I am new to Blogger, but thought I would get things started while I figure out how to use Blogger, by posting an article that I published previously (12/20/2012) on the Urbanophile website. A link to the original article, where you can also view 36 comments that were posted on the article by readers, is provided below.
Milwaukee's Relationship with the Chicago Mega-City
I was intrigued by Aaron Renn’s recent post “
Don’t
Fly Too Close to the Sun Piece” which focused on the relationship between
Milwaukee and Chicago and the notion of whether “proximity to Chicago or another
mega-city represents an unambiguous good,” or – as posited by Aaron – may
actually be more of a curse than a blessing, and something that drains vitality
instead of increasing it. This is a topic that interests me both from the
perspective of a long-time resident of Milwaukee and as a long-time fan of the
City of Chicago. There are likely unique combinations of factors to consider in
this type of evaluation for every city pair – including the distance between the
cities, the presence or absence of high speed and/or low cost transit options
between the cities, and the relative size.
Although I did not comment on Aaron’s
post at the time of publication, I thought it would be useful to consider some
specific examples of ways in which Chicago enhances or decreases Milwaukee’s
economic vitality as both the article and many of the comments on
Milwaukee-Chicago and other city pairs, seemed to lack specific examples of both
positive and negative impacts.
I will begin by presenting several examples of ways in which Chicago’s
proximity appears to negatively impact Milwaukee’s economic vitality. I will
then consider the impact of Chicago’s proximity on professional services, which
Aaron evaluated in his recent series of articles on Chicago as a potential key
growth area for Chicago’s economic future. Finally, I will conclude with
examples of ways in which I believe Chicago’s proximity adds to Milwaukee’s
economic vitality and/or quality of life.
Ways in Which Chicago Drains Vitality from Milwaukee
1.
Competition for High End Specialty Retailers and Restaurants. The
first specific example of a way in which Chicago drains economic vitality from
Milwaukee is in the competition for certain types of high end retailers or
restaurant chains that have a national presence, but one that is limited to
perhaps 30 or 40 locations. When I travel to other Midwestern cities that are
more geographically isolated or more dominant in their geographic region (such
as Kansas City or Indianapolis) I am usually surprised by the number of high end
specialty stores or restaurants that have a presence in those cities but none in
Milwaukee. Chicago’s proximity is almost certainly a major factor in this
dynamic, and a perception (rightly or wrongly) that either the business can’t
sustain two locations in SE Wisconsin/NE Illinois, that residents in Milwaukee
could be served by a Chicago location. A good recent example was the
announcement approximately two weeks ago that: (a) Nordstrom is planning to open
a store in Milwaukee in 2013, and (b) Milwaukee is the largest city in the U.S.
that does not currently have a Nordstrom store. Chicago is almost certainly a
major factor in Milwaukee’s status as the last metropolitan area of its size to
get a Nordstrom store.
In researching this point, I came across a research article titled “
Can We Have a High-End Retail Department Store? How to Tell if Your
Region is Ready” which presented a formula for predicting the number of high
end department stores (defined as Macy’s Bloomingdales, Nordstrom, Neiman
Marcus, and Saks) that could be supported in a metropolitan area based on its
population, land area, and the percentage of households with at least $150,000
of income per year. Although the article did not present the findings for
Milwaukee, I followed the researcher’s definition of high end department stores,
and reviewed the current number of locations for these five stores that are in
Chicago, Milwaukee, and several peer Midwestern metropolitan areas, using data
available at
www.mystore411.com. The
findings generally confirmed my impression that Milwaukee is underserved by high
end department stores – with 38 of these stores being located in the Chicago
metropolitan area, 8 in both Kansas City and Columbus, 6 in Indianapolis, but
only 2 in Milwaukee. Although the research study did not consider proximity of a
metropolitan area to a neighboring larger metropolitan area, I think it likely
that this is a factor, and one in which Chicago’s proximity negatively impacts
Milwaukee.
