December 8, 2023

Poverty Rate Is Up in New York City, and Income Gap Is Wide, Census Data Show

“It’s not good news,” said David R. Jones, president of the Community Service Society, a research and advocacy group. “We’re three years into a recovery and the poverty rate is creeping upward. I don’t think this has to mean an all-out call for class warfare, but it’s a serious threat to the viability of the city of New York.

“This is going to drag us all down.”

Mr. de Blasio, who has attracted populist support with his message of economic inequality, said the latest census data reinforced the need for the next mayor to alter course. “I wish it didn’t,” he said.

His Republican opponent, Joseph J. Lhota, has accused Mr. de Blasio of promoting class warfare, but Mr. Lhota acknowledged on Wednesday that poverty remained a critical problem.

“There is no question that people are suffering in this economy,” Mr. Lhota said. “The key to lifting people out of poverty is through the creation of career jobs and education.” He said he would focus on diversifying the economy and creating additional affordable housing “to ensure more people make it into the middle class.”

The poverty rate rose to 21.2 percent in 2012, from 20.9 percent the year before, meaning that 1.7 million New Yorkers fell below the official federal poverty threshold. That increase was not statistically significant, but the rise from the 2010 rate of 20.1 percent was.

Despite such a gloomy picture, Bloomberg administration officials said the city was faring better than others.

“The national recession increased poverty rates across the country, but other major cities saw their poverty rates increase by more than what we have seen in New York City, largely because we’ve been a national leader in creating jobs and breaking the cycle of poverty,” Linda I. Gibbs, the deputy mayor for health and human services, said. “In 2012, the increase in poverty that resulted from the national recession leveled off, but there remains an enormous amount of work to do to connect those struggling to new jobs and opportunities.”

Since 2000, she said, the city has gone to 13th highest from 6th highest among poverty rates for the 20 biggest cities.

The census data did contain some other good news.

In the city, median household income inched up to $50,895, from $50,657, after declining for three years from its recent high of $54,695 in 2008. And 6 of the nation’s 10 largest cities had higher poverty rates, although 4 recorded declines compared with 2011. On average, New York had a lower poverty rate, fewer people without health insurance and a higher median household income than other major metropolitan areas.

A deeper look at the poverty rate showed that it varied widely and predictably. It was higher among black and Hispanic New Yorkers. Among children 17 and younger, 31 percent fell below the poverty line. So did 32 percent of families headed by a single mother, and 19 percent of New Yorkers ages 65 and over.

Fourteen percent had no health insurance, including 4 percent of children under 18. Fifty percent of homeowners with mortgages and 54 percent of renters spent 30 percent or more of their income on housing. The share receiving food stamps rose to 21 percent, from 20.6 percent.

Jilly Stephens, executive director of City Harvest, a food rescue organization, said, “The food insecure population of New York City remains immune from economic growth, and it is alarming that nearly two million New Yorkers could see their food stamp benefits cut in the coming weeks — which will make it even harder to put food on the table.” Ms. Stephens was referring to a battle in Congress over a farm bill, which some conservatives say must reduce spending on food stamps.

Joel Berg, executive director of the New York City Coalition Against Hunger, said some of the increase in food stamp recipients could be attributed to government policies, like shortening application forms and no longer requiring finger imaging. Still, he said, one million New Yorkers on Medicaid are not getting food stamps and “a large number would be eligible.”

A yawning income gap seemed to show a city that has become stratified with wealth concentrated in a small percentage of the population.

Citywide, the mean income of the lowest fifth was $8,993, while the highest fifth made $222,871 and the top 5 percent made $436,931 — about 49 times as much as those with the lowest income.

Manhattan retained the dubious distinction of having the biggest income gap of any big county in the country. The mean income of the lowest fifth was $9,635, compared with $389,007 for the top fifth and $799,969 for the top 5 percent — more than an eightyfold difference between bottom and top.

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Economix: Inequality Is Most Extreme in Wealth, Not Income

Typically, comments about rising inequality refer to the stark disparities in incomes of the very highest-paid Americans and everyone. We have observed in several posts, for example, that most of the income gains over the last few decades have gone to the very richest Americans. That means the highest-paid Americans have been claiming a larger and larger share of earnings.

Here’s a chart I put together showing what percentage of all of America’s income (including capital gains) is going to each of several income classes, today versus previous years:

DESCRIPTIONSource: Piketty, T. and Saez, E. 2007. Income and Wage Inequality in the United States 1913-2002. In Atkinson, A. B. and Piketty, T. Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries, Oxford University Press, Chapter 5; series updated by the same authors.

Pretty striking, right? As of 2008, about 21 percent of income was received by just 1 percent of earners.

But economic inequality isn’t just about how much you make — it’s about how much you have.

To that end, the Economic Policy Institute, a liberal research organization, has published a new report looking at disparities in wealth in the United States.

It includes this chart, showing estimates of what share of wealth each class claims:

DESCRIPTIONSources: Sylvia A. Allegretto, Economic Policy Institute; Edward Wolff, unpublished 2010 analysis of the U.S. Federal Reserve Board, Survey of Consumer Finances and Federal Reserve Flow of Funds, prepared for the Economic Policy Institute.

As you can see, the nation’s income distribution may be quite lopsided, but its wealth distribution is even more so.

The top 1 percent of earners receive about a fifth of all American income; on the other hand, the top 1 percent of Americans by net worth hold about a third of American wealth. (Note that the top income earners are not necessarily the same people as the top net-worth Americans — after all, lots of high-net-worth people don’t work or have much else in the way of sources of new income.) Wealth-related inequality has also been relatively stable over the last few decades, whereas income-related inequality has been growing since the ’70s.

Why is there more inequality in wealth than in income, both today and yesterday?

Remember that wealth accumulates over time. The highest earners are able to save much of their incomes, whereas lower earners can’t. That means high earners can accumulate more and more wealth as time goes on (assuming they don’t blow it all, of course).

Higher-earning Americans also have the resources to pay for better tax preparation, which helps them reduce their taxes and save even more money. On the tax front, note also that people who have already accumulated wealth stand to earn a lot in capital gains, which are also taxed at a lower rate.

But as I noted above, most of the attention paid to economic inequality pertains to what people are making each hour or each year, not what they already have stored up or what kind of cushion they have to fall back on. Perhaps that’s because most people  don’t have a firm grasp of how much they’re “worth,” but they can always look to their paychecks to see how much they have coming in, and can make easier comparisons to their neighbors.

Proposals for a wealth tax resurface periodically. The idea is always contentious since it basically requires double-taxation of earnings. There are lots of existing examples of double-taxation on the books, though.

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