A new report being released today by the Census Bureau finds that Manhattan has the highest level of income inequality in the United States. That is not entirely surprising, though it would also not have been surprising if it had been San Francisco or another progressive fiefdom. For all the rhetoric about wicked 1 percenters and inequality, progressivism is a luxury good, and progressive-dominated enclaves are generally pretty okay places to live if you have a fair amount of money, but sort of stink if you’re in the middle or at the lower end of the earnings curve.
Because most Americans experience New York City as tourists or in television shows and movies, it is easy to forget that the hometown of Wall Street and a very large population of obnoxious celebrities is a poor city: New York City is not only poorer than the New York State average, its median household income is, in absolute dollar terms, lower than that of such dramatically less expensive areas as Austin, Texas, or Cleveland County, Okla., where the typical household income is a few thousand dollars a year more than in New York City but the typical house costs less than a third of what the typical New York City home costs — and 17 percent of what the average Manhattan home costs. (And it’s a house, not a two-room coop.)
As indicated above, the income figures by themselves hardly tell the story. The median household income in the city of New York is a few hundred dollars a year more than the median household income in the state of Texas, but in practical terms the average New York City household is much worse off.
The most obvious issue is the cost of housing, which for New Yorkers is about four times what it is for Texans. Housing prices are a function of supply and demand, and demand for New York City housing is relatively high, a fact that probably does not have very much to do with public policy. I have lived in New York City for some time, and I have never met anybody who says he moved here because it is so well governed.
There is also the problem of the 13th month’s rent in New York City.
If you earn the median income of $52,223 in New York City and you live within the city limits — not just in Manhattan but in the distant Bronx and Staten Island, too — you pay the city nearly $1,800 a year in additional income tax for the privilege. You can basically forget about owning a home — the median house price in the city is more than a half a million dollars — but renting won’t be easy, either: Applying New York landlords’ prevailing 40-times-the-rent rule, you can afford about $1,300 a month; not impossible if you’re single, but a substantial challenge for a family. But in any case, you’ll be paying a 13th month’s rent and change to the city for the privilege of residing within its boundaries. Assuming you are single, taxes and rent would consume between 50 percent and 60 percent of your income. Move to Houston, and you’d get a $3,000-a-year discount before even accounting for the lower cost of housing.
If you are truly concerned about inequality, then that matters a great deal, because income inequality is only one kind of economic inequality, and one of the less important kinds: Wealth inequality is more significant. If the majority of your income is being consumed by taxes and rent, saving and investing becomes hard. And given progressives’ abysmal record in providing key municipal services such as effective law enforcement and decent public schools to low-income communities, there are powerful incentives to take on additional expenses by paying the premium for living in a better neighborhood or enrolling your children in private schools. When it comes time to pay for college or to leave behind a bequest for children or grandchildren — an important means of building wealth within families — you’re almost certainly better off in San Antonio or Provo than in New York or San Francisco.
Highly skilled, highly educated people are likely to do well wherever they are, and creative, dynamic, global cities such as New York are gold mines for them. But not everybody is going to be an investment banker or a tech entrepreneur. If you want to get a picture of what progressive policies look like for everybody else, try living in New York City for a year with an average New York City income — and try it with a family.
— Kevin D. Williamson is roving correspondent at National Review.