The State of Working New York City 2005

September 27, 2005. A special supplement to the 2005 edition of the Fiscal Policy Institute’s biennial report on the State of Working New York. Presentation >>

The Effect of Welfare Reform in NYS

September 21, 2005. Testimony by Trudi Renwick, FPI senior economist, before the NYS Assembly Committee on Social Services.

New National Report Offers Sobering Look at Trends in New York’s Early Childhood Education Workforce

September 15, 2005. This issue of Fiscal Policy Note$ takes a look at a comprehensive new report, Losing Ground in Early Childhood Education, from the Economic Policy Institute, the Keystone Research Center, and the Foundation for Child Development. Among the findings: qualifications decline among early childhood education workers with less one fourth now having college degrees. Since the early 1980s, there has been a large and unsettling dip in the qualifications of the early childhood education workers in New York. The share of New York early childhood educators working in child care centers with at least a four-year college degree fell from 42% in 1980 to 32% in 1990 to 23% in 2000, based om analysis of Census data. Read the brief >>

An Open Letter on the Rebuilding Process from Civic Groups in New York on 9/11 and Katrina

September 15, 2005. An open letter to members of Congress and concerned individuals and groups on the Gulf Coast.

In Manhattan, Poor Make 2¢ for Each Dollar to the Rich

September 4, 2005. Sam Roberts cites FPI’s report The State of Working New York City 2005 in his New York Times story on income inequality in New York City.

Trump Tower on Fifth Avenue is only about 60 blocks from the Wagner Houses in East Harlem, but they might as well be light years apart. They epitomize the highest- and lowest-earning census tracts in Manhattan, where the disparity between rich and poor is now greater than in any other county in the country.

That finding, in an analysis conducted for The New York Times, dovetails with other new regional economic research, which identifies the Bronx as the poorest urban county in the country and suggests that the middle class in New York State is being depleted.

The top fifth of earners in Manhattan now make 52 times what the lowest fifth make – $365,826 compared with $7,047 – which is roughly comparable to the income disparity in Namibia according to the Times analysis of 2000 census data. Put another way, for every dollar made by households in the top fifth of Manhattan earners, households in the bottom fifth made about 2 cents.

That represents a substantial widening of the income gap from previous years. In 1980, the top fifth of earners made 21 times what the bottom fifth made in Manhattan, which ranked 17th among the nation’s counties in income disparity.

By 1990, Manhattan ranked second behind Kalawao County, Hawaii, a former leper colony with which it had little in common except for that signature grove of palm trees at the World Financial Center. The rich in Manhattan made 32 times the average of the poor then, or $174,486 versus $5,435.

The analysis was conducted for The Times by Dr. Andrew A. Beveridge, a sociology professor at Queens College of the City University of New York.

The growing disparity in Manhattan helped drive New York from 11th among cities with the biggest income disparities in 1980 to fifth in 1990 and fourth in 2000, behind Atlanta; Berkeley, Calif.; and Washington, according to the analysis. “The gains are all going to the top,” Dr. Beveridge said. “It’s a massive class disparity.”

Last week, the Census Bureau reported that even as the economy grew around the nation, incomes stagnated and poverty rates rose. The Bronx, with a poverty rate of 30.6 percent, was outranked only by three border counties in Texas where living costs are lower.

Swollen, in part, by the earnings of commuters who work in New York City, median household income among the states was highest in New Jersey ($61,359) and Connecticut ($60,528). It was $47,349 in New York State, also above the national median.

A separate analysis, being released this weekend by the Fiscal Policy Institute in Albany, warns that the middle class is being depleted while the rich are getting richer and the poor are growing in number and barely getting by – more so in New York State and particularly upstate.

The loss of good-paying jobs, especially in manufacturing, “has meant that the ‘hollowing out’ of the middle of the income distribution continued at a rapid pace,” the institute, a union-backed research group, concluded. It said the number of families earning between $35,000 and $150,000 declined by 50,000 from 2000 to 2003 while the number that earned above $150,000 and below $35,000 increased.

