As a campaign strategy, dividing voters into groups of rich elites and exploited workers is neither original nor bold. But the central problem with Bill de Blasios “tale of two cities” is that its wrong.
Yes, New York has some very wealthy people as well as many poor ones. But de Blasio goes much further than that.
His crusade against economic inequality is laid out in his policy book, “One New York, Rising Together”:
“Nearly 400,000 millionaires call New York home, while nearly half of our neighbors live at or near the poverty line. Our middle class isnt just shrinking; its in danger of vanishing altogether.
“Addressing the crisis of income inequality isnt a small task. But if we are to thrive as a city, it must be at the very center of our vision for the next four years.”
In fact, the evidence doesnt support de Blasios claims of mass poverty, a shrinking middle class and diminished opportunity — all caused, at least in part, by rising inequality.
Income inequality is higher in New York than almost anywhere else in the country. By one popular measure that compares the average income of households with the average income difference between households (known as the “Gini coefficient”), New York is the seventh most unequal of the 100 largest American cities.
Also true: The top 1 percents share of income has been rising since the late 1970s. But this growing wealth gap is a national trend.
Most important, contrary to de Blasios narrative, the incomes of the rich and of the rest tend to rise and fall together.
Median household income in the city dropped 5 percent to 6 percent from 2007 to 2011, according to the official Census Bureau definition of the term (after adjusting for changes in the regions cost of living). But the Census Bureau doesnt 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 non-cash 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 non-cash 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. (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.
And if inequality is harmful, we would expect New York to have some of the lowest incomes and highest poverty rates in America. In reality, fact, New York ranks ahead of 68 of the largest 100 cities in terms of median income.
None of this is to dismiss the extent of poverty in the city or the economic stress that middle-class New Yorkers face. But New York has not entered some new period where inequality has worsened the lot of “the 99 percent.”
Before the recession, inequality was steadily growing — particularly during the late 1990s boom — yet no one seemed terribly troubled by it.
Despite what de Blasio may think, and notwithstanding the citys real challenges, this is not the worst of times. But if the next mayor needlessly pits New Yorkers against one another, it wont be the best of times, either.
Original Source: http://www.economics21.org/commentary/new-york-tale-two-cities