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New York's Changing Middle Class

The Drum Major Institute and Baruch College's School of Public Affairs co-sponsored a conference in April 2007 on whether the middle class dream can survive in New York. At the conference, titled The American Dream in the Big Apple: Is New York City still a middle-class town?, CUR's John Mollenkopf presented the numbers in a slide show (see PDF link on this page) that set the stage for an informed discussion by city officials and others during the day. The text of his presentation is below, and also at Gotham Gazette's transcript of the proceedings. Other speakers included former Governor Mario Cuomo and NYC Comptroller William Thompson.

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Download DMI Middle Class conference - Mollenkopf presentation.pdf (51Kb)

"The Winner and Losers"

By John Mollenkopf

There is an economic paradox in New York City. In some ways, the city is prosperous: There are gains in employment, higher than average incomes, rising prices for housing and a construction boom. At the same time, the numbers of people on the bottom and on the top of the income distribution are growing, and New York City's middle class is shrinking. The income distribution in the city is growing more unequal over time. And yet, we do not feel the level of class resentment that might be thought to be inevitable from the income distribution numbers.

Over the past three decades, New York City's employment numbers have fluctuated between 3.2 million and 3.8 million jobs. And the fiscal health and prospects of the city have ridden the rollercoaster of employment. We have experienced three steep drops in unemployment since the 1970s. There was the fiscal crisis in the mid 1970s when the city was in dire financial shape. We grew our way out of that into the late 1980s, but then we experienced a second recession, even sharper in some ways than the previous one. We once more worked our way out of that and reached a peak of employment in 2000. The city had a third - also sharp, but less deep - dip in the economy after September 11, 2001. The city has recovered in many ways, but we still haven't made it all the way back to the peak numbers.

Despite these fluctuations in employment, if you add together all the money of all of the people who work in the city, as reported to the state unemployment insurance system, New York has experienced fairly steady growth. There has been an even sharper rise in the annual average wages by the people working in the city. In other words, even when employment dips, people don't necessarily earn less money.

All of these numbers point to upward growth in the total amount of earnings, the amount of money that people have in their pockets. These measurements of the city's economy give us an image of prosperity.

Of course, there are problems with these numbers. People don't always accurately report their income to the government. And these numbers do not take into account what people must spend on housing, health care or other expenses that have increased as well.

If you divide the residents of the city into five income brackets and then look at the number of people in each category, you see a picture of the city's changing class structure.

Between 1990 and 2005, the number of people in the bottom two-fifths of income grew substantially. The number of people in the third and fourth brackets of income decreased. And the number of people in the top one-fifth in income stayed about the same.

And if you look at how much New Yorkers in each bracket earned, you will find that the fruits of the economic prosperity that the city has experienced over the last 15 years is concentrated at the top. If you looked at the top five percent, or the top one percent, or the top one-tenth of one percent, you see that each of those refined groups was receiving a more and more disproportionate share of the growth in income.

Anyway you look at it -- and there are hundreds of ways to look at income distribution and how to define the middle class -- we are seeing a growth in polarization or more unequal income distribution. In particular, the top part is growing, relative to the others, not only in terms of how many people are clustered there , but also in how much of the gain they have gotten. In terms of income and the share of wealth, those at the top are pulling away from those in the middle and bottom.

So why isn't there more anger in the streets?

The number of white households, which are generally on the top, has been declining and shifting toward the upper end of the distribution. To a lesser extent, this is also true of people in households headed by native-born African-Americans and native-born Hispanics. While blacks and Hispanics tend to be toward the lower end of the income distribution, their overall numbers are also in decline. And lower-income blacks and Hispanics have been moving out of the city. Native-born poor people are moving out over time to places where they do not face competition from immigrant, low-wage workers who have been flooding into New York City.

The low-wage workers who have been flooding into New York City in recent years are immigrants. But if you look at the other immigrant groups and classify them by race, the immigrant groups are fairly evenly divided across the income brackets. Many of these people are poor, but many are middle class and even upper class. The one group that really stands out as not fitting that pattern are people living in Hispanic immigrant households. They are clustered at the bottom of the economic ladder.