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Looking Forward to the 2013 ASA Annual Meeting
The Two Cities of New York:
Wealth, Poverty, and Diversity
in the Big Apple
Andrew A. Beveridge, Queens College and Graduate Center CUNY
The many poor immigrants and minorities as well as some affluent members of these groups, the super wealthy financial traders and executives, the mostly white high-powered and high-priced lawyers, a large community devoted to creating the arts, and a city government that has fostered and subsidized the wealthy have created a united and divided city like no other in the United States. At the same time, as these groups came together in New York, they remained stratified. New York’s development harkens back to Disraeli’s famous comment about England in his book Sybil or the Two Nations,“Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets.... The rich and the poor.”
Much of Manhattan, which many tourists and some social scientists mistake for the entire city, is in its own realm. The Manhattan north of 96th Street on the East Side, north of 122nd Street on the West Side, and above 110th north of Central Park really exists in the non-Manhattan realm.
Around the country and around the world, Manhattan took center stage due to the Occupy Wall Street movement, which took root September 2011 in Zucotti Park in downtown Manhattan near the New York City Federal Reserve Bank, the New York Stock Exchange, and not far from the Goldman Sachs headquarters. While forcibly removed from the park in November, and though it has since faded as an ongoing protest movement, Occupy did provoke discussions about the “1 percent” versus the “99 percent.”
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The Rich Getting Richer
Certainly, it is well-established that much of the income gains over the past 30 years did not go to those in the middle or lower classes, but rather to the top 1 percent of earners and especially the top 0.1 percent. Banks posted record profits after the financial crisis, and there have been similar revelations that the top 1 percent of income earners captured 93 percent of the income growth following the fiscal crisis—the same crisis that obliterated housing prices, devaluing the largest assets most families held, especially the lower and middle classes. Many of the top one percent work or live in New York City (and often both). Although data from the Survey of Consumer Finances show that being in the top 1 percent requires about $1 million of income and about $10 million of net worth, the U.S. Census Bureau computes the top 1 percent as beginning at about $380,000 in annual household income. The amounts differ because the survey is stratified to catch the income and wealth of the top and has many very specific questions about income, including capital gains and other income sources.
Before the protest signs were placed around Zucotti Park, the signs funded by Wall Street Business Improvement District used to proclaim, “New York City is the Capital of Capital.” Mayor Bloomberg, now in the last year of his third term, recognized this when he famously said, “[New York] isn’t Wal-Mart…It isn’t trying to be the lowest-priced product on the market. It’s a high-end product, maybe even a luxury product” (Diane Cardwell, New York Times, January 8, 2003). The largest number and highest concentration of 1 percenters live in and around New York City. This point is made very clear by data on Manhattan. According to a 2011 Census survey, the top 5 percent of Manhattan households averaged incomes of $791,355 and the top 20 percent averaged $391,022, while bottom 20 percent averaged $9,681, a ratio of 40.3 to 1.
The figures for the entire city, which are driven by Manhattan’s wealth level, are $438,890 for the top 5 percent, $223,285 for the top 20 percent, and $8,844 for the bottom 20 percent for a ratio of 25.2 to 1 between the top 20 percent and bottom 20 percent. Manhattan has the highest income for the rich of any county in the United States with at least 65,000 residents. It is followed by Fairfield County, CT, where many hedge fund owners make their headquarters, and Westchester County, NY, one of the main bedroom counties for the city’s financial sector. The level of inequality is similar to that in several Latin American countries, and is the highest for any U.S. county except for four in Puerto Rico and Clarke County, GA, which is the home of the University of Georgia, but surrounded by areas of rural poverty.
Where the High Earners Live
When one focuses on the areas (census tracts) with high average-income households in the city itself, as shown in the accompanying map, the areas are located in the Upper East Side and Downtown near Wall Street. These same census tracts have the highest proportion of those in the top 5 percent and top 20 percent. Indeed, the Upper East Side includes the largest concentration of very high income tracts near Central Park along Fifth Avenue and Madison Avenue. The census tract with highest average income ($440,000) is between 70th and 77th streets between Fifth and Madison avenues.
If you walk around this area and try to see how the 1 percent live you will not see much since these areas are guarded by doormen and the residents are likely to be whisked away by taxi cabs or limousines. Apartments in this area go for $3 million and up with monthly maintenance charges of $12,000 or more. In this area the top 5 percent of households enjoy more than $2 million per year in income, and probably live in even more luxurious apartments, some of which are valued at well over $10 million. There are also a few townhouses at that price range or higher. As the map shows, one will find most of the truly poor and those that must exist on incomes averaging less than $75,000 living in the outer borough.
Manhattan is, once again, predominantly inhabited by whites, while minorities are more often located outside of Manhattan. The accompanying table shows a few figures comparing Manhattan with the rest of the city, referred to as the “outer boroughs.” Residents in the rest of New York City are less white, more immigrant, more minority, and generally poorer than those in Manhattan. This trend began after 1980, and has only accelerated since then.
Some parts of the outer boroughs are becoming trendy, but areas in Manhattan—such as the Lower East Side—that once accommodated the hip crowd are now occupied by quite affluent individuals and households. Though the Bloomberg administration had a plan to preserve and build more affordable housing for those newly moving into New York City, rental housing remains difficult to afford.
Much of the luxury development in Manhattan has been heavily subsidized by tax breaks and direct government subsidies. For instance, the Goldman Sachs headquarters, opened in 2009, was built with tax-free bonds issued by the Dormitory Authority of State of New York. The Time Warner Center at Columbus Circle at 59th St. and Broadway, a heavily subsidized, highly touted development of commercial areas, offices, theatres, bars and restaurants, hotels, and co-op apartments had a recent apartment listing for $26 million.
During the height of the financial crisis New York City’s biggest banks and other financial institutions were being protected by several trillion dollars of bailouts from the Federal Reserve and Treasury (a subsidy not available to many of the homeowners facing losses because of exotic financial instruments invented in New York City), meanwhile city and state public sectors were being cut because of declines in revenue.
Just as Disraeli said about England, in New York City the rich and the rest live as if they are inhabitants of two different planets. And here in New York, the planet of the rich runs and dominates the entire galaxy.
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