New York City of Aspiration Middle Class Report

8/6/2019 New York City of Aspiration Middle Class Report

1/52

www.nycuture.org FEBRUARY 200

REVIVING THE CITY

OF ASPIRATION:A study o the challenges acing New York Citys middle class


2/52

CONTENTS

PART I: OVERVIEW AND HISTORY

INTRODUCTION 3

WHO IS MIDDLE CLASS IN NEW YORK? 9

A HISTORICAL OVERVIEW 11

PART II: MIDDLE CLASS CHALLENGES

WHY THEY CANT MAKE IT HERE: New Yorks eorbitant cost 14o living is making the city out o reach

CHILD CARE COSTS: Many working parents spend thousands 18

on child carei they can nd a slot

THROUGH THE ROOF: Over the past decade, housing costs

skyrocketed in virtually every corner o the city

NO TICKET TO RIDE: There has been a steady erosion o 22

middle income jobs in New York

NOT MAKING THE GRADE: Inerior public schools cause 25middle class amilies to leave New York

A PAROCHIAL VIEW: Catholic schools once oered a quality 26alternative to substandard public schools. Now, its not so clear.

STUCK ON THE TRAIN: Transit service has not kept pace 27

with growing demand in neighborhoods outside o Manhattan

THERE GOES THE NEIGHBORHOOD: Outoscale

development has diminished the quality o lie in manycommunities

PART III: SNAPSHOTS OF THE MIDDLE CLASS SQUEEZE

SCHOOLS OUT: University proessors are opting to leave 30schools in New York or locations where their salaries go arther

CITY LIMITS: Municipal jobs used to provide a clear path to 31

upward mobility, but that may no longer be the case

DETOUR FROM THE DREAM: Successul immigrants are 32leaving New York or other, more aordable regions

PART IV: REVIVING THE MIDDLE CLASS DREAM IN NEW YORK

A PLATFORM FOR MOBILITY: Community colleges should 36play a more central role in boosting New Yorkers into the

middle class

A NEW ECONOMY FOR NEW YORK: City ocials must do 39more to groom industries that create middle income jobs

IF YOU BUILD IT: Most o the new housing built in the past 42decade was geared toward the luury market or the poor

BOLSTERING THE BOROUGHS: The outer boroughs 44

represent the best hope o retaining the middle class

BACK TO THE BASICS: Instead o building stadiums, city 46

ocials should ocus on improving everyday lie in NYC

RECOMMENDATIONS 48

This report was written by Jonathan Bowles, Joel Kotkinand David Giles. It was edited by David Jason Fischerand Tara Colton, and designed by Damian Voerg.Mark Schill, an associate with Praxis Strategy Group,provided demographic and economic data analysisfor this project. Additional research by Zina Klapperof www.newgeography.com as well as Roy Abir, BenBlackwood, Nancy Campbell, Pam Corbett, AnneGleason, Katherine Hand, Kyle Hatzes, May Hui, Far-

ah Rahaman, Qianqi Shen, Linda Torricelli and MiguelYanez-Barnuevo.

This report was made possible by support from TheBodman Foundation and Wagner College, New YorkCity. The Center for an Urban Future is a project of CityFutures, Inc. General operating support for City Futureshas been provided by Bernard F. and Alva B. Gim-bel Foundation, The Citi Foundation, Deutsche Bank,The F.B. Heron Foundation, Fund for the City of NewYork, Salesforce Foundation, The Scherman Founda-tion, Inc., and Unitarian Universalist Veatch Program

at Shelter Rock.

City Futures Board of Directors: Andrew Reicher (Chair),Margaret Anadu, Michael Connor, Russell Dubner, KenEmerson, David Lebenstein, Gail O. Mellow, GiffordMiller, Lisette Nieves, Ira Rubenstein, John Siegal, Ste-phen Sigmund, Karen Trella, Peter Williams and MarkWinston Grifth.

