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Saving New York's Middle Class

by Gotham Gazette Staff, Apr 16, 2007
 

A white child being raised in Manhattan is likely to be treated to some of the finer things in toddlerhood - high-end strollers, swank birthday parties and designer label clothes. After all, he or she is ensconced in a family where annual income averages almost $285,000, the New York Times reported, which means "these toddlers are growing up in wealthier households than similar youngsters in any other large county in the country." The borough's other kids are not as quite as materially well off; the average black family withchild under five in Manhattan has an annual income of $31,171.

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What about the people at neither end of this huge disparity - the middle class? Are they disappearing from New York's communities, even in the outer boroughs that for decades were their bastion. Some say yes - and have research to back them up. While the economy shows many signs of strength (see related story), a 2006 study by the Brookings Institution concluded that New York City had the smallest proportion of middle-income families of any metropolitan area in the country. And a new study by the Drum Major Institute (in pdf) found that most New Yorkers believe it is harder to enter the middle class today than it was just 10 years ago.

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Last month the Drum Major Institute held a conference to discuss whether the middle class dream can survive in New York. A number of prominent New Yorkers described what they saw as the problem and offered some solutions.

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The following are edited transcripts of some of those comments.

Reviving the American Dream
By Mario Cuomo

Aristotle recognized the importance of the middle class thousands of years ago. And it thrived in the 20th century. But today, the former governor says, growing disparities in wealth make it hard to survive on what most people would consider a middle income.

The Winners and Losers
By John Mollenkopf

The rich are getting richer, while immigrants, particularly Hispanics who recently arrived in the city, are clustered at the bottom of the economic ladder. The political scientist examines the numbers.

What Happened to Our Middle Class?
By William Thompson

Looking at the shrinking middle class, the city comptroller blames a number of things, including rising housing costs and a changed job market.

How to Speak to the Middle Class
By Anthony Weiner

The city government seems to be ignoring the concerns of many New Yorkers, says the congressman, who thinks politicians must convince these New Yorkers that they understand their problems and will work to solve them.

Invest in Neighborhoods
By Adolfo Carrion

To keep people from moving out of New York, the Bronx borough president says the city must invest in housing, health and, above all, education.

Cutting Taxes, Preserving Communities
By John Liu

New Yorkers have a right to expect government to meet some basic needs and preserve a degree of stability, the city council member says.

Reviving the American Dream

By Mario Cuomo

This topic of the middle class is a vital one, not just for New York, but for the nation. It is badly under appreciated in today's political campaigns. I don't feel that people are eager to address it and to identify the hard questions and answer them.

Part of that might be semantic. It is hard to define what middle class is, although it's been a demographic and a political reality for more than 2,500 years. Plato's student, Aristotle, described society as having three parts: the rich, the poor and the people in between, who he referred to as the middle class. He said a strong middle class would be indispensable to a well-ordered society. It would help protect against the domination of the rich and the desperation of the poor. The middle class' strength would come from its numbers and its intense desire to achieve a good life, by working hard, forcefully advocating for adequate compensation for its labors and fighting for the opportunity to own property.

That was 2,500 years ago. But middle class is still difficult to define.

Some people go to numbers. Lou Dobbs uses income numbers -- $26,000 to $150,000 is middle class to Lou Dobbs. But numbers depend on where you are and what other circumstances surround you when you are there.

Fifty thousand dollars and a lot of overtime in Tuscaloosa, Alabama, may be pretty good income. But if you're a single parent with two school-age children looking for an apartment in Manhattan, the definition is dramatically different. Now in the 1950s, '60s, and '70s, you could have a one-earner family, as we did, with a spouse who stayed home and raised five kids in a Cape-Cod house in a safe neighborhood in Queens with good public schools and convenient emergency rooms that were free with a new car every two years a $30,000-a-year income. In those years, you could expect to earn more than your father did because the labor unions and the economy saw to that. The mobility was upward.

