I recommend reading Scott Winship on inequality in New York city alongside Mitchell Moss’s defense of Michael Bloomberg’s tenure as mayor of New York city.
Median household income in the city dropped 5 percent to 6 percent between 2007 and 2011, according to the official Census Bureau definition of the term, after adjusting for changes in the region’s cost of living. However, the Census Bureau definition of income fails to take into account many government policies that mitigate income losses. At the national level, median incomes dropped 7 percent from 2007 to 2011—but accounting for the value of noncash public benefits, employer-provided health insurance, and tax cuts intended to prop up consumer spending wipes out that loss entirely. So middle-class incomes in New York are probably somewhat higher in 2013 than they were before the recession (when they were as high as the city had ever seen).
The official poverty rate shows that 21 percent of New Yorkers were poor last year, up from 18.5 percent in 2007, but this figure also misleads. When a researcher with the liberal Center on Budget and Policy Priorities accounted for noncash benefits and tax breaks, he found that, instead of rising from 12.5 percent to 15 percent between 2007 and 2011, the national poverty rate increased only from 10 percent to 11 percent. Had he included health benefits in his calculation, the increase would have been even smaller and might have disappeared entirely. Meanwhile, the average income of the top 1 percent of New Yorkers fell by an amazing 44 percent between 2007 and 2009, and nationally, the average for the top 1 percent was still 14 percent lower in 2012 than in 2007.
Today, poverty in the city is no more prevalent than in the late 1970s, when the top began taking in a growing share of income, and median income is at least 25 percent higher. These trends are national in scope and reflect factors that are largely outside the influence of mayors.
To understand the Bloomberg years, it is important to understand that New York city has a large population of less-skilled workers, many of whom are foreign-born. Given that a local government has only a very limited ability to influence larger tax and spending priorities, it is instructive to consider how the Bloomberg administration responded to this landscape. As Moss observes, the continued emphasis on improving public safety contributed to a tourism boom (New York city now attracts more than 50 million tourists a year) which spurred employment growth “in restaurants, hotels and retail, especially for those with limited English skills and formal education.” Some of the Bloomberg’s most inexplicable priorities, like his efforts to expand the Javits Center, a convention center, and his failed bid to secure the Olympics in 2012 can be understood as a kind of homegrown industrial policy aimed at bolstering job creation and wage growth at the low end of the labor force. The same is true of his notorious enthusiasm for drawing expatriate billionaires and millionaires to New York, on the grounds that lavish spending by the ultrarich translates into service jobs.
Without endorsing Bloomberg’s policy priorities, it is important to acknowledge that Bloomberg has been in many respects more serious about the changing U.S. labor market and the realities facing less-skilled workers than most elected officials. Pie-in-the-sky enthusiasm for manufacturing jobs never really dies in New York city politics, and people often neglect the real challenges facing immigrants with limited English skills and formal education (regularizing the status of these immigrants might improve their relative position, but the labor market position of less-skilled workers won’t stop deteriorating) and the real challenges that are created by them (supplementing low wages is expensive and educating the children of the less-skilled is labor-intensive). Because Bloomberg was never going to embrace moderate restrictionism — to do so would have been political suicide in New York, not least because any mayor has to work with a large unauthorized immigrant population, and calling for limits on less-skilled immigration wouldn’t have meshed with his cosmopolitan sensibilities — he had to deal with the question of how to generate employment opportunities for this population. He embraced a strategy that was entirely coherent: attract more high-productivity workers who will need to outsource household production, and who won’t burden municipal services; attract tourists, who will help spread the burden of services with high fixed costs (you need roads, mass transit, and effective policing whether or not you attract tourists); and improve the quality of K-12 schools to retain middle-income and upper-middle-income parents as their children age, and to make a long-term investment in children from more modest backgrounds.
Bloomberg’s strategy could have gone much further. The Bloomberg administration has, as Moss makes clear, facilitated the transformation of many close-in neighborhoods by championing new development. Yet New York city’s building boom has not been big enough to absorb rising demand for housing in the five boroughs, as Stephen Smith of The Next City has observed:
According to classical economic theory — which Michael Bloomberg and his administration once embraced, but which Burden now seems to now doubt — it’s not supply that staves off price increases, but supply meeting demand. Demand for housing in a particular city can be difficult to estimate, but New York hasn’t gotten any less desirable compared to the rest of the U.S. over the past decade. It seems reasonable to assume that at a minimum, the demand for housing is equal to the nation’s population growth rate. (In reality, New York would almost certainly have to build more than this to keep up with demand, both because of its rising “stock” and because of its suburbs’ even more pitiful housing production numbers.)
From 2000 to 2011, the U.S. population grew 10.4 percent. Local housing data isn’t generated each year, but in 2011 the New York City Housing and Vacancy Survey found that the five boroughs had a total of 3.35 million housing units, up from around 3.2 million in 2002.
Keeping up with U.S. population growth would have meant that New York city would now have somewhere in the neighborhood of 3.5 million housing units. During the Bloomberg years, the city built roughly half that amount — of the 247,000 units that were permitted, only 170,000 were built. (I’ve written about policies New York city might pursue to increase housing supply, as has Brandon Fuller in City Journal.) Had the city build more units over the last decade, the affordability problem would have been greatly alleviated, and this would have allowed New York to retain and attract more workers and consumers. The next mayor would do well to pursue different transit priorities as well.
If you’re going to snipe at Bloomberg, you should offer some alternative. If you don’t like stop-and-frisk, tell me how you would improve public safety in a cost-effective way. If you don’t think increasing the supply of housing is the right way to reduce its price, what do you propose instead? And if you believe that New York city should continue to be the destination of choice for less-skilled immigrants with limited English skills and formal education, how do you propose helping them achieve economic self-sufficiency in an era of skill-biased automation and how do you prevent this influx from raising the share of households earning poverty-level incomes before taxes and transfers? There are, I’m sure, answers to these questions. But I certainly haven’t been hearing them from Bloomberg’s critics.
There are complaints about Bloomberg from the right as well, though they tend not to get much of a hearing in New York city. The chief criticism, which you often hear from Manhattan Institute scholars Fred Siegel and Nicole Gelinas, is that Bloomberg didn’t do enough to address the city’s looming fiscal challenges, including the rising cost of pension and health benefits for city workers. This is incontrovertibly true. Others criticize the Bloomberg administration’s paternalistic public health measures, which strike me as a mixed bag. Nanny-statism on the local government level strikes me as less offensive than nanny-statism on the state or national level, as you can always vote with your feet. But more to the point, this nanny-statism flows from the aforementioned challenge of addressing the problems facing the less-skilled, whether native- or foreign-born. The prevalance of metabolic disease among poor New Yorkers has a real fiscal impact. Soda bans and transfat bans might not be the ideal way to tackle the problem. But just as liberal critics need to put up or shut up, conservative critics ought to do the same. Simply declaring that New York city should not bear the cost of bad decisions made by poor New Yorkers is an intellectually serious response. You’ll notice, however, that populist critics of nanny-statism rarely go there, at least not in New York. And I say this as someone who thinks that the (so-called) soda ban was a clear case of overreach.