(
Editor's note: In 2014, Milwaukee gained both a Nordstrom Rack and a Saks Fifth Ave Off 5th store which opened at the Mayfair Collection in Wauwatosa. A full service Nordstrom store is under construction and scheduled to open at Mayfair Mall on 10/23/2015).
2.
Competition for Federal Offices Another example where I believe
Milwaukee loses out economically due to its proximity to Chicago is in serving
as a location for regional federal offices. I know this from personal experience
in developing business plans for pursuing federal work, and discovering that in
terms of regional facilities (versus those that are present in nearly every
major city such as postal service, federal courts, social security offices,
etc.), Milwaukee is pretty much limited to a Forestry Service Regional Office
and a Veterans Administration Regional Headquarters. Although I don’t have any
detailed data to back me up, I did review the locations of regional offices for
five agencies, including the IRS, U.S. Army Corps of Engineers (USACE), U.S.
EPA, Small Business Administration (SBA), and the Federal Reserve Bank (FRB),
and determined that Chicago has regional offices for 4 of these 5 agencies (the
USACE, U.S.EPA, FRB, and SBA). Among peer cities, Kansas City has regional
offices for all five agencies, followed by Minneapolis/St. Paul (with regional
offices for three agencies); and Cincinnati, Memphis, and St. Louis (each having
two regional offices for these agencies).
What this means economically varies from agency to agency, but for Kansas
City, the office for the IRS regional service center reportedly occupies an
11-story building with 900 employees (based on data from Emporis). In addition
to direct economic benefits to cities that host a greater number of regional
federal offices, there are likely significant indirect benefits as well, as
consulting firms are more likely to establish locations in cities that host
federal regional offices, as there are benefits to engineering firms from being
in the same cities as USACE regional offices, benefits to accounting firms from
being near IRS regional offices, benefits to financial firms being near FRB
regional branch offices, etc. Although there may be other major cities in the
Midwest that are also losing out in the competition for regional federal
offices, I believe that Chicago’s proximity puts Milwaukee at a particular
disadvantage, and my impression is that on a per capita basis, Milwaukee has
fewer federal offices than almost any of its peer cities.
3.
Ranking as a Metropolitan Area A third example of a possible
negative impact from Chicago’s proximity on Milwaukee’s economic vitality
occurred to me as I was researching the example presented above on the
competition for high end retailers. In trying to confirm that the Indianapolis
and Kansas City metropolitan areas are in fact comparable in size to Milwaukee,
I noticed that both are ranked ahead of Milwaukee – with Kansas City currently
ranked as the 29th largest metropolitan area (with 2,052,676 residents) and
Indianapolis ranked as the 35th largest metropolitan area (with 1,778,568
residents) versus the Milwaukee-Waukesha-West Allis MSA’s ranking as the 39th
largest metropolitan area (with 1,562,216 residents). This size difference could
provide an explanation as to why Milwaukee would be chosen after these cities as
a regional location for certain businesses.
However, Milwaukee’s ranking below Indianapolis and Kansas City is arguably
more of a statistical artifact than reality, and due to Chicago’s proximity and
the manner in which the U.S. Office of Management and Budget choses to split the
two metropolitan areas. Indianapolis and Kansas City, which are more
geographically isolated than Milwaukee, have MSAs that extend over approximately
3,200 and 8,000 square miles, respectively, whereas the Milwaukee-Waukesha-West
Allis MSA is defined as a much more compact 1,500 square mile area. If Chicago
was not located in as close proximity to Milwaukee, Racine and Kenosha Counties
would almost certainly be included as part of the Milwaukee MSA. Adding the
361,000 residents in Racine County (defined as a separate metropolitan area) and
Kenosha County (defined as part of the Chicago MSA) would result in a Milwaukee
metropolitan population of 1,920,000 residents in a land area of 2,100 square
miles – in theory, a market greater in population than Indianapolis and only 5%
smaller than Kansas City, in a far more compact land area than either MSA.