Given all the variances of the middle class, I've decided to stay with my own definition. It's closer to Aristotle's than anyone else's. Here it is: The middle class is made up of people who aren't rich enough to be virtually free of economic concern, nor poor enough to warrant any subsistence payment from the government or from charity. They are people who work for a living because they have to, not because some psychiatrist told them it's a good way to fill the grim interval between birth and eternity.

Some of them are two-parent families, one-parent families, and some of them single. There are police officers, firefighters, nurses, emergency responders, teachers, secretaries, bus drivers, taxi and limousine drivers, and clerks. Without these middle-class New Yorkers, we could not have built, operated, or survived comfortably in what is now the greatest city in world history. And if these workers are not adequately paid and otherwise reasonably accommodated, the quality of our city's life is sure to decline.

How is the middle class doing today? You'll find arguments that say, "Oh you shouldn't say that the middle class is in trouble. So many wonderful things have happened in the middle class." That is absolutely true. They live longer. Home ownership is up. More people seem to drive new and expensive cars. In my era, there were jalopies everywhere. But not now. Everybody seems to have a reasonably new car. They all own computers and flat-screen televisions. They fly across the country, and they call relatives overseas regularly. All these things are now taken for granted. In my days, we would have thought of them as the prerogatives of the very rich.

On the other hand, despite all of those advantages, the middle-class prosperity level is lagging badly. The economic balance in our country has become radically skewed by gross disparities between the extremely rich and the rest of the population. Of course, in market system, there are going to be winners and losers; that is obvious. But this disparity goes far beyond what is inevitable in a market economy. And as a result of this disparity, the stability of this society that Aristotle hoped for and that my family and I lived is threatened. Perhaps dangerously so.

Today a CEO is paid 420 times what the workers are paid. Some say that is not really a lot: The corporations are so large now that hundreds of millions of dollar in salary to run them is not a lot. Well, it is a lot to a worker. When I was living in the period of the American Dream, that ratio was closer to 20 times.

Today, more Americans than ever average a million dollars a year in income. There are more billionaires than ever. And a lot of that has happened recently. That is all good. What is not good is that they are only the top one percent of the taxpayers.

At the same time, the number of poor people has grown significantly. And middle-class firefighters, police officers, sanitation workers are forced to live outside the city because they cannot buy a house or pay the rent in an area where they think the public school is good enough. A lot of them who love this city and love their jobs find that they have to get rooted in the suburbs.

We are having difficulty finding teachers to teach the skills that our high-powered economy demands at the kind of salaries our city supposedly can afford. For how long will we be able to ask our young men and women to risk their lives as police officers for a meager starting salary of $25,000 a year before taxes?

Our society is wonderfully rewarding for high-level executives and investors but punishing workers of moderate or low skills with the cost of everything the middle class needs most: housing, education, healthcare, retirement security, transportation. The prices of all these things are going up faster than their wages.

The distinguished analyst, Kevin Phillips, one of my favorite Republicans, wrote in 1994, "The fragmentation is incredible. And I'm a Republican, I'm a conservative. This is bad and it has to be stopped." For years I said, "Kevin, you have to write another book because it is getting worse." He said, "Nobody's listening, nobody cares, nobody believes it. Somehow the country's been conned into believing everybody is better off. They don't understand that there are no savings.."

So Phillips wrote a second book recently, Wealth and Democracy, and he said this: "The current of extreme economic disparities are simply not sustainable without serious damage to the country's productivity patterns and performance."

I agree. What then must we do to help stabilize our society by strengthening our middle class? We have to provide current middle-class New Yorkers with an opportunity to earn a good life while making room for the poor.

We have to prepare middle-class New Yorkers for life in these challenging days and we have to protect them from serious threats to their welfare. How do we protect them? Give them education. From pre-K to the end of their life. You can't stop because the world is changing rapidly and the complexity is growing.

It's fun to learn and to stay with the wave. That's what's necessary.

We are nowhere near doing what we have to do with education. How many years ago was it that this country decided that, in order to be successful as a nation, you'd have to have a certain minimum level of proficiency at reading, writing, and things like that? If you depend on the market, then only the rich people are going to get an education.

