Commentary

Is New York's Economy As Good as It Seems?

By Emanuel Tobier

Between 1989 and 1993, New York City lost around 315,000 private sector jobs. Since then, these losses have been regained and then some. These new jobs pay a lot more on average than the ones that fell by the wayside, and they don't just go to commuters. Unemployment among the City's resident workforce has been tumbling as well. Between 1997 and 2000, the citywide unemployment rate dropped from 10.1 to 6.2%, with substantial declines registered in each of the boroughs. True, these rates are still high by national standards, but they are certainly heading in the right direction.

DISSENTING VIEWS

While more of the City's residents are employed, there is still the nagging question of how well they are doing. Those who are employed in the city's Manhattan-based global economy sector-financial services, new media, etc are raking it in. But what about New York's rank and file? The evidence here is mixed but far from discouraging. The 1999 New York City Housing and Vacancy Survey provides recent data on the subject. Sponsored by the New York City Department of Housing Preservation and Development, the NYCHVS has been conducted every three years since 1965 by the US Census Bureau. The survey's sample size, approximately 18,000 housing units, is large enough by Census standards to be representative of the City's population and housing stock. According to the HVS, inflation-adjusted median household income in the city increased by 4% between 1995 and 1998 and by 13% from 1992 to 1998. In fact, New York outperformed the nation on this score for the longer period 13% versus 9% thought it did lag in the more recent timespan 4% in NYC versus 7% nationally. There was also significant reduction in the poverty rate among the City's households from 21% in 1995 to 18% in 1998.

The Community Service Society, a self-described "leader in the fight against poverty" tells a different story. Their recent report about New York in the1990s draws the rather surprising conclusion that poverty in New York City has climbed the social ladder: During the last decade poverty rates rose sharply among the more educated and intact families with children. So if you had somehow believed the conventional wisdom (and the empirical evidence) that getting more schooling, marrying and having a family would strengthen your economic prospects, think again.

The basis for CSS's startling findings is quarried from the 2,000 New York City households in the national sample of the Current Population Survey, maintained by the US Census Bureau. The problem with using this sample to examine socioeconomic trends is simple: the CPS is not a representative sample of New York City, but rather a sub-sample of a much larger group. The Census Bureau uses the CPS to report on trends at the national and broad regional level, and for selected big States. When looking at changes within very small subgroups (e.g., married with children, by income and educational attainment) the number in the sample may be too small to be representative.

But, let's not quibble. These are striking findings and statistical caveats shouldn't stand in the way of such important news. Interviewed by the New York Times, David R. Jones, CSS's President, warns of the ominous nature of the findings, and urges more liberal provision of food stamps, Medicaid and subsidized child care, and an increase in the minimum wage. However it be noted that much more statistically robust national data shows no evidence of the disturbing trend of the mainstreaming of poverty. So, if such a trend does exist, could it just be a New York thing?

Possibly. A plausible explanation for this trend might be that the 1990s has seen a substantial rise in the number of foreign born workers in the City's resident workforce, a high proportion of whom are well educated. It may take a few years before this group gains enough local experience to translate its educational qualifications into better-paying jobs. In other words, they may be temporarily poor, not chronically so. In the longer run, it is these high levels of education (and the intactness of their families) that will allow them to rise out of poverty.

WHY THE LEFT IS UNHAPPY WITH GOOD TIMES

Few would question the fact that the US economy is in the midst of an unprecedented boom. Consumer spending is setting new records, and more Americans than ever are buying bigger, better and more. The specter of chronic unemployment as a function of too few jobs no longer seems to be a problem to most job seekers. Unemployment rates haven't been this low since the late 1960s.

Not everyone is cheered by these developments. Liberals are upset by a number of things. First, they are not entirely comfortable with capitalism's triumph, and the increasing inequality of the income distribution. They are distressed by the much greater fortunes accumulated by people at the top of the income distribution. Liberals also point with alarm to the apparent deterioration revealed by official income statistics in the living standards of those who occupy the bottom 10-20% of the income distribution. While these concerns are not baseless, they may be a little overdone; official income distribution statistics understate the actual resources available to the poor and near poor since they do not include the monetary value of food stamps, earned income tax credits, housing subsidies and Medicaid-financed health care and the like. Some even regard these trends as immoral and dangerous. Left unattended, they fear it will lead to people on the bottom giving up hope of succeeding by lawful means.

But liberals' concern for the poor is not entirely selfless. They have become deeply involved in the delivery of services to those who occupy the lower reaches of the income distribution. It has become a way of life for them, as well as a worldview. They run the substantial number of government and government-funded programs created to provide for the needs of the poor and for victims of discrimination. Thus, the launch of Clinton 's New Democrat project, "ending welfare as we know it," was viewed by Professional Liberals like CSS as a potential threat to their livelihoods, their political power and their prestige. When the Welfare Reform Act of 1996 was enacted, they were alarmed both for their livelihoods, and for the potential for social disaster. While these disasters have yet to materialize, there is no assurance that they will not.

While Professional Liberals await an eventual denouement or affirmation of their world view, it is clearly in their interest to point to those developments which buttress their case for a greater role for government and an expansion in the social welfare state. There is nothing unusual in this; everyone defends his corner. But advocates should not present their efforts as a form of disinterested or factual research. And in reporting on their findings, the media should take care to label their contents properly.

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