Cover photo: Adrian Kinloch


3/52


4/52

10,000

5,000

0

-5,000

-10,000

-15,000

-20,000

-25,000

-30,000

-35,000

MIDDLE CLASS ON THE MOVE?New York still does well in attracting highly educated people, but growing numbers

o those with a bachelors degree are leaving the ive boroughs

Bron Brooklyn Manhattan Queens Staten Island NYC

5,1415,984

12,933

5,997

4,442

8,195 5,304

744 1,550

12,955

29,370

20042005

20052006

Source: Prais Strategy Group, U.S. Census, 2005 and 2006 American Community Survey Public Use Microdata

4,029

Netmigrationofpeoplewith

abachelorsdegree

This report takes an in-depth look at the chal-

lenges acing New York Citys middle class. More

than a year in the works, the report draws upon an

extensive economic and demographic analysis, a

historical review, ocus groups conducted in every

borough and over 100 individual interviews with ac-

ademics, economists and a wide range o individuals

on the ground in the ve boroughs. These include

homeowners, labor leaders, small business own-

ers, real estate brokers and developers, immigrant

advocates, and ocials rom two dozen community

boards.

Throughout the course o our research, the vast

majority o New Yorkersor the most part erce de-

enders o the citywere alarmingly pessimistic about

the current and uture prospects o the local middle

class. What middle class? was the quip we heard

repeatedly ater telling people about our study.

But or all the valid concerns o those we spoke with,

our conclusion is that a strong middle class remains in

New York, and that there are considerable grounds or

optimism about its uture. In 2007, the city recorded the

second highest total o building permits issued since

it started keeping track in 1965, with Brooklyn and

Queens hitting recordsa clear sign that large num-

bers o people want to live in these long-time middle

class havens. Home ownership rates in the city reached

their highest levels ever in 2007, another testament tothe citys desirabilityeven i a not insignicant share

o the recent housing purchases were driven by unair

and deceptive predatory lending practices. And in many

communities, there have been long waiting lists or day

care centers and private schools. While the economic

crisis is already leading to sharp spikes in oreclosures,

a precipitous decline in housing sales and, most trou-

bling, a massive number o layos, it should not reverse

the sense o many middle class amilies that New York

now oers a sae environment to raise their kidsa key

actor in the decision to stay in the city rather than de-

camp or the suburbs.

The perception o New York among young peo-

ple is so phenomenal, says Alan Bell, a partner with

the Hudson Companies, a housing development com-

pany. It used to be that automatically youd get mar-

ried and had kids and you were out to Montclair, New

Jersey or Westchester. Now they want to stay. The

question is how they stay since its so expensive.

Set against this picture o progress, however, are

some alarming trends. Most o the people interviewed

or this report told us o middle class riends, rela-

tives or colleagues who had recently given up on the

city. I work with a lot o people who moved to Phila-

delphia and commute each day, says Chris Daly, a

media director at Macys who now lives with his wie

and three kids in Tottenville, Staten Island but plans

to move to New Jersey. Its the cost o living. Youre

going to see more people moving to Philadelphia, thePoconos and commuting.


5/52

3,500

3,000

2,500

2,000

1,500

1,000

500

0

MIDDLE CLASS ON THE MOVE?Twice as many New Yorkers relocated to Philadelphia and Charlotte in 2006 as in 2000;

the number moving to Gwinnett County, GA and Lehigh County, PA roughly tripled

Source: Prais Strategy Group, Internal Revenue Service Migration Data.

