Miami-Dade’s Money Gap

The recession is over. Unemployment rates are declining. But still, something is off. Most people in Miami-Dade are still barely getting by and a lot of people aren’t even doing that.

That’s because while high-rises and new cocktail bars go up, not much else is.

Miami was booming up until 2007, lifting both the poorest and the richest residents, but since the recession it’s been the total opposite story for everyone but those in the top 5 percent.

The FIU Metropolitan Center painted a pretty dire picture of the South Florida economy yesterday with the release of its latest study.

Since the recession, economic growth has slowed for most Miami-Dade households and straight-up reversed for our poorest residents. They’re calling it the prosperity gap.

“On our way here as we drive through Brickell and we see these glass boxes rising, we see what appears to be a prosperous community… but what the study and data reveal is a sobering story,” said Ines Hernandez, senior vice president for South Florida with Citi Development Corporation. They funded the “Prosperity Initiatives Feasibility Study.”

“It’s not a question of whether we are leaving people behind … but what it means when this gap is that large?” she added.

First things first — what is the prosperity gap?

On the most basic level, it’s the gap in opportunities and the ability to move up — economically, professionally, etc. — among households in different income groups.

From 1999 to 2007, the 95/20 ratio, which measures the difference in mean income between the poorest 20 percent of households and the richest 5 percent of households, was pretty even. But from 2008 to 2014, that difference increased by more than 12 percent — which means income inequality increased by a lot. It’s not far off from the national average, but it’s on a downward trend nationwide, and an upward trend here.

In the bigger picture of our economy, the prosperity gap is  how our opportunities to move up in Miami-Dade county stack up against other regions of the country And we don’t stack up very well. For example, the economic value of each worker’s labor in Miami-Dade is on part with metro areas like Green Bay, Wisc., and Owensboro, Kentucky, according to the report.

Elaborate, please.

Our poverty rate of 19.8 percent is 33 percent higher than the national average, according to FIU Metropolitan Center. Every income quintile (what you get when you divide anything into five) in Miami-Dade is below the national averages for income. (So yeah, even the richest 20 percent of Miami-Dade residents aren’t as rich as the richest 20 percent of Americans).

And all that is happening as housing costs go up. Way up.

From 2000 to 2007, we were doing pretty great. Look at that graph below. Almost everyone’s incomes were rising aside from the very top of the heap, but the ones seeing the most growth were the poorest 20 percent of Miami residents. Inequality was narrowing.

Source: U.S. Census, American Community Survey 5-year estimates, FIU Metropolitan Center.

Then the recession hit. While the rest of the U.S. is beginning to recover lost wages, you can tell from the graph below that we are not — even if you’re in that very fortunate top 5 percent. Compare that with the national trends around the same time:

Source: U.S. Census, American Community Survey 5-year estimates, FIU Metropolitan Center.

Below is a map of some of the most distressed parts of the county — places where the poorest residents in that bottom 20 percent tend to be concentrated.

OK, so what’s being done about it?

FIU pitched five ideas for things to launch or expand to fix what’s broken.

Social enterprise incubators and accelerators: It’s 2016. You know what incubators and accelerators are, right? These would be specifically focused in struggling neighborhoods and on helping individuals to get their own enterprises off the ground.

Community land trusts: We’ve written about them before. Since then, they’ve been officially approved to come to Miami-Dade.  This is how a land trust works: A nonprofit entity buys or acquires land. It builds homes on it. It sells those homes to people who qualify for low-income housing at an affordable cost.

Community benefit agreements: These are contracts between communities and developers, requiring a developer to provide something to the community in exchange for developing there. We do this here already, sometimes — think of the requirements for David Beckham’s soccer stadium, which included employing neighborhood residents, in exchange for building in Overtown

Children’s savings accounts: The name is pretty self-explanatory. A saving account is often established at birth with an initial deposit that can be added to and accrue interest over time. Often these have agreements for matching funds. When a kid turns 18, they can use that money in the account to purchase something like college tuition.

Employee-owned business cooperatives: This name is also pretty self-explanatory. These are businesses owned and run by their workers.

Are they going to happen?

Well, the commissioners, researchers, and nonprofit leaders at the report launch were pretty jazzed about it. But it’s going to be on you to put pressure on them to pass the legislation we need to create solutions — things like mandatory inclusionary zoning, which Commissioner Barbara Jordan is pushing, or money for the affordable housing trust, something Commissioners Daniella Levine Cava and Xavier Suarez both championed. Stay tuned. Tell us what you think. Let us know how we can help you help Miami-Dade close the prosperity gap.