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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.

  • Juol1729

    I’m really enjoying The New Tropic. News have become so consumed with garbage, always focusing on criminals and filth, and here we have a breath of fresh air with articles that are relevant, informative, sometimes light (but not idiotic). Good job, guys. Thank you.

  • Juol1729

    I’m really enjoying The New Tropic. News have become so consumed with garbage, always focusing on criminals and filth, and here we have a breath of fresh air with articles that are relevant, informative, sometimes light (but not idiotic). Good job, guys. Thank you.

  • you might find it interesting that Miami Beach in its continuing restrictive zoning is creating further divide. The only building that has come to market in the last cycle is Super Luxury… The reason is simple, the costs and efforts to build in MB are extremely higher than anywhere else in the County and the limits of hight & mass do not allow for attainable let alone affordable housing…

  • you might find it interesting that Miami Beach in its continuing restrictive zoning is creating further divide. The only building that has come to market in the last cycle is Super Luxury… The reason is simple, the costs and efforts to build in MB are extremely higher than anywhere else in the County and the limits of hight & mass do not allow for attainable let alone affordable housing…

  • a smart US citizen

    a very interesting report.. let us hope local citizens learn a lesson and do their homework before voting next time! Socialism has never work!

  • a smart US citizen

    a very interesting report.. let us hope local citizens learn a lesson and do their homework before voting next time! Socialism has never work!

  • Publius Houstoniensis

    Interesting that poorer people did better under President Dubya than under President Pookie.

    In any event, all these suggestions reek of collectivism and statism – – in other words, socialism – – and will not work:

    1. Social enterprise? How about individual enterprises? Started up by for-profit entrepreneurs. During the last couple of years, more American companies have been wound down than started up, a product of Obamanomics.

    2. Non-profit collectives for land development? You mean Soviet-style collectives, right? How well did those work? Check the productivity of collective farms in the Soviet Union or Cuba, or of ejidos in Mexico.

    3.Community-developer contracts? Who represents the community? Why such a collectivist solution? Why not individual property-owners contracting with developers? Do you really want to turn Miami neighborhoods into the equivalent of American Indian reservations?

    4. Children’s savings accounts are a good idea, similar to privatizing Social Security, as was done in Chile. Also consider similar health savings accounts, instead of ObamaCare, and school savings accounts, to fund school choice and charter schools.

    5. Employee-owned cooperatives? Really? Where have these worked? Not as well as privately-owned, for-profit corporations, if your objective is to increase prosperity. You need a manager representing the owners and supervising the employees for best results.

    A lot of your suggestions have been tried in an island 90 miles south of Key West, and how well have they worked there? Wake up!

    Ed Vidal
    Miami, Florida
    [email protected]

    • Ed, thank you for taking the time to post this comment. I sat here reading the article, and eagerly looking forward to the resolutions, and was honestly stumped when I read these proposals. Who thought these up? Literally nothing in these proposals seeks to increase prosperity. Everything is about seeking to socialize the existing pool rather than increasing it, along with handing things to people that are in no way personally invested to take care of it (community offering by developers? cheap homes on someone else’s land??). We need to talk about the real issues which include INSANE taxes on homes and apartments. People wonder why developers are only building out-of-reach luxury housing? It’s because our greedy politicians are SOARING the cost of taxes per apartment. LOOK IT UP. You can’t get affordable housing because the profit margin between costs and taxes is $0.00 if the rental or sale price isn’t outrageous.

      My solution: Give us a quarterly or annual report of where EVERY TAX DOLLAR is going across the board. I want to know how much every tax payer employee (government, school board, etc) is making and what investments they are making with our dollars.

      My church provides an extremely clear budget report each year and people aren’t even forced to pay for these things. For the taxes we are forced to pay, we should be given a clean, easy to read, and beautifully designed report on where all the money comes from and where it goes. And the opportunity to voice concerns that amount to change.

      DONE.

  • Publius Houstoniensis

    Interesting that poorer people did better under President Dubya than under President Pookie.

    In any event, all these suggestions reek of collectivism and statism – – in other words, socialism – – and will not work:

    1. Social enterprise? How about individual enterprises? Started up by for-profit entrepreneurs. During the last couple of years, more American companies have been wound down than started up, a product of Obamanomics.

    2. Non-profit collectives for land development? You mean Soviet-style collectives, right? How well did those work? Check the productivity of collective farms in the Soviet Union or Cuba, or of ejidos in Mexico.

    3.Community-developer contracts? Who represents the community? Why such a collectivist solution? Why not individual property-owners contracting with developers? Do you really want to turn Miami neighborhoods into the equivalent of American Indian reservations?

    4. Children’s savings accounts are a good idea, similar to privatizing Social Security, as was done in Chile. Also consider similar health savings accounts, instead of ObamaCare, and school savings accounts, to fund school choice and charter schools.

    5. Employee-owned cooperatives? Really? Where have these worked? Not as well as privately-owned, for-profit corporations, if your objective is to increase prosperity. You need a manager representing the owners and supervising the employees for best results.

    A lot of your suggestions have been tried in an island 90 miles south of Key West, and how well have they worked there? Wake up!

    Ed Vidal
    Miami, Florida
    [email protected]

    • Ed, thank you for taking the time to post this comment. I sat here reading the article, and eagerly looking forward to the resolutions, and was honestly stumped when I read these proposals. Who thought these up? Literally nothing in these proposals seeks to increase prosperity. Everything is about seeking to socialize the existing pool rather than increasing it, along with handing things to people that are in no way personally invested to take care of it (community offering by developers? cheap homes on someone else’s land??). We need to talk about the real issues which include INSANE taxes on homes and apartments. People wonder why developers are only building out-of-reach luxury housing? It’s because our greedy politicians are SOARING the cost of taxes per apartment. LOOK IT UP. You can’t get affordable housing because the profit margin between costs and taxes is $0.00 if the rental or sale price isn’t outrageous.

      My solution: Give us a quarterly or annual report of where EVERY TAX DOLLAR is going across the board. I want to know how much every tax payer employee (government, school board, etc) is making and what investments they are making with our dollars.

      My church provides an extremely clear budget report each year and people aren’t even forced to pay for these things. For the taxes we are forced to pay, we should be given a clean, easy to read, and beautifully designed report on where all the money comes from and where it goes. And the opportunity to voice concerns that amount to change.

      DONE.