Politics & Policy

Where the Middle Class Goes to Die

Bright lights, big city, high cost of living. (Bogdan Hoda/Dreamstime)
In progressive Manhattan, inequality is maxed out.

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.)

Inequality per se is a relatively minor and generally misunderstood issue, inasmuch as if New York’s median household earned four times what it does now but its top–5 percent households earned ten times what they do, there would be more income inequality but a much higher overall standard of living for rich and middle-class alike. What is particularly salient about the progressive governance of places such as New York City and San Francisco is not the income inequality coincident with it — which has many causes, only some of which are directly related to public policy — but the myriad ways in which misgovernment makes these cities such hostile places to live for people of relatively modest means.

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.

On the other hand, supply is highly restricted, and that is a direct consequence of bad public policy, an economic reality that is obvious even to such sympathetic progressives as Matt Yglesias, who sensibly notes that limitations on the number of new housing units in places such as Washington, D.C., bias construction toward high-priced luxury homes, while hostile zoning codes in places such as San Francisco prevent markets from responding to demand and lead to “deliberately underutilized” mass-transit arteries. In New York City, housing prices are kept artificially high by draconian restrictions on new construction, rent control and the less aggressive “rent stabilization,” political interference with development financing, onerous union rules that drive up construction prices, byzantine regulation that imposes enormous compliance costs, and more. Even in a city in which four of the five boroughs are located on islands, there are vast tracts of underused real estate, the development of which could alleviate housing expenses for the middle class and the poor.

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.

Most Popular

Economy & Business

Who Owns FedEx?

You may have seen (or heard on a podcast) that Fred Smith so vehemently objects to the New York Times report contending that FedEx paid nothing in federal taxes that he's challenged New York Times publisher A. G. Sulzberger to a public debate and pointed out that "the New York Times paid zero federal income tax ... Read More

The Kaepernick Saga Drags On . . . off the Field

Colin Kaepernick’s workout for NFL teams in Atlanta this weekend did not run smoothly. The league announced an invitation to scouts from every team to watch Kaepernick work out and demonstrate that he was still ready to play. (As noted last week, the workout is oddly timed; the NFL season is just a bit past its ... Read More

Israel’s New Way of War

Commuters on Route 4, driving toward the Israeli coastal city of Ashdod on November 12, were shocked by an explosion, a rocket impact next to a major intersection. Had it fallen on a car or one of the many trucks plying the route, there would have been deaths, and the road would have been closed. Instead, police ... Read More
White House

Decide Trump’s Fate at the Ballot Box

If Donald Trump’s presidency is going to end before 2025, it should end at the ballot box. A lot of what has been revealed by Trump’s desire to see Ukraine investigate Joe and Hunter Biden -- or at least publicly announce an investigation -- merely confirms character traits, instincts, and habits that have ... Read More