Competition for Service Businesses
A fourth potential negative influence of Chicago on Milwaukee’s economic
vitality that I considered (but rejected) is the competition for serving as a
location for professional service firms. I considered this factor partly in
response to Aaron’s recent series of articles on Chicago, which noted Chicago’s
status as the Midwestern center for professional services such as management
consulting, technology consulting, business process outsourcing and legal
services. In theory, large firms with greater resources based in Chicago might
out compete smaller firms based in Milwaukee. While I am not familiar with all
categories of professional services, for law and engineering firms with which I
am familiar, Chicago’s proximity and large pool of major firms appears to have
no negative impact on the vitality of similar firms based in Milwaukee. This is
probably most surprising with law firms, given that Chicago not only has 17 of
the top 250 largest law firms in the U.S., but has an even more impressive 5 of
the top 13 firms (based on data at
Internet Legal Research Group).
Milwaukee has 5 of the top 250 firms (including Foley and Lardner at No. 29),
which not only compares favorably with Chicago on a per capita basis, but
compares even more favorably with cities such as Charlotte (with 2 of the top
250 firms), Cincinnati (3 firms), Columbus (2 firms), Indianapolis (3 firms),
Kansas City (4 firms), and even Houston (5 firms). None of these cities has a
firm ranked as highly as Foley and Lardner at 29. The main point is that in
spite of the incredible concentration of major law firms in Chicago, there is no
evidence that this has negatively impacted Milwaukee’s vitality as a center for
legal services. The fact that this is the case is significant for Milwaukee’s
downtown, as nearly every major office building proposed or constructed in the
last decade in the downtown had one of these major law firms as its anchor
tenant.
Examples of Ways in Which Chicago Increases Vitality
Having considered some of the ways in which Chicago’s proximity drains
vitality from Milwaukee, following are several examples of significant ways in
which I believe Chicago increases Milwaukee’s economic vitality and/or the
quality of life for residents of Milwaukee:
1.
Enhanced Travel Connectivity. It takes 60 minutes to drive from
downtown Milwaukee to O’Hare International Airport. For all intents and
purposes, residents of Milwaukee have two airports – one (General Mitchell
International Airport) that is 10 minutes from downtown, and the other (O’Hare)
that is 60 minutes from downtown. Which airport is used for a particular flight
is a choice made by Milwaukee residents on a flight by flight basis, based on
the most favorable combination of price, availability of direct flights, and/or
preferred departure or arrival times. Quite often, General Mitchell
International Airport is the choice because similar flights from the same
airlines are actually cheaper than from O’Hare (a competitive pricing factor
that is almost certainly due to the Chicago’s proximity and the presence of
O’Hare as an alternative airport for Milwaukee residents). Even excluding Midway
Airport from the discussion (which is appropriate as Midway is not convenient
for routine use by residents of Milwaukee), Milwaukee residents through the
combination of General Mitchell International Airport and O’Hare have better air
travel options than residents of almost any other major metro area in the U.S.
(New York City, Chicago, and perhaps Atlanta, being possible exceptions).
Another benefit related to air travel that Milwaukee residents take for granted
is the convenience for visits by friends from other countries. Chicago will
almost always be one of the lower cost U.S. travel options for foreign
travelers.
2.
