Miami’s Inequality: Good Or Bad For The City?

Miami has inequality. But that is an innate feature of the local demographics – and may even be helping the city.

Scott Beyer | November 27, 2018 | |
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The skyscrapers of Miami Beach (foreground) and Miami (background) speak to the inequality found in nearby neighborhoods.

Miami – In 2014, the Brookings Institute ranked income inequality in America’s 50 largest cities. Earlier this year, they updated the report, amidst heated rhetoric on the issue. Miami ranked 4th-highest, which surprised no one here, since the city’s rich-poor divide is visible from street level. But because of Miami’s innate demographic makeup, inequality here should be considered more an inevitability, than something to be upset over. The more important question is whether the city allows the poor to rise, or at least maintain better living standards than where they came from. The answer has long been yes, and likely still is.

The Brookings report used census data to look at given cities’ “incomes among households near the top of the distribution—those earning more than 95 percent of all other households—and households closer to the bottom of the distribution—those earning more than only 20 percent of all other households.” Then it calculated each city’s “95/20” ratio, based on how many times more the higher earners made on average than the lower ones.

Atlanta had the highest ratio and is thus the nation’s most unequal, with the 95th percentile earning $288,159, and the 20th percentile earning $14,988, for a ratio of 19.2. This was followed by San Francisco, Boston, and Miami.

The presence of both rich and poor in Miami is largely immigrant-driven. Amongst the rich it attracts are white-collar professionals from developed countries like Russia, Brazil, and Argentina. Many of Miami’s poor, meanwhile, resemble the migrants found throughout the developing world; they are often uneducated, were previously agrarian or slum-dwelling, are without English, and, in this case, come from the Caribbean and Central America.

This is exactly why Miami’s inequality should be considered inevitable. The world is full of people from both developed and developing countries who have radically different living standards. By becoming a crossroads for both, Miami has become, ipso facto, unequal. But this does not mean that the city is doing something wrong, or that there’s some policy it can enact to magically bridge the divide. After all, a Haitian refugee who escaped his homeland by raft will be far poorer than a French banker, and it might take generations for them to become equal, if ever.

The Brookings Institute’s data reflects these trends. According to the study’s appendix, Miami’s 95th percentile are not actually that rich relative to other U.S. cities, with incomes at $169,855. But the city’s poor are extremely poor, with the 20th percentile averaging $11,497, third-lowest among the 50 cities.

These figures could be expected of a city that has crunched the First and Third Worlds together. But the more important question, again, is whether Miami provides these poorer immigrants a chance for a better life. And on this front, the city has done historically well.

For example, the city has received two waves of Cuban immigrants, first after the 1959 Castro revolution, and then in 1980, when Fidel opened up the ports during the Mariel Boatlift. Many of these Cubans, especially the latter ones, entered Miami poor, but have since become one of America’s leading immigrant success stories. For decades, Cubans were among America’s highest earning Hispanic groups, and although they have yielded this title recently, their median household incomes are still a respectable $40,000. Their upward mobility has been evident throughout Miami, as they are slowly ceding the gritty Little Havana to other immigrant groups, and moving to wealthier suburbs like Coral Gables, Miami Beach, and Key Biscayne.

Haitians, who represent Miami’s second-largest immigrant group, haven’t been as successful. Haiti’s economic elite exiled to Miami in the 1950s because of the Duvalier regime, and the far poorer “Haitian Boat People” followed more recently. Both groups have become isolated in the city’s poor northern neighborhoods and suburbs, where the streets have grown dominated by their native Creole dialect. But as another Brookings Institution report notes, their meager situation must be put in context; while their median household income is in the low $20,000s, the average per capita income in Haiti is $400. So while perhaps not “prosperous” by U.S. standards, it’s unsurprising that Haitians continue flocking here.

Other immigrant groups do also, occupying certain neighborhoods or suburbs—Dominicans in Allapattah, Bahamians in Coconut Grove, Venezuelans in Doral and Nicaraguans in Sweetwater. Some of these communities are poor by census figures, but hardly in the desperate manner that I’ve found when walking through, say, the hollowed-out neighborhoods of St. Louis or Flint. Instead, they have thriving small-business climates, and it is easy to envision them following the Cubans’ path to prosperity.

Will the city’s innate inequality make their path harder or easier? It will be harder if the rich bring gentrification to their neighborhoods. But so far, gentrification in Miami has been mostly limited to organic shifts between working-class ethnic groups, not the rich pushing out the poor. This is astounding, considering that Miami-Dade is a land-constrained metro whose population nearly doubled since 1980. But the city has met these trends with fast housing construction, allowing neighborhoods to develop vertically along the waterfront, so that the rich can concentrate rather than invading poorer inland areas. These pro-growth policies must continue if Miami is to remain inclusive.

Miami’s inbound wealth generates money needed to pay for local services.

One way that the rich influx has undoubtedly helped Miami’s poor, though, is by generating revenue for new public investments—from practical ones like port modernization and expanded mass transit, to lifestyle amenities like museums and waterfront parks. It has also funded a good public school system that integrates a large non-English-speaking population. And roads here are generally clean and well-paved (both the roads and the schools have been labelled America’s most efficient). While the job market, linked to housing and tourism, can be chaotic, the overall fiscal picture is good: this year, S&P lifted Miami’s bond rating from BBB to A+.

These are improvements which cannot be claimed by cities that are merely poor. The one on the list with the lowest-earning rich people was by far Detroit, where the 95th percentile makes only $107,000, with their average income dropping by $15,000 since 2007. Cleveland’s 95th percentile was second lowest at $116,000. Is it any wonder that public services in both cities are crumbling?

In the more “unequal” cities, meanwhile, rich people have helped fund jobs, infrastructure and amenities. There were several other cities on Brookings’ top ten unequal list—including Chicago, Dallas, New York City, San Francisco, and Los Angeles—that have Miami’s global demographic mix, making them predestined for inequality. But rather than being fundamentally bad or exploitative places, they have long been, like Miami, upwardly mobile, and many remain so. Their disparities may not suit an idealist. But the advantages they offer seem to be recognized by all the poor people flooding into them.

[This article was originally published by Forbes.]

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