New York Is Rebounding for the Rich. Nearly Everyone Else Is Struggling

As New York City approaches a gradual recovery from the economic setbacks caused by the pandemic, Manhattan, the city’s financial hub, has reached a sobering milestone. It now boasts the most substantial income inequality of any large county in the United States.

In a city already renowned for its stark contrasts between opulent living and severe poverty, this widening income gap is particularly striking. According to 2022 census data, recently released this month and analyzed by demographic data firm Social Explorer, the top 20 percent of Manhattan residents had an average household income of $545,549. This is over 53 times the average income of the bottom 20 percent, who earned an average of $10,259.

Andrew Beveridge, President of Social Explorer, commented on this staggering inequality, noting, “It’s amazingly unequal.” He likened it to disparities seen in many developing countries. This income gap is the widest in the United States since 2006, when such data was first reported. Notably, the Bronx and Brooklyn also rank among the top 10 counties in the nation concerning income inequality.

This latest data reinforces the uneven nature of New York City’s recovery from the pandemic. While wages have risen across the city, the benefits have primarily accrued to the affluent. Jobs have returned, but many of these are low-paying positions. While unemployment has decreased, it remains significantly higher among Black and Hispanic residents. This dichotomy underscores a growing divide: the city is rebounding, but many of its residents are not.

James Parrott, Director of Economic and Fiscal Policy at the Center for New York City Affairs at the New School, stated, “We’re still much worse off than we were in 2019.”

The Department of Housing and Urban Development reports that nearly 20 percent of public housing residents in New York City earn less than $10,000.

Middle-income New Yorkers are also feeling the pinch. Roger Gunning, a 50-year-old sanitation worker and resident of public housing in the South Bronx, shared his struggles, saying, “I make $22 an hour, and I still can’t survive on my own in New York.” He noted that some of his co-workers are forced to live in temporary shelters.

Dr. Parrott explained that middle-income New Yorkers have been hit hard by stagnant wage growth in service jobs and the slow recovery of key industries, particularly retail, which experienced a more severe contraction in New York compared to most other parts of the country.

When adjusting for inflation, the median household income in New York City dropped to less than $75,000 between 2019 and 2022, marking nearly a 7 percent decrease. This decline is four times the national rate and represents the most significant income drop among major U.S. cities. For comparison, San Antonio experienced just over a 5 percent drop, with median household income falling below $59,000. Phoenix, on the other hand, saw a significant improvement with an almost 8 percent increase in median household income, reaching nearly $76,000.

Chino Zeno, a 21-year-old construction worker earning $23 per hour installing solar panels, expressed his frustration with the impact of inflation on his finances. To cover rising costs of food and gas and help with expenses at his family’s apartment in East New York, Brooklyn, he also works as a freelance photographer. Despite a recent pay increase, which followed his transition from a part-time warehouse job earning $16 per hour in 2021, he still finds it necessary to hold down a second job.

Zeno summed up the challenge many New Yorkers face, stating, “One hundred is the new $20 bill. It’s hard for people right now.”

The already affluent have benefited the most from rising wages, according to labor data analyzed by the Center for New York City Affairs. Low-paid workers, like restaurant servers and child care professionals, who made an average of $40,000 last year, saw their salary increase by just $186 every year from 2019 to 2022, when adjusted for inflation. But highly paid earners, who made an average of $217,000 in fields like technology and finance, received an average pay bump of $5,100 in each of those years, or 27 times more, in extra income, than low-wage earners.

Picture: NYT

A recent analysis of labor data by the Center for New York City Affairs reveals a stark contrast in wage growth between the already well-off and low-paid workers. While highly paid earners in fields such as technology and finance, who averaged $217,000 annually, enjoyed an average pay increase of $5,100 each year from 2019 to 2022, their low-wage counterparts, including restaurant servers and child care professionals with an average income of $40,000, saw a meager salary rise of just $186 annually when adjusted for inflation.

