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N.Y.C.'s Middle-Class Boom


N.Y.C.'s Middle-Class Boom

June 10, 2002
Urban PolicyNYC

In late May, the federal government released economic data from the 2000 Census that provoked a spate of press commentary that only the rich benefited from New York City's 1990s economic boom. But the press got it dead wrong.

Look more carefully at the newest Census data, and you'll see that something spectacular happened in New York in the ‘90s: a vast expansion of the middle class in each of the city's boroughs.

Far from being the decade of the rich, the ‘90s saw hundreds of thousands of modest New York households substantially improve their economic station—even as more than a million immigrants, many of them poor, flooded into the city.

Typical of the misleading coverage was a New York Times story that noted that median household income had declined in the ‘90s in every city borough except Manhattan. Nowhere in the story or the chart accompanying it did the Times mention a key detail: The paper had adjusted the 1990 data it presented for inflation. By neglecting to inform readers about the adjustment, the Times made it seem as if people were earning more dollars in 1990 than they are today—which isn't the case.

I'd like to believe that the Times just made an innocent mistake. But a few weeks later, when the Census Bureau released the same data for the whole country, the paper responded with a similarly misleading piece, with a lead and a headline stressing that not everyone benefited from the ‘90s economy—thus implying, as any Times reader would infer, that the poor got left behind and inequality increased.

By contrast, other major newspapers—The Washington Post, the Philadelphia Inquirer, The Christian Science Monitor -accurately emphasized the sharp nationwide across-the-board income gains, along with the decline in the number of those living below the poverty line. After the second Times Census piece, it became clear that the one-time paper of record can't be trusted on the subject of economic mobility.

To understand exactly what happened in the ‘90s, consider these facts. The 2000 Census shows that New York City welcomed a staggering 1,224,524 foreign immigrants over the course of the decade. A large number of these folks were poor; indeed, one important reason people have always come to the city from overseas is to improve their station in life.

IRS data show that people who immigrate to New York state and pay taxes have an average income of just $24,000 the first year they're here, well below the state's median income. (There are no comparable stats for Gotham, but the vast majority of immigration in the state occurs in the city, so the number is likely to be similar.)

The data show that immigration constantly replenishes the ranks of lower-income New Yorkers—and that this was especially true in the ‘90s.

Though many of these immigrants did better simply by coming here from poor Third World countries, they also sparked unprecedented competition for low-wage jobs in the city, causing wages at the bottom of the city's economy to decline slightly when adjusted for inflation. This decline is what constrained the city's overall income gains.

But given this influx of immigrants, what's truly remarkable is that poverty didn't soar and incomes at the low end of the scale didn't plunge.

Why not? Simple: While poor immigrants streamed into the city, the New Yorkers already here, including many lower and middle-income residents, were swiftly pulling themselves up the economic ladder.

The Census shows that the number of households in The Bronx earning under $25,000 a year—lower-income households, in other words—fell 8 percent during the 1990s.

Yet The Bronx welcomed 167,666 immigrants in the 1990s, many of them presumably poor. Why didn't the ranks of the poor swell dramatically in the borough? Because many people already living in The Bronx were vaulting into the middle class: The number of Bronx households in every income category above $25,000 a year increased, sometimes sharply.

Households earning between $50,000 and $75,000 a year rose by 18,318, or 38 percent, while those between $75,000 and $100,000 jumped 87 percent to 30,029. These are real, substantial gains made by households that are hardly rich.

The rest of the city? In Queens, the number of households earning between $50,000 and $100,000 jumped by 58,000, or 38 percent. In Brooklyn, the gains in the same category were similar, up nearly 59,000 households, or 40 percent.

Where did all of these new middle-class households come from? Not from outside New York. Domestic immigration data consistently show that the city loses more middle-income earners than it gains. That almost certainly means that most of the new households appearing in these middle-income categories were in the city already at the start of the ‘90s, and the Opportunity City gave them the chance to pull themselves into the middle class.

The data also reveal that the ranks of the well-off exploded. The number of households citywide earning between $100,000 and $150,000 a year rocketed upward by 126,492, an astounding 117 percent gain. And more than 75 percent of that growth occurred outside of Manhattan—with about 97,000 new households in the outer boroughs earning between $100,000 and $150,000 a year.

Many of these newly well-off New Yorkers, we can be pretty certain, didn't come from outside the city, since Gotham has a perpetual net drain in people earning more than $100,000 a year. For the most part, they must have been New Yorkers, probably those previously in the $50,000 to $100,000 a year category now vaulting up the ladder of economic mobility.

In other words, it wasn't just the rich getting richer in the 1990s, but the middle class getting rich, too.

The overall picture of economic gains in the ‘90s, then, is astounding in its breadth and scope: Total households making more than $50,000 a year in New York grew by 429,993, or 56 percent, in the 1990s, compared to just a 7 percent gain in the total number of households in the city. And while it's true that the ranks of the rich increased robustly, the biggest gains were in more modest income categories.

This is some of the best news about the middle class in Gotham since the middle-class exodus began in the mid 1960s. The city is filled with recent arrivals who, within just a few years, are improving their lot. And the city's professional classes overflow with the sons and daughters of immigrants or low-wage workers who, in just one generation, have realized the American dream.

That dream was still at work in New York in the ‘90s—and not just for the rich.

From the forthcoming Summer issue of City Journal Magazine, where Steven Malanga is a contributing editor.