To judge by the press and popular perception, Brooklyn is rapidly evolving into a very different kind of place. Actors and celebrities are moving into Brownstone neighborhoods, now mostly populated by parenting yuppies. Artists and fashion models have moved into Williamsburg. Tourists from Europe and Asia vacation in Prospect Park. And natives who are too good for mass transit continue to reside in neighborhoods represented by Anthony Weiner and Lew Fidler. The wave of affluence spreading out from Manhattan has even pushed into formerly poor neighborhoods such as Bushwick and Crown Heights, brining fears of displacement and hordes of real estate developers in their wake.
Recently released Local Area Personal Income data from the Bureau of Economic Analysis, however, tells a different story. The per capita income of Brooklyn, which equaled the national average in 1969, the first year of the data series, and was 92 percent of the national average (8 percent below average) as recently as 1990, fell to 82 percent of the national average in 2000, the peak year of the previous economic boom. In the second-to-peak year of this economic boom, 2006, it was still just 82 percent of the national average, a loss of 18 percent from 1969. While different neighborhoods may be subject to different trends, it hardly seems as if the affluent are rushing into Brooklyn and washing everyone else out.
The annual Local Area Personal Income release from the BEA occurred on April 24th, and I’ve started to look through it to gather any unreported and counter-intuitive insights I can. The attached spreadsheet shows per capita personal income as a percent of the national average for New York State’s counties and metro areas in one worksheet, and total personal income as percent of the state total in a second worksheet, for selected years corresponding with peaks and valleys in the former statistic.
New York State’s share of the nation’s population continues to fall, as stability here contrasts with growth elsewhere. But despite the massive shifts in the state’s economy over the years, New York State’s relative personal income in 2006 was right were it was in 1969 — 20 percent above average. The low for the state was just 7 percent above average in 1979, at the end of Downstate New York’s worst decade relative to the rest of the country ever. The booming 1980s recovery left the state at 21 percent above the national average in per capita income in 1990. The most recent recession, in the wake of 9/11 knocked that down to 15 percent above average, before another recovery. It is possible that 2007 will show the state more than 20 percent above the national average in per capital income, because the recession hit other parts of the country before hitting New York.
While the state as a whole is right where it was, there have been large shifts in relative affluence among the state’s counties. Brooklyn’s experience of declining per capita income relative to the national average is typical of most counties in the state. Queens, whose per capita income was 32 percent above average in 1969 but 8 percent below average in 2006, has fallen farther, as has the Bronx, which went from just 6 percent below average in 1969 to 33 percent below average — among the poorest highly populated counties in the country — in 2006. Rounding out the outer boroughs, per capita income in recently-developed Staten Island is down slightly relative to the national average since 1969, but remained 10 percent above that average in 2006.
The agricultural and industrial counties of Upstate New York have also lost per capita income relative to the national average, though generally not as much as Brooklyn, the Bronx and Queens. The most highly populated of these Upstate counties — Monroe (Rochester), Schenectady, Erie (Buffalo), Onondaga (Syracuse), and Broome (Binghamton) have generally lost less, and remain higher, relative to the national average than those outer boroughs, while rural counties have lost as much and/or are as poor. Per capita income in Monroe and Schenectady counties remains slightly above the national average.
More than offsetting all these counties with below average and diminished relative incomes is a small number of wealth centers. Manhattan remains the U.S. county with the highest personal per capita personal income in the country at $110,292, triple the national average in 2006. In 1969 Manhattan’s per capita income was slightly more than double the national average. Westchester is second in both per capita income (nearly double the national average) and change since 1969 (up from 65 percent higher) a difference of 27 percentage points. But Nassau, Suffolk, and Rockland are also up 20, 20 and 18 percentage points over those years, and 70, 28, and 39 percent above average. These counties are where most of the wealthy in the state live.
Most of New York State’s wealthy work in Manhattan, and as will be discussed later, Manhattan accounts for a huge and growing share of the state’s economy. Based on the distribution of per capita income by place of residence, it appears that the best-paid people working there generally live either in Manhattan or in the suburbs (including those in Connecticut and New Jersey) to an even greater extent than in the past. While there are some corporate lawyers in hedge fund traders in Brownstone Brooklyn to be sure, they are not typical — the subways are more likely to be filled with administrative assistants, sales clerks, waiters, and building maintenance workers.
A small number of additional New York State counties had higher per capita incomes, relative to the national average, in 2006 than in 1969. Almost all of these have some link to the economic dynamism of Manhattan. Counties such as Putnam, Dutchess, and Columbia might be described as the telecommuter-zone. They are too far away to live well while commuting to Manhattan each day, but close enough to maintain contact with Manhattan work, thanks to MetroNorth. Several counties in the Adirondacks, second home territory for affluent people, are poorer than the national average but more affluent, relative to the national average, than they used to be. Albany County contains the state capital, which sucks Manhattan money north, and Saratoga County the Capital District’s fastest growing suburbs as well as the resort area.