What about Mario Cuomo in south Jamaica, Queens, whose mother and father cannot read or write and were broke with a little grocery store that was not working? What do you do for him? Public schools. To when? Age 16, high school. Why? Because we need it. For what? For the good of the country.

Mario Cuomo was governor of New York State from 1983 to 1994.

The Winner and Losers

By John Mollenkopf

There is an economic paradox in New York City. In some ways, the city is prosperous: There are gains in employment, higher than average incomes, rising prices for housing and a construction boom. At the same time, the numbers of people on the bottom and on the top of the income distribution are growing, and New York City's middle class is shrinking. The income distribution in the city is growing more unequal over time. And yet, we do not feel the level of class resentment that might be thought to be inevitable from the income distribution numbers.

Over the past three decades, New York City's employment numbers have fluctuated between 3.2 million and 3.8 million jobs. And the fiscal health and prospects of the city have ridden the rollercoaster of employment. We have experienced three steep drops in unemployment since the 1970s. There was the fiscal crisis in the mid 1970s when the city was in dire financial shape. We grew our way out of that into the late 1980s, but then we experienced a second recession, even sharper in some ways than the previous one. We once more worked our way out of that and reached a peak of employment in 2000. The city had a third - also sharp, but less deep - dip in the economy after September 11, 2001. The city has recovered in many ways, but we still haven't made it all the way back to the peak numbers.

Despite these fluctuations in employment, if you add together all the money of all of the people who work in the city, as reported to the state unemployment insurance system, New York has experienced fairly steady growth. There has been an even sharper rise in the annual average wages by the people working in the city. In other words, even when employment dips, people don't necessarily earn less money.

All of these numbers point to upward growth in the total amount of earnings, the amount of money that people have in their pockets. These measurements of the city's economy give us an image of prosperity.

Of course, there are problems with these numbers. People don't always accurately report their income to the government. And these numbers do not take into account what people must spend on housing, health care or other expenses that have increased as well.

If you divide the residents of the city into five income brackets and then look at the number of people in each category, you see a picture of the city's changing class structure.

Between 1990 and 2005, the number of people in the bottom two-fifths of income grew substantially. The number of people in the third and fourth brackets of income decreased. And the number of people in the top one-fifth in income stayed about the same.

And if you look at how much New Yorkers in each bracket earned, you will find that the fruits of the economic prosperity that the city has experienced over the last 15 years is concentrated at the top. If you looked at the top five percent, or the top one percent, or the top one-tenth of one percent, you see that each of those refined groups was receiving a more and more disproportionate share of the growth in income.

Anyway you look at it -- and there are hundreds of ways to look at income distribution and how to define the middle class -- we are seeing a growth in polarization or more unequal income distribution. In particular, the top part is growing, relative to the others, not only in terms of how many people are clustered there , but also in how much of the gain they have gotten. In terms of income and the share of wealth, those at the top are pulling away from those in the middle and bottom.

So why isn't there more anger in the streets?

The number of white households, which are generally on the top, has been declining and shifting toward the upper end of the distribution. To a lesser extent, this is also true of people in households headed by native-born African-Americans and native-born Hispanics. While blacks and Hispanics tend to be toward the lower end of the income distribution, their overall numbers are also in decline. And lower-income blacks and Hispanics have been moving out of the city. Native-born poor people are moving out over time to places where they do not face competition from immigrant, low-wage workers who have been flooding into New York City.

The low-wage workers who have been flooding into New York City in recent years are immigrants. But if you look at the other immigrant groups and classify them by race, the immigrant groups are fairly evenly divided across the income brackets. Many of these people are poor, but many are middle class and even upper class. The one group that really stands out as not fitting that pattern are people living in Hispanic immigrant households. They are clustered at the bottom of the economic ladder.

John Mollenkopf is a professor of Political Science and Sociology at the CUNY Graduate Center and director of the Center for Urban Research.

What Happened to Our Middle Class?

By William Thompson

When I graduated from college in 1974, I came back to live with my parents in Bedford-Stuyvesant, Brooklyn, where I grew up. I was not making a lot of money at the time, but within six months, I got my own apartment in Brooklyn Heights. Within a couple of years, I was able to get a new car and the insurance for it. And I had a little money in the bank.

