MILWAUKEE — You won’t find any newspapers for sale at the fluorescent-lit convenience store about two blocks from the Milwaukee Journal Sentinel’s downtown headquarters. Ask for a copy of the local daily and you get an apologetic chuckle from the clerk. He instead suggests The Onion, print copies of which are just outside in a rusting metal box.

In other cities, this might feel like a tidy metaphor for the plight of the newspaper industry — particularly the metro dailies. Before the web, metros occupied the business’ sweet spot: big newsrooms, a captive audience, and riches flowing in from the classifieds. But in the past decade, they’ve suffered the steepest declines, the biggest cutbacks, the worst losses.

But something’s different in Milwaukee. The daily newspaper is actually…kind of…almost…thriving.

There’s been plenty of pain along the way: layoffs, buyouts, wage freezes, and advertising declines. The staff is smaller, as it is almost everywhere.

But spend time talking to people in the newsroom and you’ll find morale is unusually high. Out in the community, the newspaper has maintained one of the nation’s highest rates of market penetration. And there’s a common thread between those two facts: Through all the financial stress, the paper has maintained — even extended — its commitment to watchdog, investigative reporting. Journalistically, the Journal Sentinel is in a period of real strength.

Since 2008 — over what has been the most crushing stretch in American newspaper history — the paper has won three Pulitzers and been finalists three other times. That’s a tally newspapers a lot larger than the Journal Sentinel can only envy.

“At the risk of sounding like a Pollyanna, it really feels like we are actually moving toward something new and exciting,” said Dave Umhoefer, an investigative local government reporter who won one of those Pulitzers in 2008.

“Several years ago, we lost 100 people or something in one buyout,” said Umhoefer, in his 29th year at the paper. “It’s just brutal. You wonder how you’re going to recover from that. So I don’t want to minimize how many people we lost. But it just feels like, over the last year or so, things have stabilized. We have a really solid core of people who can do this level of investigative reporting. If we could stay at this level of staffing and keep adding to the core of younger people, that’s a great recipe.”

The Journal Sentinel’s story begins with its location. Milwaukee is not an average newspaper town. It’s easy to fall back on Midwestern stereotypes — nice, earnest, civic-minded — but there’s some truth in them.

Managing editor George Stanley said that reader surveys have shown that people read the paper because they have “a desire to be good citizens.” The newspaper’s pollster told Stanley that civic engagement isn’t always a priority for newspaper readers. “In some of the places they had been, that reason was not even on the list,” Stanley said. “Not only was it not the top reason for reading the paper, but it didn’t even come up!”

The Journal Sentinel also found that the No. 1 reason women in its market read the paper is for investigative journalism, according to a survey Stanley says the paper conducted last year. “For men, investigative journalism was the No. 3 thing,” Stanley said. “No. 1 was the Packers. I forget what No. 2 was.”

Whatever the reason, the paper is ubiquitous in Milwaukee. Walk around downtown on a weekday and you’ll lose count of people toting a print copy. Tim Martinez, 58, a lifelong Milwaukee resident and hairdresser, was reading the food section at a downtown Starbucks on a recent weekday. “I’m a pretty big news freak,” Martinez said. “I subscribe and read it every day — pretty much just print.”

Around the corner, at a Downtown Books, both men behind the counter said they go to the Journal Sentinel’s website at least once a day. “I think the paper’s reputation is generally positive,” said Joe Guszkowski, 23. “I mean, it is the only newspaper, but their investigative coverage — I know they’re really well-regarded. And their sports section is great.”

“It’s still a strong paper,” said longtime media watcher Jim Romenesko, who worked at the old Milwaukee Journal in the 1970s. “You have reporters who really know the city, know where the bodies are buried, and I think that works to their advantage. What they’ve done is focus on watchdog reporting. They’ve done a very good job at that.”

The watchdog heritage started by Lucius Nieman was still alive and well when a young Romenesko was covering the cops beat at the Journal. The paper was flush with cash — for a time, it had a full-time ballet reporter — and it drew attention.

“I recall Time magazine said that Milwaukee City Hall grinds to a halt when the Journal is delivered — that’s when it was an afternoon paper and they used to deliver the paper at 1 in the afternoon,” Romenesko told me. “Everything stopped. The Journal truly was the major media.”

And Milwaukeeans paid close attention — not just to stories but to bylines. “I remember taking my VCR to a repair shop and the guy not wanting to charge me because he said, ‘I know you’re a police reporter,'” Romenesko remembered. “Later, when I went to the St. Paul Pioneer Press, not only was my byline there but my picture, and nobody recognized me. Not a single person. That always struck me when I was in St. Paul. The readers up there are not like they were in Milwaukee.”

The Newsboy, 1888. Carved, assembled and painted wood with folded tin; artist unknown. Milwaukee Art Museum, The Michael and Julie Hall Collection of American Folk Art. Photo credit: John Nienhuis.

When times got tough in the 2000s, every metro newspaper had to cut staff. Many gutted their investigative capacity along the way. But the Journal Sentinel had a different strategy, building its values into the structure of the newsroom by hiring Mark Katches to create a special watchdog unit in 2006. Katches guided his team to two Pulitzers before leaving for the Center for Investigative Reporting, where he’s the editorial director.

“It’s great,” said Umhoefer, who is on the team. “They gave us time. They gave us resources. They were patient — you know, accepting that you’re not always going to get to the bottom of something. Stories fall apart. So, they were supportive. Then we really started to upgrade our methods — a lot of data analysis, really intense vetting, hiring experts to check our work. We really upgraded our whole approach.”