Dr. Mark Levitan, senior policy analyst for the Community Service Society, a liberal research and advocacy group, said he did not believe the city’s economy was “uniquely weak,” but said an increase in the poverty rate from 19 percent to 20.3 percent, as measured by the census’s new American Community Survey, “is fundamentally a story about stagnant wages.”

Edward Wolff, a New York University economist, attributed the growing disparity to ballooning Wall Street incomes and declining wages for lower skilled workers. “Though these forces are at work across the country,” he said, “the heavy preponderance of corporate headquarters, the financial sector and the legal sector in New York City has made the increase in the ratio of income between the top and bottom quintile more extreme than in other parts of the country.”

Jared Bernstein, senior economist at the liberal Economic Policy Institute, said the income gap, which in Manhattan has historically been large, can endure indefinitely.

“The elites, the top sliver of the income scale, can drive consumption and investment forward while the bottom half slogs along,” he said. “If inequality had embedded within it its own seeds of destruction, it would implode sooner than later. But that doesn’t appear to be the case. Many who have fallen behind have a skewed notion of their prospects for upward mobility.”

Manhattan, he said, is “an amplified microcosm” of conditions elsewhere in the country.

The income gap in Manhattan was far wider than in any other county. In tiny Clay County, Georgia, which has only 1,355 households and ranked second, the rich, on average, made about 38 times what the poor made.

Compared with the poorest Manhattanites, those in the top fifth are disproportionately male, non-Hispanic white and married. Roughly equal proportions among rich and poor are immigrants, are employed by private profit-making companies and work in sales.

The lowest-income census tract in the city is a triangular patch of East Harlem east of First Avenue and north of East 119th Street, where, despite a hint of gentrification in a renovated brownstone or two, the neighborhood is dominated by the mammoth though generally well-tended public housing project called the Wagner Houses. The median household income there is $9,320, most of the residents are black or Hispanic and do not have high school degrees, 56 percent live below the poverty level and about one in 10 are foreign born.

Darryl Powell, a 43-year-old automobile mechanic, said that most were struggling just to get by. “They’re trying to keep a roof over their head,” he said. “People are trying to hold onto what they’ve got.”

Sheila Estep said she was facing eviction because she was working as a full-time mother raising three sons rather than returning to her earlier jobs as an electrician, plumber and cosmetologist. “If I fail at my job, they’ll fail at theirs,” she said.

Sharon Hammond, who sells cosmetics, said she and other tenants wished their neighborhood were better and that she had a working stove instead of a temporary hotplate in her apartment, but added: “Everybody can’t be rich.”

Manhattan’s highest-income census tract is a six-square-block rectangle bounded by Fifth and Park Avenues and East 56th and 59th Streets. The median household income in this mostly commercial section of East Midtown is $188,697 (average family income is $875,267); none of the residents identified themselves as black; nearly one-third have advanced degrees and more than one in three are foreign born. Even there, though, the poverty rate is 16 percent.

“The income gap, while supposedly increasing, seems to be a natural phenomenon,” said the developer Donald J. Trump, who lives in Trump Tower. “Times have been good, but times have been good for many people and many classes of people. I think there is a very large middle class – but not in this section, by the way.”

Little in the Middle

September 4, 2005. An op ed by David Dyssegaard Kallick, New York Times.

ON this Labor Day weekend, here’s something to think about: New York City’s middle class is shrinking. Once a solidly middle-class place, New York has become a city of rich and poor.

What’s going on, in part, is a worrisome shift in the structure of the New York job market. The economic boom of the 1990’s didn’t do much to lift middle-income New Yorkers; people in the top 20 percent captured virtually all of the benefits of the go-go economy. In recent years, job gains in New York have been primarily in very high-wage positions – like finance or professional services – and in low-wage jobs in areas like food, social and health services. Ask well-heeled professionals how much typical New Yorkers earn a year and they will often say $80,000 to $100,000, yet the median family yearly income in the city, according to census data, is just $47,000 – $7,000 below the national median.