Enhanced Entertainment and Recreational Amenities/Opportunities. It
is nice to be located adjacent to a city that has some of the best museums and
cultural institutions in the US. Although there is some inconvenience in driving
90 minutes to downtown Chicago, there is the option to take Amtrak, or even
Metra ($5 from Kenosha). I’ve thought about this when visiting geographically
isolated cities with great (and often deserved) reputations such as Denver, Salt
Lake City, Phoenix, Seattle, etc. I would even add some sizeable (>5 million
resident) metro areas to the list such Miami, Dallas, and Atlanta. The cultural
attractions in these cities do not match those present in Chicago, such as the
Museum of Science and Industry, the Field Museum of Natural History, or the
Chicago Art Institute. For friends and family travelling from other countries, a
trip to Milwaukee means they get a trip Chicago thrown in for free. It also
means that these visitors will never run out of interesting places to explore
available through the combined attractions in Milwaukee and Chicago. For
visitors to other even fairly large metro areas in the U.S., the entertainment
options for out-of-town visitors will typically be exhausted within a week or
less. Not so in Milwaukee, thanks to Chicago. This is a quality of life factor
more than an economic vitality factor, but one that should be a consideration in
businesses trying to recruit employees from other major metropolitan areas to
Milwaukee. Although I think Milwaukee has a pretty large and attractive set of
amenities on its own, due to the proximity of Chicago and the amenities
available in our mega-city’s “southern” downtown, residents in Milwaukee have
access to amenities that are matched by few cities in the world, and this has
economic value in the increasing competition for highly skilled and mobile
workers.
3.
Enhanced Business Expansion Opportunities. For businesses based in
Milwaukee, having a metro area with 9.5 million residents an hour away is a
significant plus. For entrepreneurs based in Milwaukee, Chicago presents an
exceptional opportunity for expansion, as the cities are close enough together
that it is possible for someone living in the Milwaukee area to oversee branch
offices or locations in both the Milwaukee and Chicago metropolitan areas.
Although one could argue that businesses in Milwaukee have additional
competition from businesses in Chicago, this type of analysis varies greatly
from business to business with no consistent rule. For major businesses located
in Milwaukee, if they need access to some very specialized consulting expertise,
if it isn’t available from firms based in Milwaukee, it will almost certainly be
available from one or more firms based in Chicago, providing a very deep
business support talent pool and a competitive advantage for firms based in
Milwaukee relative to those based in more geographically isolated cities.
4.
Enhanced Global Mindset. This is a little more subtle advantage,
and a quality of life enhancement versus an economic vitality enhancement. Even
if I don’t go to Chicago for several months, I like having Chicago nearby. I’m
conscious of it. It is definitely one of the reasons I like living in Milwaukee,
even if it is impossible to precisely quantify this aspect. In my mind, I always
know that I have all of Chicago’s assets readily available to me, whenever I
might feel inclined to “imbibe” (but without the hassle of actually having to
live in Chicago, as well as not having to live in a state that is currently
ranked 49th or 50th in most financial health measures). When I travel (and I
suspect this is the case for most people) I almost always measure the city I am
visiting in my mind to my hometown of Milwaukee. Whenever I visit some nice, but
geographically isolated metropolitan area, the quality of life in that city is
frequently downgraded in my mind as I can imagine how quickly the interest of
living in that city would wear off once I exhausted the list of unique
attractions in those cities. Chicago is a component of how I measure Milwaukee
against those cities, as all of its attractions are in fact readily accessible
to residents of Milwaukee. I suspect there are many other cities where a similar
dynamic plays out – such as for residents of Baltimore including the attractions
and opportunities available in Washington DC in their similar assessments.
5.
Increased Groundedness. This is a subtle point and one that
occurred to me only recently. Milwaukee is a city that definitely does not have
an inflated view of itself. I think part of this is the result of its proximity
to Chicago, and knowing that by a hundred different measures, Milwaukee does not
match Chicago. If there were fifty new 50-story skyscrapers constructed in
downtown Milwaukee over the next 100 years, I am pretty sure that our skyline
would still fall short of Chicago’s. I think there is a tendency of other
somewhat “successful” cities (Charlotte and Indianapolis come to mind) to always
be chasing some grand ambition. Although there are definitely positive aspects
to ambition, there can also be a tendency to pursue goals that really aren’t
important, as well as a greater reluctance to realistically address obvious
shortcomings. Milwaukee, through its proximity to Chicago, is relieved of this
aspirational burden, and can simply go about its business in a quiet, but
usually highly effective way.
