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Third World America

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There are 12.7 million jobs located in America’s inner cities — about 8 percent of this country’s private sector. Average annual salary for jobs located in inner cities is $38,000. Average salaries for jobs in the surrounding areas are $39,000. Nationwide, 77 percent of the jobs in America’s inner cities are held by commuters from surrounding areas, not by inner city residents. These disquieting numbers are from a November 15, 2004 report entitled the “State of the Inner City Economies.” This ongoing study examines the economic performance and potential of inner cities as economies, and is being carried out by the Initiative for a Competitive Inner City (ICIC), a Boston, Massachusetts not-for-profit founded in 1994 by Harvard Business School professor Michael E. Porter. Third World from 1 Since 2001, Prof. Porter has had a particular interest in Milwaukee. That’s when ICIC was invited by Daniel Bader, president of the Helen Bader Foundation, to join forces with Milwaukee business leaders and the Greater Milwaukee Committee (GMC) to create the Initiative for a Competitive Milwaukee (ICM). A “Bold Effort” Since February of this year, ICM has been headed by Art Smith, who was named Chief Executive Officer. Smith, a local entrepreneur, is President and CEO of Keystone Travel, American Express Travel Services in Milwaukee.The goal of ICM is to revitalize the inner city of Milwaukee by discovering and enhancing its advantages as a place where businesses can thrive. With the help of ICIC, a detailed strategic plan to build the inner city as a competitive economic engine has taken shape over the last three years. According to A Call To Action, the ICM final report issued last spring, the plan has three goals: • Increase the competitiveness of inner city Milwaukee as a business location • Strengthen the competitiveness of businesses located in the inner city and their economic linkages to the regional economy. • Increase jobs, income and wealth creation opportunities for residents of Milwaukee’s inner city.The organization has created an intricately detailed plan to implement those goals. The Plan According to Prof. Porter, the most important element in creating a competitive economy is the existence of clusters of related industries and firms in a given geographical area. This concentration of industries increases the effectiveness and profitability of businesses, simultaneously raising prosperity and wealth for all involved. The ICM Call to Action identifies four industry clusters for the Milwaukee Inner City: • Manufacturing • Business Process Service Centers • Construction and Development • Health Services The document also targets two business environment issues: Workforce Development and Entrepreneurship. How’s It Going? Over the last month, a review of business-related headlines reveals a lot of money flowing through the coffers of ICM, and a lot more attention to the issue of family-supporting jobs in the inner city. This activity is in conformity with the stated goals of ICM. Grants to ICM from Miller Brewing Co., Wisconsin Department of Workforce Development and the state Department of Commerce were all announced in December. In November, ICM awarded $58,920 in grants offered in cooperation with the Wisconsin Manufacturing Extension Partnership. They were earmarked for improvement projects for 17 Milwaukee manufacturers, including Mil-Tex Steel Fabricating. There has also been a flurry of state and city projects, either awarded to minority and inner-city contractors, or specifically aimed toward attracting those contractors. According to a recent press release from the Office of the Governor, “Since Governor Doyle took office, the Department of Commerce has made 97 awards to minority firms totaling $2.3 million for projects that retained 141 jobs, created 230 jobs, and leveraged $20 million in private funds.” For the last month or so, the Requests for Proposals coming from City Hall have specified that proposed projects associated with the city meet the minimum requirements for using “Emerging Business Enterprises (EBE),” usually specifying the goal for the particular city department involved. For example, a recent RFP offered by the Redevelopment Authority specified that, “The Redevelopment Authority’s [EBE] goal is 21 percent. An EBE agreement with the City is required prior to closing.” Emerging Business Enterprises refer to “small businesses that strive to become competitive in the marketplace,” according to City documents. In the past, businesses were sometimes granted waivers for these agreements when they worked on city projects, allowing them to hire subcontractors that did not meet EBE guidelines. However, sources with the City say that waivers will be much more difficult to acquire on upcoming projects. Business Environmental Issues What about Workforce Development and Entrepreneurship, the two “business environmental” issues identified by ICM? One goal outlined in the Call To Action has been met. The UW Milwaukee School of Continuing education has set up an on-line Workforce Enterprise clearinghouse to help employers and individuals in Southeastern Wisconsin find work-related training resources. It even includes a section on funding sources for education and training. The Entrepreneurship Challenge Paradoxically, the area of entrepreneurship seems to be the most promising and the most challenging for ICM and their partners. It’s obvious to anyone who lives here that Milwaukee’s inner city is full of entrepreneurs. When there is no paying work to be had, people who wish to work will find work to do. The inner city is full of little businesses: hair and nail salons, home-based childcare centers, storefronts offering a wide variety of products for sale. On another level, inner city entrepreneurs may set up a used appliance showroom in a vacant lot or an open suitcase full of tube socks on the sidewalk. A teenager walking down the sidewalk may offer a bicycle or a VCR for “twenty bucks…ten? Maybe five…?” To say nothing of the thriving black market in drugs and sex. It all feeds the inner city economy, and exhibits a sophisticated understanding of industry clusters and business techniques that might surprise Prof. Porter. A Cautionary Tale The Call to Action is full of concerns that inner city entrepreneurs lack “formal business training” and “a good understanding of what is needed to put their ‘financial house’ in order.” A discussion concerning lack of access to capital and the lamentable fact that, “Banks outreach to inner city entrepreneurs is limited,” does, at least, acknowledge the root of the problem. But the story of how one of the “Action Steps” suggested in the document actually played out is particularly revealing. Action Step Two under Business Environment Strategies is, “Launch a business plan competition.” The strategy calls for Marquette University, which had recently started a business plan competition, to include an inner city category, as well as categories for Marquette University alumni and students. Winners from each of the three categories would go on to the state business plan competition announced by the Governor early in 2004. Who won? This ain’t no fairy tale. The first and second prizes, a total of $55,000, was split by two biotechnology companies, one from Milwaukee, one from Middleton. However, the endeavor did provide a forum for a discussion concerning the unique set of challenges and obstacles, as well as the resources designed to overcome them, by a panel consisting of the State Secretary of Commerce Cory Nettles, ICM’s Art Smith, and Mark Burwell, executive director of the Urban Hope Entrepreneur Center based in Green Bay. Strong points Since its inception in November 2001, the Initiative for a Competitive Milwaukee has made a difference for the better. It has helped raise the consciousness of public officials and citizens alike to understand that what is needed in the inner city are meaningful jobs with family-supporting wages. There is now a meaningful plan based on real-world research to improve the economic climate for businesses in the inner city — a strategy designed to create businesses with long-term sustainability. There is also a concerted effort by city and state government to support the initiative, and a buy-in by local industry and educational institutions. Weak points One has to wonder if this initiative might suffer from the same problem that has plagued so many of our social programs: a lack of eyes and ears. Is there anyone on the street to notice if the program is actually making a difference in the lives of people in the inner city, the Third World of America? Gathering numerical data is easy, but it doesn’t tell all. There’s a place, too often ignored, if not downright vilified, for anecdotal evidence in these situations. Prof. Porter, perhaps lunch at The Ja-Stacy (2370 N. Martin Luther King Dr.)? We could hook you up…. Want to know more? Visit the Initiative for a Competitive Inner City online at www.icic.org. You can read a number of definitive articles about the Initiative for a Competitive Milwaukee by “googling” them and following the links. In addition, the ICIC website has background information on the ICM. Contact Art Smith Chief Executive Officer of ICM at 414-272-0588 ext. 106.
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