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.