Fast forward to today: When my daughter graduated from college in 2001, she moved back home as well. But she couldn't afford to get her own apartment. She couldn't afford to get a car, much less pay the insurance on it.

That, to some extent, is an example of the plight of the middle class.

The American dream is that your children's lives will be better than your own. But that is getting harder to achieve. In New York City, we all strive and want to do well, but over a period of time, you look at almost the barbell effect, with both ends -- lower income people and higher income people -- expanding, and those in the middle being squeezed.

A combination of factors is responsible for this.

Housing is one key issue. Costs are up, property values have driven up rents, and the number of affordable apartments in programs like Mitchell-Lama is dwindling. New Yorkers, particularly those in the middle-income brackets, are scared of being priced out their own neighborhoods. They've lived in their neighborhoods for decades - when times weren't good they stayed - and now they may not be able to survive the good times.

Another contributing factor is the changing workplace. In the past, part of the American dream was to work for a corporation. People were loyal to the company. You used to be able to work for a corporation and expect that if you did a good job, you would be there for a lifetime. That doesn't exist any longer. Over time corporations have become less loyal to the people who work for them.

People used to be able to earn a modest salary, take a couple of weeks vacation each year and have a retirement plan. For many, those things are disappearing as well.

There is a rise in the number of self-employed people. In the last seven years, 210,000 individuals moved into the ranks of the self-employed. It is part of the future of the city, but there are also problems like health insurance that we have to confront.

Manufacturing jobs have left and gone overseas, not just in New York but nationally. We're not getting those jobs back. We need create different types of jobs you create and built other industries.

New York also did away with residency requirements that mandated that those who work for our uniformed services live within the city limits. Those middle-class workers -- police officers, firefighters, teachers and others -- now live outside of New York.

All of these factors contribute to a shrinking of the middle class, but there are ways that we can work to address the issue.

Small business across the city is going to be an area of growth. We must create access to capital, through micro loans and small-business loans. We have to change tax regulations that prevent the growth of small businesses across the city, like a reduction in the unincorporated business tax. It is something that we need to continue to focus on in the future: to create and spur small business growth across the city, and particularly outside of Manhattan.

The massive housing programs of the past, like Mitchell-Lama, are evaporating. The Bloomberg administration has put more focus on affordable housing -- and the tag "affordable" isn't on just for the low end, it's across the spectrum. But we need to do more in the area of affordable housing -- different and unique programs to help bring people back to the city. We need housing growth in all five boroughs.

Education is another factor. We need to continue to improve our education system, and offer middle-income families, and all families, greater opportunity.

One of the best things that is happening in New York City in the last five or six years has been the stability, growth and attractiveness of the city university. There have been studies that say that, as higher education systems go, so goes your city, and so goes the middle class. Elementary and high schools have always done better than middle schools. That is where you need to create a major focus. Some middle-income parents are here through elementary school and go some other place because of middle school. If you stabilize your middle schools, you keep those families here for the entire school career.

We need to maintain our public transportation. The Long Island Rail Road, for example, is at 100 percent state of good repair, and Metro North will take another seven years to reach that standard. But New York City Transit is 25 to 35 years away from being in a state of good repair. We have to able to move people around the city - not just move people into and out of the city from the suburbs.

William Thompson is New York City comptroller.

How to Speak to the Middle Class

By Anthony Weiner

You could say, without fear of contradiction, that New York City is the financial capital of the world, although there has been some conversation about whether we are losing that edge. We are the entertainment, creative capital of the world. And up until rather recently, you would have said we were the middle-class capital of the world. When you thought of the iconic middle-class family, you would think about New York. But it is not an overstatement to say that New York is not a place that you go anymore if you are middle class or trying to make it into the middle class.

You get a call from a friend who says, "I just got a great job. Seventy-five thousand dollars working at a local law firm. Tell me a nice place I can go to set up shop and raise my middle-class family in New York City."