While investigative reporters are given time for heavy lifts, the watchdog team was also created with the Internet in mind. The section of the Journal Sentinel’s website dedicated to the Watchdog team’s work also includes quick-hit blog posts, resources for citizens interested in doing their own digging, and a data journalism vertical. The paper’s 2011 investigation into police officers who have broken the law, for example, is paired with an interactive database that allows readers to search by name for an officer’s criminal record.

One of the keys to making the unit successful, according to Umhoefer and others, was keeping the team integrated with the rest of the newsroom. Each watchdog reporter is teamed up with a daily beat reporter. “Some investigative teams [at other papers] will be on a separate floor in the building,” Umhoefer said. “But we’re in the newsroom. We all still work weekend shifts and have to do that stuff. There’s enough of the feeling of being involved. That was the whole idea: Don’t let these people be divorced from reality where all their sources dry up and it becomes an ivory tower situation. Let stories bubble up from the beats. Follow up on stories instead of plucking ideas out of thin air.”

Stanley says giving reporters freedom — and a feeling of being engaged with quality work — is one of the most important steps to keeping staffers happy. “People like to have a lot of say in how they do their job, and they like to have a degree of independence in what they do,” Stanley told me. “People also want to be master craftsmen, they want to be master journalists, they want to be master mechanics. But the most important thing is a sense of purpose larger than ourselves. You want to work for something that matters.

“If you provide those three things, you have a happy and engaged workforce and the sky’s the limit on what you can accomplish.”

Journal Sentinel staffers await Pulitzer news in 2010. From left: George Stanley, John Diedrich, Raquel Rutledge, sports editor Garry Howard, and editor Marty Kaiser. Photo credit: Mark Hoffman

“It has so much to do with the leadership at this paper,” said reporter Raquel Rutledge, who won a 2010 Pulitzer in local reporting for her investigative series on the state’s $350 million childcare system. “It means everything. It really does.”

Her husband John Diedrich covers federal agencies for the Journal Sentinel and still finds time to coach Little League. His bosses also allowed him work full-time for the paper from Cambridge when Rutledge took a Nieman Fellowship in 2011. “We really like it here,” Diedrich told me. “The people who work here are all cranking at a really high level. Our bosses care about quality of life. So we’re fortunate enough that we get to work here but also we really like to work here.”

Rutledge credited the collaborative atmosphere that allows people with complementary skills to work together. On one story, she had a stack of 1,800 PDFs and wanted to tally one field of data from each record to determine the public burden imposed by a tax subsidy. Counting manually was a waste of time, but no one in government said they had the total.

“I just wanted this one number, this one field, but I wanted it for all 1,800,” Rutledge said. “Well, this 23-year-old dude comes out, writes a little code, and boom-boom-boom-bam: In a couple of hours we have a number that no one had ever seen before. It was a $29 million program. A $29 million burden on the rest of the state. I requested it a million different ways from county people and no one had ever counted it. That is such a huge public service. Hiring that kid was just one of the best things you could do.”

Lucius Nieman (right) visits his printing press. Photo courtesy the Milwaukee Journal Sentinel.

The same trends that affect other newspapers affect the Journal Sentinel too. Print advertising continues to decline. The roughly 140 people on the editorial staff have plenty of room in a newsroom built for better days. At the paper’s parent company, Journal Communications, publishing’s share of the business has dropped; radio and television now make up nearly 60 percent of the company’s revenues. (Journal Communications’ stock price — which bottomed out at just 49 cents amidst the financial collapse in 2009 — has actually spent most of the past few years on a relatively steady climb. It’s now north of $8 a share.)

But despite the ongoing financial pressures, the focus on watchdog work remains in place. Earlier this month, the paper revealed that it would challenge the local government for access to records in a closed judicial investigation. The probe involves a secret email server that was set up in a county executive’s office so high-level staffers could communicate outside of the regular government email system.

This year it published a deep-dive into public assistance fraud, and a remarkable enterprise series about a botched sting by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives.

Readers notice. At a burger joint half a mile from the Journal Sentinel, Juston Calvert, 25, says he inherited the print habit from his dad. Now, he and his four roommates subscribe. “It just doesn’t feel right to read online,” Calvert said. “They do a good job. I gotta say, I think it’s unbiased. It’s just information.”

“People get the Pulitzer mixed up with the Nobel Prize,” reporter Diedrich said. “They’ll go, ‘You guys won the Nobel Prize! That’s great!’ It’s huge in our business, but the big picture is we’ve got to be indispensable to people. And you can’t forget the daily coverage. You have to do the moment-by-moment coverage while continuing to say, ‘Okay, people really want their dollars watched, they want their rights watched, they want the accountability reporting.'”

At the newspaper — a short walk from riverfront breweries, an old-fashioned cheese market, and a bronze-and-pewter statue of the Fonz — news meetings are still held in the Nieman conference room, where Lucius’ portrait is on the wall. Journal Sentinel staffers like to joke that the room is so cold because his ghost still hangs out there.

But managing editor Stanley thinks conditions are warming. The paper is doing well enough today that he says he’s “very hopeful” it will soon be able to grow its staff again. And although it has found some success during a difficult time for the industry, it hasn’t solved the question of what kind of business model will sustain its journalism in a post-print-advertising world. No one has.

Yet Stanley suggests things would have to get really, really bad for the paper to start chipping away at its investigative unit or moving watchdog reporters to other areas of the newsroom.

“There was a little paper in Maine last year with a two-person staff, and they were finalists for a Pulitzer Prize for an investigative series they did. My view has always been that really every reporter should be an investigative reporter. If we’re doing our jobs and we’re always chasing the best stories, we’re always going to be doing the investigative stuff.”