State of Working New York 1999: The Illusion of Prosperity

September 1, 1999. Prosperity bypasses most New Yorkers. Wages fall, the upstate economy falters, and the ranks of the working poor rise over the 1990s. Press release below.

Prosperity Bypasses Most New Yorkers

Wages Fall, Upstate Economy Falters and Ranks of Working Poor Rise in 1990s

On this Labor Day, most New Yorkers find themselves less economically secure than a decade ago, according to a new report from the Fiscal Policy Institute, a New York State economic think tank.

Using a wide range of government data, The State of Working New York, The Illusion of Prosperity: New York in the New Economy paints a grim statistical portrait of New York State. The Institute finds that economic reality for most New Yorkers is out of sync with the positive news coming from Wall Street. “The Dow may be up, but family incomes and wages are down for most New Yorkers except the very well off,” said James Parrott, the report’s primary author and the Fiscal Policy Institute’s Deputy Director and Chief Economist.

Three broad trends are identified in the report:

  • Wages and incomes for most workers and families are declining in relation to the cost of living;
  • The state generally has been losing high paying jobs and gaining low paying jobs and the quality of individual jobs is also deteriorating; and
  • New York’s economic growth has been slow and uneven throughout the 1990s, with upstate lagging and downstate heavily dependent on Wall Street.

Some of the report’s major findings are as follows:

  • Middle income families have seen their incomes decline by 8% since the late 1980s while incomes for those in the bottom 40% of families have fallen by 13-15%. The richest 20% have had average income gains of nearly 30% over the decade.
  • As a result, the gap between rich and poor and between the rich and those in the middle is greater in New York than in any other state. The number of New Yorkers in poverty increased by one-third since 1989 to 3 million. Twenty-five percent of the state’s children, and 40% in NYC are growing up in poverty. New York’s poverty rate is now 16.5%, exceeding the nation’s, which  declined in the 1990s.
  • The median hourly wage fell 6.3% in the 1990s despite a 7.9% increase in productivity per worker. For Black and Hispanic men and women, median wages fell at least one-and-a-half times as much as they did for men and women overall.
  • New York has a higher percentage of people without health insurance than the U.S., and fewer New Yorkers have employer health and pension coverage than 20 years ago.
  • According to the 3 major economic indicators–job, income and output growth–the performance of New York’s economy has trailed the nation’s since 1992, and has lagged most of the 8 comparable industrial states of the Northeast and Midwest.

In New York City, the number of working poor families has jumped by 84% in the 1990s, more than three times greater than the U.S. increase. Income and wage declines in NYC since the late 1980s have been steeper than for the state, with incomes falling by almost
20%, on average, for all but the top 40% of families. The benefits of the Wall Street bull market have been highly concentrated among the well off, with the top 7% of New York households receiving 85% of all capital gains, most of which stem from the sale of stocks.

Since 1989, upstate regions have lost 175,000 high-paying manufacturing jobs, the core of the upstate economic base, and gained low-paying service jobs. Sluggish job and income growth in the 1990s has resulted in outmigration and net population declines. The report profiles each of the state’s 10 regions in detail.

To redress the state’s economic failures, the report makes recommendations in three areas: restoring wages to a decent level; investing in people and productive capacity, and redirecting state and local economic development policies. Four of the report’s specific recommendations are:

  • Increase and index the minimum wage to its 1968 level (approximately $7.65 in current dollars) in several reasonable steps, as part of a broader strategy to restore wages to a decent level and create an environment in which businessesthat pay a living wage are not undercut in the market place.
  • Strengthen the state’s educational system: ensure that all children receive a sound basic education; provide the resources necessary for all students to meet the new academic standards; and restore the State’s commitment to high quality andaccessible higher education.
  • Build an effective workforce development system utilizing the strengths of community and labor organizations to eliminate barriers to employment and guarantee that jobs pay a livable wage with benefits and offer opportunities for careeradvancement.
  • Develop and implement a comprehensive revitalization plan for the upstate cities that fosters collaboration between business, labor and community organizations to fully exploit each region’s technological and entrepreneurial potential and enhance the quality of life for area residents.

####