Manhattan residents now account for 21% of the personal income of New York State residents, up from just 14.2% in 1979 (see second worksheet). Manhattan plus the most affluent suburban counties — Westchester, Rockland, Nassau, and Suffolk — account for nearly half of the personal income of all state residents, up from just under 38 percent in 1969. New York City’s outer boroughs have gone in the other direction — their residents accounted for nearly one-third of the state’s personal income in 1969, compared with around one-quarter today. Brooklyn residents have gone from 12 percent of the state’s personal income in 1969 to less than 9 percent in 2006. Upstate residents’ share of the state’s personal income has also fallen, but not as severely.
Getting back to Brooklyn, where is the perception of affluence coming from, and why doesn’t it square with the facts? Part of it may have to do with race. Brooklyn may be getting whiter, but not richer.
New York City has had an ongoing influx of young college graduates from elsewhere in the metropolitan area and United States, many white, over the years. In Brooklyn, most have settled in the Brownstone belt or, more recently, in north Brooklyn. College graduates are certainly better off in the long run than high school dropouts, but those who arrive with Harvard MBAs and work on Wall Street tend to settle in Manhattan, while many of those getting whatever jobs than can and living two to a room to cut costs live in Brooklyn. Young people tend to have lower earnings than experienced workers, and the city’s school system — and shortage of family-sized housing — has tended to drive the college educated out to the suburbs as their income starts to rise.
Throughout the United States, moreover, more recent generations are worse off than those who came before — at every age. The “income” tabulated by the Bureau of Economic Analysis includes not only wages but also the value of employer-provided health insurance and pensions, which younger generations are much less likely to get. They also don’t get the public housing, Mitchell Lama housing and rent regulated housing others have already occupied. And, as discussed in previous posts, many young college graduates today are made “independent contractors” rather than employees, denied benefits, and forced to pay New York City’s unincorporated business tax to boot. For these struggling young adults, like in Brooklyn isn’t like life in Sex and the City, Seinfeld, and Friends (all of which supposedly took place in Manhattan), just as the immigrants of a century ago found the streets were not paved with gold.
The fast-growing Hasidic and Orthodox Jewish communities tend to have moderate and middle-class household incomes, but per capita income is reduced by the large number of little capitas running around.
On the southern rim of Brooklyn, from Bay Ridge around to Canarsie, middle class senior citizens — many with government or union pensions and health care younger people do not get — continue to be replaced by immigrants from abroad. The immigrants come from all over, but in Brooklyn there has been a particular surge of white arrivals from Eastern Europe. While younger generations of Russians, Ukrainians and Poles may become affluent someday, the arrivals themselves — like the arrivals from Europe a century earlier — tend to start out be working class. The replacement of a single widow by a family of four with equal or even higher income, of course, will by definition pull per-person income down.
While racial perception may lead to an overestimate of the affluence of Brooklyn’s Whites, it may also lead to an underestimate of Brooklyn’s Blacks. Brownsville and East New York are, of course, high poverty areas. Last time I looked, however, the median household income of East Flatbush was quite high; although the almost exclusively Black area had relatively few college graduates, it had an above average share of high school graduates, and an above average share of adults who were working.
In some areas, in fact, Whites may be gradually replacing Blacks not because they are more affluent but because they are willing to live in more crowded conditions — in “urban dorms” similar to their college living arrangements. Or they are willing to become “house poor” by devoting a larger share of their income to housing, at least during the housing bubble. If they are successful, meanwhile, those who grew up in neighborhoods such as Crown Heights may be choosing to. The north Brooklyn trend may be a mirror-image of the 1960s and 1970s, in other words.
Some neighborhoods, such as Park Slope, are certainly more affluent than they were in 1969. The data, however, indicates that concern about the gentrification of Brooklyn overall is misplaced. The whole “neighborhood character” issue that generates the hostility that pops up on Brownstoner and Curbed from people who came here 25 years ago from the suburbs toward those who came here 5 years ago from Ohio — is also misplaced.
I’ll worry about the gentrification of Brooklyn, the “suburbanization” of Brooklyn, and/or the “Manhattanization” of Brooklyn when the borough’s per capita income relative to the national average, and poverty rate relative to the national average, get back to where they were in 1969. Not only have we not completed that journey, despite some stunningly positive economic trends (I’ll try to get to those later) we haven’t even started it. So there is no need to fear, and no cause to sneer, at that young guy or gal from some declining burg in Ohio or the Ukraine (or anywhere else for that matter regardless of race, for that matter).