The city has made significant strides. In August, the labor force participation rate was at a record high, and the unemployment rate was 5.3 percent, down from a pandemic peak of over 21 percent in May 2020. But New York has yet to fully recoup the jobs lost since the pandemic, while much of the nation already has, in part because the virus struck the city sooner and businesses, including those tied to hospitality and tourism, remained closed longer, Dr. Parrott said. Other popular entry-level jobs like couriers and home health aides have seen their wages lose ground to inflation.

Despite notable progress in New York City, including a record-high labor force participation rate and a decreased unemployment rate of 5.3 percent in August, down from its pandemic peak of over 21 percent in May 2020, the city has not completely recovered the jobs lost during the pandemic. This lag in recovery is attributed in part to the city being hit by the virus earlier than other areas and the extended closures of businesses tied to the hospitality and tourism sectors. Additionally, wages for popular entry-level jobs like couriers and home health aides have failed to keep pace with inflation.

Charles Lutvak, a spokesman for the mayor’s office, credited the job growth to initiatives like the expansion of youth employment and apprenticeship programs. “But we have more work to do, and we won’t stop until every New Yorker has access to a quality, family-sustaining job,” he said in a statement.

Charles Lutvak, spokesperson for the mayor’s office, attributed the city’s job growth to various initiatives, including the expansion of youth employment and apprenticeship programs. He emphasized their commitment to continue working toward ensuring that all New Yorkers have access to quality, family-sustaining employment opportunities.

Wage growth has been stunted for many New Yorkers in part because the minimum wage, set at $15 an hour, has not increased since 2019, Dr. Parrott said. Among the 10 largest American cities, five have raised their minimum pay in that period by an average of 25 percent, and four of them have higher minimum wages than New York City.

Wage growth in New York City has been hampered, in part, by the stagnant minimum wage, which has remained at $15 per hour since 2019, according to Dr. Parrott. In contrast, five of the ten largest American cities have increased their minimum wages by an average of 25 percent during the same period, with four of them now surpassing New York City’s minimum wage.

Many labor groups are pushing for a $21-an-hour minimum wage, which itself could fall short of the cost of living, because the city does not scale pay to inflation, said Gregory Morris, the chief executive of the New York City Employment and Training Coalition, an association of work force development groups. Next year, New York State will raise the minimum to $16 an hour in the greater New York City area and $15 statewide. In 2027, the minimum wage will be pegged to inflation.

Several labor organizations are advocating for a $21-per-hour minimum wage, although this amount may still not adequately cover the cost of living, as the city does not adjust wages for inflation, according to Gregory Morris, CEO of the New York City Employment and Training Coalition, a consortium of workforce development organizations. In the upcoming year, New York State plans to increase the minimum wage to $16 per hour in the greater New York City area and $15 statewide, with provisions to peg it to inflation in 2027.

“This is a working people’s city, as the mayor points out, but I think the question now is, which working people?” Morris asked.

Gregory Morris posed a crucial question, noting that New York City has long been characterized as a city of working people. However, he raised concerns about which segments of the working population are truly benefitting from the city’s economic growth.

For Khadijah Bethea, 42, a single mother raising three children on the Lower East Side of Manhattan, finding work is not the problem. It’s the hours.

Khadijah Bethea, a 42-year-old single mother raising three children in Manhattan’s Lower East Side, doesn’t struggle to find work; rather, her challenge lies in the demanding hours associated with her employment.

After losing her job as a security guard at a bank in 2020, she started working as a server for catering events around the city — up to 70 hours a week, seven days a week.

Following her job loss as a bank security guard in 2020, Khadijah Bethea transitioned to working as a server at various catering events across the city. Her new role required her to put in long hours, often up to 70 hours per week, working every day.

At over $25 an hour, the jobs were worthwhile, but all-consuming, she said. “I caught a bad anxiety attack one day. You worry about not spending enough time with your children, so I said, ‘I need to find something else to do.’”

