The Applied Sciences NYC Initiative: FPI Testimony

September 28, 2012. In testimony submitted to the New York City Council Committees on Economic Development, Higher Education and Technology, James A. Parrott, FPI’s Deputy Director and Chief Economist, concluded that the “Applied Sciences NYC Initiative” represents an important step in diversifying the New York City economy.  According to Parrott, this initiative, which includes the plan for the development by Cornell and Technion Universities of a new engineering campus on Roosevelt Island, as well as projects involving NYU and Columbia University, is “a conscious effort to move the city beyond its reliance on the finance sector” and that it “has borne considerable fruit in just three years.” The testimony also raises a number of concerns and makes a number of suggestions for increasing the likelihood that the ambitious projections for the initiatives’s long-term economic benefits are borne out over time.

NYC’s Rising Poverty and Falling Incomes Since the Great Recession

September 27, 2012. The latest data from the Census Bureau on poverty and incomes in 2011 clearly show that New York City has a long way to go to make up for the erosion in living standards caused by the Great Recession of 2008-09. Since the start of the recession, 200,000 more city residents have fallen into poverty, bringing the total to 1.7 million out of a population of 8.1 million.  For 2011, the federal poverty threshold for a 3-person family was $17,916.

Poverty has increased and incomes have fallen each year since 2008. NYC’s poverty rate climbed from 18.2% in 2008 to 20.9% in 2011, an increase of 2.7 percentage points, the same as for the nation as a whole (the U.S. poverty rate went from 13.2% to 15.9% over this 3-year period).

The number of city residents living in “deep poverty,” considered to be half the official poverty threshold, increased from 2008 to 2011 even faster than the city’s overall poverty increase (deep poverty grew 15.3% vs. a 13% increase in poverty overall).

NYC family incomes have been battered particularly hard by the recession and historically weak recovery. Adjusted for inflation, median family incomes dropped by 8%, falling by nearly $5,000 from $59,100 in 2008 to $54,300 in 2011. Nationally, median family incomes dropped by 7.2% from 2008 to 2011.

This dramatic income erosion among NYC residents largely results from a 7.8% drop in real median wage earnings, which went from about $35,000 in 2008 to $32,200 in 2011. Median wage earnings includes both full-time and part-time jobs held by city residents and reflects the increase in involuntary part-time work since the recession began, and the fact that most of the city’s net job growth since the recession began has occurred in industries paying below-average wages. Plus, real median wages for NYC full-time workers dropped in 2010 and 2011.

In 2011, 400,000 workers, or one in every 10, were paid wages that kept them in poverty.  These 400,000 constitute the “working poor”, i.e., those who work either part-time or full-time but with family incomes below the poverty line.

While over a third of the city’s adults living in poverty had less than a high school education, the city’s weak labor market means that poverty is affecting more and more of New York’s college-educated population as well. Between 2008 and 2011, poverty rose 20 percent among the college educated, or one-and-a-half times as fast as the overall poverty increase. The poverty rate among those with a 4-year college degree increased from 6.6% to 7.6%.

The city desperately needs the sort of recovery that shares the fruits of economic growth with all workers, rather than continuing to be heavily concentrated in the hands of a small elite. According to the latest Census Bureau data for 2011, there has been no lessening of New York City’s extreme inequality since 2007.

The U.S. needs more immigrants to grow the economy and create jobs

September 26, 2012. An opinion piece from the George W. Bush Institute on why immigration matters to the economy.

Data show that immigrants are highly entrepreneurial, putting their skills to good use creating new jobs in the U.S. economy. A June 2012 study published by the Fiscal Policy Institute reports that 18% of all small business owners in the U.S. are immigrants. This is especially impressive considering immigrants make-up less than 16% of the civilian labor force and account for less than 13% of the total U.S. population. That same report finds that among small businesses for which at least half of the founders were immigrants, these firms “employed an estimated 4.7 million people” and “generated an estimated total of $776 billion in receipts in 2007, the most recent year for which these data are available.”