It would not be anywhere in Manhattan. It would be fewer and fewer places in the outer boroughs. Think about saying, "Uh, Jersey City? Hoboken?"

One of the things that is most troubling to me is that it is very hard to point to anything that the city is doing to address this. If you need evidence of that, just look at what Mayor Michael Bloomberg, who I think generally has done a pretty good job, points to as proof of how well the city is doing. He points out is how the property values are up.

That is undeniably a good thing. But you have to understand on a fundamental level that that rise in property values makes many New Yorkers deeply insecure about their fate, even if they live in one of those homes that have gone from $300,000 to $600,000.

Mayor Bloomberg has characterized New York as a luxury product. But you cannot sustain any economy if you do not have an affordable place in economy for those who provide the services. Even if you own a yacht, you need somebody to swab the deck and cook the meals. Even if you own a beautiful home, you need someone to maintain it. You need someone to patrol the streets and collect the garbage.

Part of our problem is that we in elected life don't talk to these families in a way that they care about. We are not engaging middle class families. When I talked in 2005 about giving the middle class a tax cut and asking that those who make more than a million dollars pay a little more, people responded because it was something they could understand.

When somebody sits at the table with their daughter, about to send her off to their local public school, they are not thinking about the nuances of the reorganization of the school system. They want to know that their daughter will have an experienced teacher, that she is getting some face time with that teacher, that she is in a safe school where discipline means something.

Part of what we're doing is selling to New York City residents and the middle class is that we in government understand their plight. We need to say to middle-class families, the families that we're trying to make stay here in the city, "We understand what you're thinking."

Let me give you a brief example: This year, did you see the announcement of how many Westinghouse scholars we have? You didn't, because the education department did not release the numbers. They haven't for the last three years because there has been a precipitous decline.

Now, most middle-class kids do not get Intel scholarships. Those are the most brilliant kids imaginable. But what those scholarships do is say to the middle class that the public schools are an aspirational place.

You want to know if these new, younger teachers can still get it done like the more senior teachers who have aged out like my mother. Gifted and talented? It's a fight every year to get them funded.

We have been so obsessed and focused on the big businesses in Midtown that we have forgotten that about 60 percent of job creation has come from small businesses in the outer boroughs. Yet we do very little to address their concerns. We need to do things like help small businesses pool together to provide health insurance.

What keeps me up at night, and perhaps the reason I pursue these issues with a little excess of passion, is the idea that my middle-class family story -- father who went to college on the GI bill, mother a civil servant, me in public schools -- can't be repeated. My fear is that we are tiptoeing up to a tipping point where anybody who is able to take their kids out of public schools will have done it and where anyone who is thinking about coming here will decide that they can't. We have one priority among all others, and that is to make sure we stay safe. And thank God we have stayed safe. But the close second is making sure this city is hospitable in for creative energies, for ambitious energies, for those entrepreneurial energies of all economic stripes.

Anthony Weiner represents part of Brooklyn and Queens in the U.S Congress. He ran unsuccessfully for mayor in 2005.

Investing in Neighborhoods

By Adolfo Carrion

The fact that 300,000 of the highest income earners in our country earn the equivalent or more of the 150,000,000 Americans at the bottom is astounding and worrisome. The problem is not unique to New York, it is across every urban center. New York's problem is one of having abandoned a large sector of the population that is crafty and hard working and tends to figure things out on their own and doesn't necessarily rely on government or see it as a crutch.

If we don't pay attention to that sector it could be the beginning of the end. The real New York and the life of New York plays out in the hundreds and hundreds of neighborhoods across the city where people pay mortgages and shop for good schools, where they're concerned about basic issues like transportation, traffic in their neighborhoods, and the businesses in their neighborhoods, and the regulatory maze that they have to live with everyday. That's what regular New Yorkers and that bleeding middle class, that hemorrhaging middle class, is worried about.

When Ed Koch was mayor, he made a decision that was unpopular at the time, especially with some members of the City Council. He said, "I'm going to take $5.2 billion of city capital funds. We're going to fix our own problem, we are going to invest." As a result, we created neighborhoods all over the city and restored neighborhoods that had been devastated by the policies of the 1970s and '80s. Now you go to some neighborhoods, and there are people owning homes, raising their kids. They own a little patch of green.

