Most of the time, those elsewhere in the state don’t bother to justify the fact that New York City residents are expected to pay local higher taxes (all taxes combined) as a share of their income while receiving inferior public services, and those in older generations don’t justify why younger people should face higher taxes and a diminished quality of life. The simply assert that they and people like them deserve more, and no one makes them face the fact that others will be left with less. To the extent that it is justified, however, the reasons include “they don’t need it,” “they don’t deserve it,” and “we don’t have it. New York City residents are simultaneously scored for being rich and scorned for being poor, while the “good people” who “make it on their own” by being “hard working” live elsewhere. Except in recessions, when there isn’t enough money to go around and, well, the good people deserve to keep what they’ve got. In light of a 40-year river of contempt, I’ve compiled from recently-released BEA data on where New York’s money comes from and where it goes. Basically, it comes from Manhattan, and goes everywhere else.
As the data shows, if the mostly government-funded health care and social assistance sector is excluded, Manhattan once again accounted for more than half of New York State’s private sector earnings by place of work in 2006. I didn’t say New York City. I said New York State. New York City overall accounted for nearly 61 percent of the money earned in the state, with the Downstate Suburbs accounting for somewhat less than 20% and Upstate New York accounting for somewhat more.
And that’s just directly. The reason that residents of the Downstate Suburbs accounted for 27.9% of the personal income earned by state residents, while businesses in those suburbs accounted for just 18.3% of the earnings is money earned in the state, is money earned by surburbanites in Manhattan. And when that money is spent in the suburbs, that generates part of the 18.3% earned there. The reason that residents of Upstate New York accounted for 27.0% of the state’s personal income but its private businesses accounted for only 20.9% of the money earned in the state is taxes collected in Downstate New York (earned in Manhattan) and spent in Upstate New York. Adding in the indirect effects, Manhattan may account for three-quarters of the state’s economy.
Government earnings, in fact, accounted for 22.7% of the money earned in Upstate New York, compared with 16.3% in the Downstate Suburbs, 16.5% in the United States, and just 10.4% in New York City. And many of New York City’s best paying government jobs, by state law, are held by commuters from the suburbs, while New York City residents are generally barred from government jobs outside the city, one of zillions of distinctions just like is. No wonder the State of New York continually passes laws asserting that New York City public employees are expected to do less for New York City residents in exchange for more.
New York City’s public spending is more likely to flow to the non-profit health care and social assistance sector, primarily via Medicaid. That sector accounted for 8.1% of the money earned in New York City, but that is lower than the 9.3% in the United States, the 12.45 in the Downstate Suburbs, and the 11.5% in Upstate New York. So it would appear that New York City doesn’t have a disproportionately large health care and social assistance sector in terms of earnings (it does in terms of employment), but a disproportionately large share of the money spent on that sector in New York City comes from government payments.
Indeed government transfer payments, including in-kind payments such as Medicaid, accounted for 18.2% of the income of city residents in 2006, far above the share in the Downstate Suburbs or the United States, but even in this case lower than the share in Upstate New York at 19.3%. In addition, many of those government “jobs” in the rest of the state are really not real jobs at all, but the equivalent of “welfare” for “hard working” people.
If there is anything more ridiculous than suburban and Upstate residents sucking money out of New York City while sneering at it, it is outer borough politicians sneering at Manhattan. It isn’t just that many residents of the outer boroughs work in Manhattan and travel there every day by subway. It is that one-fifth to one-third of the income of outer-borough residents is received with no work in return at all, and comes from transfer payments funded by federal, state and local taxes paid by people who work in Manhattan. And a huge share of the earnings of those working in the outer boroughs comes from the health care and social assistance sector, also funded primarily by taxes paid by those working in Manhattan.
New York State and New York City are lucky to have a dynamic economic engine such as Manhattan. But the State of New York, in order to enrich interests with a very high sense of entitlement, might very well destroy it, either by destroying the transit system or choking it off with high and discriminatory taxes. If the lords of finance don’t kill it off be destroying the reputation of the city’s businesses for fair dealing first.