community coalitions bring accountability to developers’ always-exaggerated promises of economic development and prosperity for cities.

While job quality in the construction industry is often the first consideration by labor leaders when contemplating development projects, the dynamic between MASH and the Bucks proves that corporations, politicians and unions must treat hospitality and service workers with the same respect and consideration if they hope to lead Milwaukee back to a middle-class city that works for all its citizens.

Michael Rosen (Economics) and Charlie Dee (American Studies) are retired faculty from Milwaukee Area Technical College and formerly were leaders of American Federation of Teachers Local 212.

This article originally appeared on Milwaukee Journal Sentinel: Until workers are paid decent wages, economic benefits won't appear