New poverty and income inequality data should be a call to action

September 21, 2012. Data released by the Census Bureau yesterday casts additional light on New York’s high poverty rate and its extreme income inequality. The poverty situation is particularly dire in the Upstate cities and among children. When those two factors are looked at together, alarm bells should be going off in policymakers’ offices.

More than half the children in Rochester and Syracuse lived in poverty in 2011 and Buffalo (46.8%), Schenectady (50.8%) and Albany (37%) were not far behind. See Table 1 for the overall family and individual poverty rates, and for the poverty rates for major age groups and two family types, for the 30 cities and towns, and five New York City boroughs in the state covered by the data (i.e., communities with populations of 65,000 or more).

Table 2 has the overall poverty rates and the child poverty rates for the 39 counties covered by the new data. Tables 1 and 2 both show the great differences that exist within New York State in terms of economic status. For the 30 large cities and towns, the overall poverty rates ranged from 3.2% in the Town of Oyster Bay to 36.7% in the City of Syracuse. For the 39 large counties, the poverty rate ranged from a low of 5.8% in Putnam County to 30.4% in the Bronx. Three Upstate counties had poverty rates estimated to be above 20% – Oswego and Tompkins at 21% and 20.2% in Chautauqua County. (The Tompkins county figure is somewhat anomalous because of the large numbers of graduate and undergraduate students living in Ithaca.)

Statewide, New York’s poverty rate increased from an estimated 14.9% in 2010 to an estimated 16% in 2011. This raised the number of persons living in poverty in New York State by 206,000 to slightly over 3 million. According to the Census Bureau, New York was one of 16 states with statistically significant increases in this measure of the percentage of the population living below the poverty line. The state level information on poverty is summarized in a new Census Bureau report. The increase in the national poverty rate was also statistically significant, up from 15.3% to 15.9%.

The information released yesterday is from the Census Bureau’s 2011 American Community Survey. Frequently referred to as the ACS, this survey provides data for the nation, all 50 states, the District of Columbia, Puerto Rico, every congressional district, every metropolitan area, and all counties and places with populations of 65,000 or more.

Since 2006, the ACS has been reporting an estimated Gini index of inequality for states, cities, and other governmental jurisdictions. The Gini index measures the inequality of incomes for a given area in a range from zero (all incomes are equal) to one (one household has all the income). The higher the index value, the greater the  degree of inequality. For the years 2006-2010, New York State had the highest Gini index value among all states, indicating the greatest degree of inequality. In the new 2011 estimates (Table 3), New York again ranks first followed by Connecticut, Louisiana, and New Mexico. Wyoming had the lowest estimated degree of income inequality.

Failure to support the Affordable Care Act and expand Medicaid in New York State would threaten 2011 progress in health care coverage

September 20, 2012. After years of watching the number of New Yorkers without insurance climb higher and higher, we are finally seeing the trend reverse, thanks to health care reform and Medicaid. The data released today by the U.S. Census Bureau underscores the urgency for New York to implement health care reform.

According to the Census Bureau’s 2011 American Community Survey data, overall health insurance coverage in New York increased slightly from 2010 to 2011, from 88.1 percent to 88.6 percent.

Private health insurance coverage continued to decline though, from 67.9 percent in 2009 to 65.1 percent in 2011. Health insurance provided by the government grew over this same time period -from 31.8 percent in 2009 to 34.1 percent in 2011.

An exception to the overall drop in private health insurance coverage lies within the 18 to 24 year old age group. An increase in overall coverage for these young adults was driven by the growth in their coverage under private health insurance – up by almost 89,500 persons from approximately 1, 131,000 in 2010 to 1,220,400 in 2011. This represents a statistically significant 4.5 percent increase in coverage from 57.8 to 62.4 percent.

Just as striking is the 2011 increase in the number of New York children under 18 years of age covered by Medicaid – up by almost 89,000 from approximately 1,587,000 in 2010 to 1,676,000 in 2011. This represents a statistically significant increase of 2.4 percent for this age group. Given that the total number of uninsured under 18 year olds went down by only 27,600 – from almost 208,500 in 2010 to over 180,800 in 2011 – it is likely that many children previously covered by private insurance or other public insurance are now being covered by Medicaid.

