In honor of Labor Day, I have appended the latest median household income and poverty data from the American Community Survey (for New York City, the boroughs and the U.S.) to the attached spreadsheets showing this data over the long term. I have data going back to 1970 for poverty (actually 1969, because the census asked about income the year before), and back to 1949 for median household income, so this presents a longer-term view than what you might have read in the newspaper. Certainly this is a different city, and a different country, than it was in 1969, when the city hit its highest payroll employment level, and 1950, when most historians believe New York City reached its pinnacle of national importance. Over that length of time, national economic changes overwhelm in importance anything specific to New York, and inflation makes dollar figures meaningless – the U.S. median household income was $2,619 in 1949, and a penny was actually worth something. By comparing New York City to the national average at each point, however, we can see how New York City residents have fared relative to the rest of the country. And the data show that the average New Yorker, in the time between 1999 and 2006, finally recovered from the early 1990s recession, though remaining worse off, relatively, than in the city’s pre-1970s heydays.
Newspaper comment on the American Community Survey release has focused on the wide disparity between rich and poor in New York City. I attribute this to the city’s inherent nature as a place that attracts the wealthy (unlike, say, Detroit and Newark) and yet bends over backward to find a place for the poor (unlike surrounding suburbs, which use zoning to exclude them). A century ago, when recent immigrants were jammed into the Lower East Side at levels of crowding and in conditions found nowhere else in urban American, and mansions were being built along Fifth Avenue, were things any different? The newspaper accounts also found that poverty did not decline from 2005 to 2006. This surprised me at first, but not on second thought. Gentrification, it seems, is leading to a replacement of the working class by the college educated, but not a replacement of the poor by the affluent or working class. There are few yuppies in the projects, so it isn’t the poor who are losing their places, or so it seems.
Looking long term, New York City’s poverty rate was 31 percent higher than the national average in 2006, and was 32 percent higher than the national average in 1989. So deep was the early 1990s recession that despite the strong growth in the second half of that decade, New York City’s poverty rate was 42 percent higher than the national average that year. That is a bigger difference than in 1979, when the city’s poverty rate was 38 percent higher than the national average. In 1969, the city’s poverty rate was 14.9%, just 8.3% worse than the national average of 13.7%. I’ll be worried about gentrification leaving no place for poor people in New York City when the city’s poverty rate approaches its 1969 level, and/or the national average. For now, however, that does not seem likely, as the city’s poverty rate has changed relatively little since rising in the 1970s.
The local poverty rate, relative to the national average, shows how many of the worst off people are living in one’s community. Per capita income, which is just total income divided by the number of people and is thus highly influenced by the big earners, measures the number of rich people in one’s community and how rich they are. As I wrote HERE, Bureau of Economic Analysis data shows that New York City is now richer than average by this measure, with Manhattan by far the richest county in the United States, rich enough to pull up the city’s average despite the fact that the other boroughs are well below average or, in the case of Staten Island, barely above.
The best measure of how the typical household is doing, not the richest or the poorest, is median household income, which is the income of the middle household if all households are listed from the one with the lowest to the one with the highest income. That household had an income of $46,480 in 2006 in New York City according to the American Community Survey, just 4% lower than the national average of $48,451. In 1999, the average New York City household had an income that was 17% lower than the national average. That is a stunning improvement, and puts the income of the average New York City household relative to the rest of the country back where it was in 1969, when it was also 4% lower than average. But it doesn’t bring the city quite back to 1989, when the average NYC household had an income that was just 1% lower than average. Neither does it account for the difference in living costs here, particularly housing costs that were inflated by a housing bubble both in 1989 and in 2006.
There was a time, however, when the average New York household had a higher household income than the national average, prior to the suburban flight of the 1960s (in the 1950s people moved to the suburbs because they couldn’t afford houses in the city, not because they were running away). In 1949, New York City’s median household income was 17% higher than the national average, compared with 17% below in 1999. The median household income was 20% higher than average in the Bronx, 26% higher than average in Brooklyn, 46% higher than average in Queens, 32% higher than average on Staten Island – and 10% lower than average in Manhattan.
Yes Fifth Avenue was Fifth Avenue and Park Avenue was Park Avenue in 1949, and as a result Manhattan’s per capita income was higher than the national average even then. Overall, however, the outer boroughs were middle class, and Manhattan the poorest borough, backing the pre-gentrification days. As late as 1979, in fact, Manhattan’s median household income was 17% below the national average, higher than the devastated Brooklyn and the Bronx but much lower than Queens. In 2006, on the other hand, the average Manhattan household earned 24% more than the national average, second only to Staten Island among NYC boroughs where the average household earned 42% more than average. But Staten Island’s median household income is inflated by having relatively few one-person households, while Manhattan’s median household income is reduced by having many. Looking at family and non-family households separately, Manhattan’s median income is almost as high as Staten Island’s for the former and very, very high for the latter.
Why was the early 1990s recession so deep? Because an entire middle-class economic base was wiped out. I’m not talking about the much-lamented decline of Manufacturing. That sector had already declined extensively by 1989, and compared with the national average, had been mostly concentrated in low-wage industries (Apparel, light assembly of items like electronics and toys) in any event. High wage manufacturing moved out with the Navy Yard, overall manufacturing employment peaked in the early 1950s (early 1900s, aside from a WWII-related boom in Manhattan), and massive manufacturing losses occurred mostly in the 1970s. It is back-office “pink collar” employment for secretaries, clerks, receptionists, and telephone answers, and those who supervised them, that was wiped out in the early 1990s, a loss that (from a public policy and political perspective) was completely ignored.
From 1970 to 1980 the number of city residents employed in blue collar occupations fell by 225,000, according to the census. From 1990 to 2000, the number employed in administrative and office occupations fell by 116,000 with many suburban residents losing jobs as well. This loss includes both the 1989 to 1994 loss and the subsequent partial recovery. What will happen next? It is hard to think of a sector that is destined to lose as many jobs as manufacturing in the 1970s and back offices in the late 1980s and early 1990s. Finance will likely lead the downturn, but it provides fewer jobs than it used to thanks to all that automated and outsourced work, and will probably recover in a year or two. But finance provides a larger share of New York state and local tax revenues that it once did. That is why I believe the coming recession will be milder here than in the rest of the United States, and will be a bigger threat to taxes and public services than to jobs. But that is what I thought in 2000 as well, before Bin Laden upset my assumptions. We’ll have to see.