Businesses continue to slash the number of mid-level jobs. Just look at banking, where managers are being hit by consolidations, customer service representatives are being replaced by automation and middle managers are being pushed out of their jobs. And some city computer and other technology jobs have moved offshore.

The portion of families in the city making $35,000 to $150,000 a year – a range that includes the middle class and then some – is 53 percent in 2004, down three percentage points since 2000. Nationwide, it’s 63 percent and fairly steady.

What should we do?

Rather than allowing so many of the new jobs created in today’s economy to be dead-end jobs, the city should do what has worked so well in Las Vegas: design training programs matched to employment opportunities to help workers advance. Community colleges can gear training toward specific career ladders to allow workers to advance from busboy to waiter to manager, or from hotel cleaner to receptionist to customer service representative.

Improving the pay for low-wage jobs is another crucial step. Albany’s decision last year to raise the minimum wage was the best single action the state could have taken to help low-income New Yorkers. And there is no reason that tourism jobs or teaching in a day care center should pay less than a solid living wage. Manufacturing jobs tend to be good jobs today, but they weren’t in the early part of the 20th century – it was unions that improved work conditions and wages. Unions can still make the difference (full disclosure: my organization, the Fiscal Policy Institute, gets some financial support from unions). Unionized office cleaners in New York typically make $38,000 a year and have health care, vacations and pensions, while the national average is $22,000. City policies can help unions grow by requiring companies that do business with the city to remain neutral if their workers want to join a union. The city also can improve job quality through measures like requiring that companies provide health benefits, as the City Council just did with a veto-proof majority for New York supermarket workers.

At the same time, the city should do more to hang on to the good jobs we already have. While the bulk of apparel production is bound to happen overseas, smart land-use policies can provide a space for small producers that work with retailers to respond quickly to the market. Similarly, it is counterproductive to let luxury condominiums displace thriving hotels – and good hotel jobs.

Report after report about the New York economy has recommended diversification. Yet city officials seem to have eyes mostly for high-end finance and media companies, luring them with subsidies and fancy new office developments. While such jobs are critical to the New York region, we should do more to encourage other types of companies to stay and grow here. Small start-ups that want to expand are squeezed out by the high price of office space, and businesses outside the favored sectors get little attention or resources from economic development officials. The city’s economic development policies should focus on increasing the number of middle-class jobs, not just on real estate development.

A final piece of the puzzle is to encourage middle-income people who work in the city to live in the city. Nothing would do more to keep middle-class families in the city than developing more affordable housing and improving city schools. Mayor Bloomberg talks a good game on housing, but his expenditures to date are still far below levels during the Koch administration. And state officials have yet to resolve the Campaign for Fiscal Equity lawsuit, which would infuse a substantial amount of much-needed money into New York City schools. Both of these investments, made intelligently, would be repaid many times over by families who bring vitality and sustainability to the city economy.

New York has strengths that make it a magnet for people and businesses from around the world. The energy that flows through this city could readily drive an engine that lifts families into a swelling and prosperous middle class. Today, however, that motor is driving us apart rather than pushing us forward together.

State of Working New York 2005: New Yorker Workers Treading Water in a Tenuous Recovery

September 4, 2005. Gains of growth go to corporate profits and high-wage earners, while the middle class shrinks. The tenuous economic recovery of the past two years has been characterized by such weak wage growth that most of New York’s working families have been left treading water, according to the latest edition of the State of Working New York.  FPI’s State of Working New York series, published biennially since 1999, provides comprehensive and up-to-date analysis of the data available on the conditions facing workers and working families in New York State.

