Manhattan, King of the Income Gap

First came word that Gotham was the only city in the country with a population over 1 million to record in increase in poverty. Now the Times reports that Manhattan has the biggest income gap of any county in the United States. The top fifth of earners in Manhattan now make 52 times what the lowest fifth make (that's about $7,047 on the bottom for every $365,826 on the top, or about two cents for every dollar!). In case those numbers didn't make the point: The disparity in Manhattan is roughly equivalent to that of Namibia.

New York County, according to one economist, is "an amplified microcosm" of conditions in the rest of the country. But really amplified. In the second richest county, Clay County, Georgia the disparity between the top and bottom quintile is about 38x, roughly where Manhattan was in 1990. The reason for the growth in disparity, many argue, has to do with the "hollowing out" of the middle class as manufacturing jobs decrease and menial work pays less (or the same). Further the "heavy preponderance of corporate headquarters, the financial sector and the legal sector in New York City has made the increase in the ratio more extreme than in other parts of the country."

And then for the final kicker, the Times gives us a choice quote from The Donald (what, Leona Helmsley was busy?): "The income gap, while supposedly increasing, seems to be a natural phenomenon. Times have been good, but times have been good for many people and many classes of people. I think there is a very large middle class – but not in this section, by the way."

Photograph from Positve-Negative

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By Garth Johnston in News on September 4, 2005 10:18 AM

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tenant in Manhattan.

Well, a couple of comments...

New York City has the honor of being one of the few places in the country where one could earn $40,000 a year and still only afford a room in a run-down neighborhood in a tiny apartment just barely wide enough to fit a bed.

Maybe if people spent more time understanding the underlying supply/demand characteristics of the rental market rather than wasting a huge amount of time and money on market-distorting travesties like rent regulation which have the net effect of reducing the amount of affordable housing in the region then poor people would have a better place to live. But, it's much easier to institute price controls---which have never worked in any capacity in any place or time in history---than it is to think critically about what you actually want to achieve and attempt to form policies that are likely to move The City in that direction.

First, there's nothing magical about Manhattan as opposed to Brooklyn. So, there's income inequality in Manhattan. Yeah. So what? It's completely arbitrary to just cut a tiny island out of an enormous city and say that there's income inequality.

Second, the way that you reduce rents is heaven forbid: increase the supply of apartments. It's a shockingly new economics theory, but: if you increase the supply to meet the demand then the prices will actually fall! Whoever discovered that should be given a Nobel prize.

You could also improve public transportation. That would effectively increase the supply of housing that is a reasonable commute to work.

Rent regulation leads to increased income inequality because it gives employers a large group of employees who do not actually pay the real cost of living in an area and hence do not need to earn as much money. Because they have less need to earn money, they are willing to accept less thus increasing the income inequality. It's not like they'd live here if they couldn't afford to, is it? So, income would have to increase to such a point that they could afford the natural rent---or the jobs would disappear.

Cranky Independent

Unlike much of the rest of the region, New York City has a wide variation in incomes because it is one of the few places where the poor have not been zoned out (by limiting development to one-family homes) that he non-poor have not fled.

Bronxville and Newark do not have wide variations in income. One keeps out the poor, one repels the non-poor. Which one is considered a model by those who whine about income diversity?

tenant

New York City has the honor of being one of the few places in the country where one could earn $40,000 a year and still only afford a room in a run-down neighborhood in a tiny apartment just barely wide enough to fit a bed. If someone makes $25,000 a year (the brand-new lowered salary of new NYPD recruits), it's nearly impossible to survive in this city. The number one cause for this is the high price of housing.

Get this~~Mayor Mike Bloomberg is *against* repealing the Urstadt Law. Gee, thanks Mike.