Pulling apart: The continuing impact of income polarization in New York State
November 15, 2012. A new report from the Fiscal Policy Institute shows that various income measures all point toward the same conclusions: In recent years, polarization has intensified; and New York has been one of the national leaders in this undesirable trend. The top one percent share of income dipped during the recession, but has started to rise again in the recovery. Further, no state is more polarized than New York and no large city is more polarized than New York City, (using the broadest measure of income polarization, the Gini index, as estimated by the US Census Bureau). This is in part because poverty is greater in New York State and New York City than in the nation overall, and partly because the finance sector, with its sky-high pay levels, is such a prominent part of the local economy. Other factors are also important, but these are the two that “bookend” New York’s polarization.
In this new report, FPI updates its earlier analyses of income polarization, showing the top one percent share of income, the top-to-bottom and top-to-middle income ratios, the gini index, and other measures. The report uses data from the household surveys conducted by the U.S. Bureau of the Census, income tax data which includes a more accurate indication of capital gains income and high incomes generally, and data from a new national study by the Center on Budget and Policy Priorities and the Economic Policy Institute.
While many actions will be needed to reverse New York’s income polarization, an important step currently being considered in Albany is boosting the state’s minimum wage, which the report shows has lost 30% of its purchasing power since the early 1970s.