New Yorker Workers Treading Water in a Tenuous Recovery
Gains of growth go to corporate profits and high-wage earners, middle class shrinks

The tenuous economic recovery of the past two years has been characterized by such weak wage growth that most of New York’s working families have been left treading water, according to the latest edition of the Fiscal Policy Institute’s biennial report on the State of Working New York.

“These trends are evident around the state and add up to an economy that faces enormous challenges in achieving a shared and sustainable prosperity,” said Frank Mauro, the Fiscal Policy Institute’s executive director.

While the overall New York economy has grown at a modest rate over the past two years, the new report concludes that workers have not been sharing fully in the fruits of this growth. At the national level, corporate profits have increased five times faster than total wages since early 2001. In New York, economic output per worker increased by 6 percent from 2001 to 2004, while average wages increased by only 1.8 percent.

And even this very modest increase in the average wage masks the difficulties faced by most New Yorkers. Only high-wage workers (80th percentile) received a modest real wage increase of 2.3 percent between 2001 and 2004. Real wages for workers in the bottom half of the wage distribution are in fact no higher than in 2001. In other words, the gains of increased productivity are virtually all going to corporate profits and high-wage earners, with most workers seeing no real gain.

Although there has been a decline in manufacturing jobs nationwide, the decline in upstate New York areas has been much steeper than for the U.S. as a whole. New York has lost 21 percent of its factory jobs since 2000. Three heavily-manufacturing dependent upstate metro areas – Rochester, Binghamton and Elmira – continued to lose jobs into the first part of 2005 and have experienced fairly substantial 5 to 10 percent job declines since 2000.

Across the state, the net loss of thousands of good paying jobs has meant that the “hollowing out” of the middle of the income distribution continued at a rapid pace.

According to Census Bureau data, there was a decline of over 50,000 families with incomes between $35,000 and $150,000 between 2000 and 2003. During this same period, however, the number of families with incomes above $150,000, and the number with incomes below $35,000 both increased.

As in many parts of the country, including the downstate New York areas and the Hudson Valley corridor, the rapid rise in housing prices and the explosion in home equity borrowing and home mortgage debt have been among the major forces driving the economy.

“For the areas within New York that have been growing in this tenuous recovery, much of that growth has been fueled by the super-heated housing market and the explosion of household debt readily evident at the national level,” commented Fiscal Policy Institute chief economist James Parrott. “Unfortunately, that spur to New York’s growth may end as the Federal Reserve pushes interest rates higher,” added Parrott.

An important bright spot in the report is the data showing that New York’s recent increase in the minimum wage did not dampen job growth among low-wage workers. The first step of a three-step increase occurred on January 1, 2005, bringing New Yorkers from the federal minimum of $5.15/hour to a New York minimum of $6.00/hour. Contrary to warnings of opponents to the increase, the number of jobs in industries employing large numbers of low-wage workers grew significantly after the first step of the increase took place. Retail jobs increased 1.8 percent in the first half of 2005 compared to the first half of 2004, considerably faster than either the state’s overall growth rate or the rate of increase in retail jobs nationally. The next phases of the increase will raise the minimum to $6.75/hour in 2006 and $7.15/hour in 2007.

The report also provides detailed economic profiles for each of the state’s 10 labor market regions, including data on population, wage, income, and job trends as well as a list of each region’s largest employers and a discussion of regional prospects.

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Understanding and Evaluating the New York State Legislature’s Proposed Budget Process Constitutional Amendments

September 1, 2005. Frank Mauro sets out the legal parameters of the New York State budget process, describes how they would change if the amendments were adopted, analyzes the interrelated concepts upon which the S1/S2 reform package is based, and critiques that approach. Analysis >>

The “Single Sales Factor” Formula for State Corporate Taxes

September 1, 2005. A boon to New York economic development or a costly giveaway? You be the judge. This report by Michael Mazerov of the Center for Budget and Policy Priorities is an update of a study first published March 27, 2001. Report >>

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