Do we need to support tourism? Absolutely. We get 44 million people coming to this city. Entertainment, hotels, the theaters, all the tourist attractions. The financial sector is critical. Of course Manhattan is critical for us, and we need to ensure that it works. That's the heartbeat of the region. But we have to pay attention to our most important asset, which is working families that are ultimately generating those little bambinos that will become good, strong, participating citizens in this free market and this free democracy.

The middle class, aspiring family is simply shopping for a good place to live where they can raise their family and do better in the future. The players in that game are the public sector and the private sector.

On the private sector side, we try to create the platform for good economic activity that churns out wealth and creates jobs. Then we try to encourage the banking community to move money out into the economy. On the public side, we try to create a monetary policy that says, "Ease the cost of money and keep it flowing." So we manage the interest rate. And we have the challenge of whether or not we are really going to invest in the building blocks that matter. We need to have a conversation about return on investment.

To build a stronger city that is friendly to the middle class, we have to make some structural changes. Our tax policy and structure needs to be progressive. We need to continue to plan very aggressively for the hundreds of neighborhoods that are imbalanced right now, and we need to ensure they are going to be nurturing communities for families. We need to turn the conversation to return on investment and invest in the building blocks.

It is not a burden, and it is not charity to support public education, public health care and investment in housing. Housing that is subsidized is not a giveaway, it's an investment. It's a platform for people to move up. And we need to have a five-borough economic development strategy that is also very aggressive.

But the single most important issue that is still unresolved for us is education and the quality of that education. People are shopping with their feet and their dollars for education in suburban communities because they know they can get a bang for their buck there.

Adolfo Carrion is Bronx borough president.

Cutting Taxes, Preserving Communities

By John Liu

We have to figure out a way to give people in the middle class or who strive to be in the middle class good places to live. That means good neighborhoods, whether they are in the form of apartment buildings or low-density residential neighborhoods. We need to provide affordable housing and, at the same time, we need to keep the character of some residential areas intact, whether they are in high-density Manhattan or low-density areas in Queens or other boroughs. And at the same time, we have to keep jobs because the middle class need places to earn decent incomes. And we need to give people viable ways to get to and from their residences and their jobs -- good public transportation that will discourage people from driving their cars and adding to congestion.

There needs to be a tax reduction. Property tax, as well as income tax. If we are really facing surpluses, then we should be rolling back the rates, just as in times of deficit, we found it necessary to increase rates. In surplus times, we have to roll back the rates in the income and property taxes, and if possible in the sales tax as well.

Even if we are able to reduce tax rates just minimally, it is still necessary. We should not discount that. The cuts send a message that government understands it has to be lean and mean. We should not take more from people than is absolutely necessary.

At the end of the day, the middle class in New York City understands that taxes are going to be high. It's always been that way in a city like New York where we have such great diversity.

Health insurance for the middle class or the aspiring middle class is obviously critical. There are many new American immigrants in New York City who either have attained or are close to the middle class, yet have no insurance. Many of them are entrepreneurs or work for very small businesses. They have to go out into the marketplace and pay exorbitant premiums for individual or small group coverage. This is something that requires a state, and ultimately, a federal policy.

People want to stay in New York. They want the reasons to stay in New York. Over and above the tax rebates and the renters' rebates, or the tax reductions, the middle class and the aspiring middle class would like to see predictability. That means knowing that the neighborhood where they live will be stable, that there will not be illegal conversions next door. That the neighborhood character will stay the same because that's what they expected from the zoning code. That their schools will be effective and will educate their kids or their neighbor's kids. And that those kids have a way to get safely to and from school.

They want to be sure that the city or government is not selectively and arbitrarily enforcing laws that may not be effective. When someone goes to work for the entire day and comes back to find a $100 sanitation fine because a cup that was blown and landed in front of that person's house, that enrages the middle class person living in this city.

John Liu is a member of the City Council and heads the transportation committee.

 


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