While the pay for her server role exceeded $25 per hour, Khadijah found the job to be all-consuming and stressful. She experienced a severe anxiety attack, leading her to reflect on the importance of spending time with her children and prompting her to seek alternative employment.

Ms. Bethea enrolled earlier this year in a 14-week career training program run by Henry Street Settlement and Stacks + Joules, two nonprofit organizations. The free program helps lower-income job seekers find work in heating and ventilation system management for large buildings.

Earlier this year, Khadijah Bethea enrolled in a 14-week career training program offered by two nonprofit organizations, Henry Street Settlement and Stacks + Joules. This program, which is free of charge, assists individuals with lower incomes in securing employment related to heating and ventilation system management for large buildings.

She graduated in May and is now enrolled in another training program that pays $20 an hour — less than she made waiting tables — but has the opportunity for career growth and the possibility of working remotely some days. For now, she still works about four catering gigs a week.

Khadijah successfully completed the program in May and has since joined another training program that offers a wage of $20 per hour. Although this is less than what she earned as a server, the position presents opportunities for career advancement and the potential to work remotely on certain days. Currently, she continues to work approximately four catering jobs each week.

A significant dilemma for job seekers is that taking the time to learn new skills can be costly, especially in an expensive city like New York, said Anisee Alves-Willis, a program director for YouthBuild, a six-month employment program through St. Nicks Alliance, a nonprofit community services group.

One significant challenge faced by job seekers is the expense associated with acquiring new skills, particularly in a costly city like New York. Anisee Alves-Willis, a program director for YouthBuild, a six-month employment program offered by the nonprofit community services group St. Nicks Alliance, highlighted this dilemma.

The time commitment is a luxury many low- and middle-income workers can’t afford, even when stipends are included.

Even when stipends are provided, the time commitment required for skill development can be a luxury that many low- and middle-income workers cannot afford.

Angelita Mendez, 35, a beautician who moved to Washington Heights in Manhattan from the Dominican Republic in 2021, began taking free English lessons last year with a nonprofit service provider.

Angelita Mendez, a 35-year-old beautician who relocated from the Dominican Republic to Washington Heights in Manhattan in 2021, initiated free English lessons with a nonprofit service provider in the previous year.

She only made it about halfway through the course before bills started to pile up — the $1,600 a month rent she splits with her mother, the $1,100 a month she pays to lease a booth in a salon and the rising cost of groceries for her two children. She makes about $600 a week, or around $31,000 a year.

Angelita Mendez was unable to complete the English course as financial pressures began mounting. She shares a monthly rent of $1,600 with her mother, incurs a monthly expense of $1,100 for leasing a booth in a salon, and faces increasing grocery costs for her two children. Her weekly income amounts to roughly $600, equivalent to an annual income of around $31,000.

“I don’t have the time to do it, honestly,” she said in Spanish, but hopes to one day return to the class, become proficient in English and use her skills to study cosmetology.

Expressing her circumstances in Spanish, Angelita Mendez revealed that she currently lacks the time to continue her English lessons. Nevertheless, she aspires to return to the course at some point, attain proficiency in English, and leverage her language skills to pursue studies in cosmetology.

Where would her newfound skills take her?

Probably New Jersey, she said — where it’s cheaper.

Angelita Mendez anticipates that her newly acquired skills could lead her to opportunities in New Jersey, where the cost of living is more affordable.

The analysis of labor data in New York City reveals significant disparities in wage growth, with higher-income earners experiencing substantial pay increases while low-wage workers struggle to keep up with inflation. Although the city has made progress in terms of employment rates, the recovery of lost jobs from the pandemic remains a challenge, particularly for certain industries. Calls for a higher minimum wage and concerns about the affordability of skill development programs highlight the difficulties faced by many low- and middle-income workers in the city. Despite these challenges, individuals like Khadijah Bethea and Angelita Mendez are taking steps to improve their career prospects and financial stability, emphasizing the importance of accessible training programs and affordable living conditions in the city.

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