If You Can't Afford It, Don't Move to Manhattan
It's the Most Unequal Income Gap in the Country: The Wealthiest New Yorkers Make More Than 50 Times What the Poorest Earn
By MARCUS BARAM
Nov. 21, 2007 —
Lackawanna County in Pennsylvania is only a two hours' drive from New York City, but it may as well be a world apart.
Workers in the rural county, home to the Electric City Trolley Museum and plenty of coal mines, earn less than a fourth of Manhattan residents, roughly a quarter for every dollar earned by New Yorkers.
The average weekly salary in Lackawanna County is $634 compared to $2,821 in Manhattan in the first quarter of 2007.
And they're not alone -- workers in Manhattan command by far the highest salaries in the country. Most other large cities lag far behind, the closest ones being San Francisco at $1,639 a week and Washington, D.C., at $1,428 a week.
Manhattan has always been bigger and brighter when it comes to culture, personality, attitude and wealth. But life at the top has only grown more extreme in the last few years as salaries and real-estate prices in the city have mushroomed.
And salaries keep rising for already wealthy New Yorkers -- the average weekly wage increased 16.7 percent compared to the same period last year, according to the Bureau of Labor Statistics. That's the second-highest increase of any county in the country.
Only workers in Trumbull, Ohio, saw a larger percent increase (and they're still only earning $860 a week, less than third of workers in Manhattan.)
Manhattan's vast financial industry is driving this income gap; the average weekly pretax pay for workers in Manhattan's financial sector was $16,918 in the first quarter of 2007, an increase of about 25 percent compared to last year, according to the Bureau of Labor statistics.
And those numbers are actually much higher, since Wall Street is planning about $38 billion in bonuses this year, which works out to an average of $201,500 per person. That bonus is four times the median American family income of $43,000, enough money to snap up a Cessna plane and a new Mercedes S-Class 4matic sedan.
Part of the reason for this growth lies in the way the city has benefited from changes to the national economy, in which high-tech and financial industries have grown and the manufacturing sector has cratered.
"In this high-tech society, those types of skills are more highly rewarded," said Karen E. Smith, a senior research associate at the Urban Institute. "So you have these dual-earner, highly skilled couples coming here to take jobs in high-tech industries, finance, insurance and law."
And there are fewer jobs for middle class and working class people compared to other cities. "Not that many people in Manhattan work every day in a paper mill," said Iglitzin. "In other cities, like in Seattle, you still have pipe-fitters and longshoremen, old-school union jobs."
And one of the reasons that the rich get richer in Manhattan is that they've been able to take advantage of changes to the tax structure, said Smith. "You have lower taxes for asset income, capital gains, inheritance, dividends, interest income, than you did in the past so people who have these assets can build them up faster."
And Manhattan truly stands out as an island in the midst of a middle-class region. The average weekly salary is more than triple that of any other borough in the city.
The contrast is emblematic of the income gap in New York County, which encompasses all of Manhattan. The disparity between rich and poor is greater here than that of any other county in the country. The top 20 percent of workers earned $365,826 a year, more than 50 times what the lowest 20 percent earn, according to a 2005 analysis of U.S. Census Bureau data done for The New York Times.
In other words, the poorest 20 percent earn 2 cents for every dollar earned by the richest 20 percent. This is almost comparable to the income gap in Namibia.
"It's incredible," said Dr. Andrew A. Beveridge, sociology professor at New York's Queens College. "The income disparity in Manhattan is by far the most unequal in the U.S."
"It's a caste system in some ways," said Dmitri Iglitzin, a labor-law attorney. "You have the extremely wealthy who work in high-tech or information services or as lawyers and doctors and they're making huge amounts of money and they live in the city. And then you the other case of people who clean the hotel rooms, serve the meals in the restaurants, dump the garbage, deliver the food to the Whole Foods supermarket, drive the taxi cabs, and they typically don't live in the city because they can't afford it."
Much of that income then gets pumped into the real-estate industry, where prices for the limited amount of property in Manhattan grew 91 percent from 2000 to 2006. The average apartment in Manhattan brushed the $1 million threshold in 2004, according to the real estate firm Douglas Elliman. "Prices got crazy and people got squeezed out of Manhattan," said Beveridge. "The super rich are driving out the upper middle class, let alone the middle class. Neighborhoods that used to be affordable -- SoHo, Tribeca, Lower East Side -- now it's all yuppies."
And expect the gap to grow wider since those wealthy couples are having more kids who will have all the advantages of their upbringing. Beveridge points out some research he did in 2005 which showed that the average income for households with toddlers in Manhattan was $285,000. "If you can afford it, it's a good town for you."