The American Community Survey asks respondents to report their health insurance at the time of the survey (“point-in-time”). A person uninsured at the time of the survey but insured at a different point during the year is identified as uninsured in the ACS.

If New York Is Adding So Many Jobs, How Come Unemployment Keeps Rising?

September 20, 2012. A story reported by Ilya Marritz for WNYC.

Tracking the City’s Poor

September 20, 2012. Anjali Athavaley of the Wall Street Journal writes about new data on poverty from the Census Bureau’s American Community Survey. Link requires subscription; excerpt below.

Of the boroughs, the Bronx had the highest rate in 2011, with 30.4% of the population living in poverty in 2011. Manhattan experienced the largest increase, from 16.4% to 18.3%.

Some economists pointed to New York’s high unemployment as a driving factor in poverty.

“While we’ve had job growth that looks good relative to other places, it hasn’t been that robust,” said James Parrott, chief economist at the Fiscal Policy Institute, a liberal-leaning think tank.

David R. Jones, president and CEO of the Community Service Society of New York, an anti-poverty group, called the city’s recovery “anemic.”

“It’s not bringing workers back in,” he said. “If they do get jobs, they’re getting extraordinarily low-wage jobs with no benefits.”

Income declines as property taxes soar

September 20, 2012. Census data show similar 3-year results statewide: a story by Joseph Spector in the Poughkeepsie Journal.

The data show what has been a perennial problem in New York: high taxes compared to wealth. Median household income in New York fell 1.4 percent from $56,033 to $55,246, but property taxes rose 18 percent, census data released today show.

Many New Yorkers “have property-tax bills that are an inordinate share of their income,” said Frank Mauro, executive director of the Fiscal Policy Institute, a labor-backed think tank in Albany. “The point we make is that too many in New York state have to pay more than 10 percent of their income in property taxes.”

Immigrants Can’t Save U.S. Cities by Themselves

September 17, 2012. An op ed by Shikha Dalmia, Bloomberg View. Dalmia is a Detroit-based senior analyst at Reason Foundation.

What is true, contrary to the bellyaching by anti-immigration restrictionists, is that [immigrants] are a net boon – not a burden – for local economies. A recent Standard & Poor’s study found that U.S. cities with a “significant” immigrant population improved their credit rating because even low-wage foreigners pay taxes that help defray the cost of services.

There is also evidence that immigration and growth are strongly correlated. A study by David Dyssegaard Kallick of the New York-based Fiscal Policy Institute examined the experience of the 25 largest metropolitan areas, starting in 1990. He found that wherever there was economic growth, there was immigration, and wherever there was immigration, there was economic growth.

From 1990 to 2000, New York’s economic-growth rate was directly related to an increase in immigrants’ share of the local labor force, Kallick found. They were crucial to the city’s recovery in the 1970s when the declining population was causing its tax base to erode and the crime rate to soar – similar to what Rust Belt cities such as Detroit and Cleveland have been experiencing.

Top 1% are 288 times richer than you!

September 13, 2012. A new post on hlntv.com covers the Economic Policy Institute’s recent release of the 12th edition of  The State of Working America. Taking up the measurement of income inequality, the article also mentions a report that FPI released December 2010, Grow Together of Pull Farther Apart? An excerpt from the article:

The idea of the 1% can get really complicated when you factor in various definitions of what qualifies members of that group. Data from one model from the Tax Policy Center in Washington, D.C., defined the top 1% in 2009 as those who made $503,086 or more.

The richest 1% of households in New York saw their share of income in the city jump from 12% in 1980 to 44% in 2007, according to a study by the Fiscal Policy Institute. New York houses a lot of executives, doctors, lawyers and managers in a variety of industries and increases in their incomes have contributed to the changing income inequality there.

There’s no doubt that economic disparity has become a huge problem in this country; the debate is over how to fix it. There’s a lot of anger and a lot of frustration out there, and creating opportunities for the 23 million Americans who are unemployed or underemployed would be a step in the right direction.

“Our history suggests it’s better to open the road to riches for those Americans than to raid the gold pot at the end of it,” wrote author Nina Easton, in the September 24, 2012 issue of Fortune Magazine.