NumberofNYCresident

srelocating

19992000 20002001 20012002 20022003 20032004 20042005 20052006

Indeed, twice as many New York City residents

relocated to Philadelphia in 2006 than in 2000 (3,635

compared to 1,811). During the same period, the

number o city residents moving to Charlotte, NC also

doubled, rom 904 to 1,893, while the number relocat-

ing to Lehigh County, PAhome to Allentownmore

than tripled (rom 648 to 2,101) and the number leav-

ing or Gwinnett County, GAa suburb o Atlanta

nearly tripled (rom 762 to 2,121).2

Astonishingly, more residents let the ve bor-

oughs or other locales in each o the years between

2002 and 2006 than in 1993, when the city was in ar

worse shape. In 2006, the city had a net loss o 151,441

residents through domestic out-migration, compared

to a decline o 141,047 in 1993.3 Overall, in 2006 the

city had a higher net domestic out-migration rate per

1,000 residents (-18.7) than struggling upstate com-

munities such as Ithaca (-8.0), Bualo/Niagara Falls

(-7.6), Rochester (-5.8) and Syracuse (-5.1).

Fewer New Yorkers let the city in 2007 than in

2006, perhaps because the slowing national economy

oered dimmer prospects o nding employment

elsewhere. But the extraordinarily high levels o

those relocating through much o the decadeeven

as crime rates remained at record lows and the citys

economy was boomingsuggests that growing num-

bers o New Yorkers simply couldnt prosper here.

As we document in this report, the city has beenlosing, or is at risk o losing, many key constituencies:

Individuals with bachelors degrees. Even beore the

economic boom ended, every borough was losing

educated proessionals. In 2005, New York City had

a net out-migration o 12,955 individuals with bach-

elors degrees; a year later, the number had spiked

to 29,370an increase o 127 percent. Brooklyn had

the largest out-migration that year, losing 12,933

compared to 5,984 in 2005. It is signicant, says

Mark Schill, a demographer with Praxis Strategy

Group. A place that should be a mecca or people

that are highly educated is still losing them.

Families. While much has been made o Man-

hattans so-called baby boomletthe boroughs

number o toddlers under the age o our grew 26

percent between 2000 and 2004our data shows

that many o these new amilies dont stay into

their kids school-attending years: the percentage

o children in Manhattan over age ve drops well

below the national average. Meanwhile, house-

holds with kids were most likely to leave the city;

nearly 40 percent o those leaving had young

children at home.

Immigrants. Growing numbers o immigrants who

have attained a degree o success in New York

including many business ownersare leaving the

ve boroughs or other cities, particularly in the

Southeast, where housing is cheaper and immi-

grant communities are growing. For instance, ourresearch suggests that growing numbers o His-

Mecklenberg Co., NC

Gwinnett Co., GA

Philadelphia Co., PA

Lehigh Co., PA


6/52

0

-20,000

-40,000

-60,000

-80,000

-100,000

-120,000

-140,000

-160,000

MIDDLE CLASS ON THE MOVE?More New Yorkers let the city in each o the years between 2002 and 2006

than in 1993 and 1994, a time when the city was in ar worse shape

Source: Prais Strategy Group, U.S. Census, 2005 and 2006 American Community Survey Public Use Microdata

NetdomesticmigrationfromN

YC

1994 1998 2002 2006

137,372

124,099

150,220 151,441

panics are moving to the Charlotte, NC area, and

to communities in Georgia and Florida.

Municipal workers. A job in city government was

once a ticket to the middle class, but many mu-

nicipal employees today have all but given up

on living in the city. One indication o this is the

ongoing campaign by the citys largest municipal

union, DC 37, to win the right or its members to

live outside the ve boroughs.

The black middle class in Eastern Queens. The

borough o Archie Bunker has nurtured one o

the nations largest black middle class commu-

nities throughout a handul o adjacent Eastern

Queens neighborhoods. But community leaders

worry that the precipitous rise in real estate pric-

es during the past decade, combined with stag-

nant wages, will make it dicult or the current

generation o black New Yorkers to aord home

ownership in these areas. As it is, the number o

black residents in Manhattan and Brooklyn re-

cently declined or the rst time since the 1800s.

In addition to middle class fight, the city is in-

creasingly biurcated, with the path rom poverty to

the middle class more arduous than ever. During the

years o economic growth rom 2003 to 2007, average

weekly wages, when adjusted or infation, barely in-

creased in the boroughs outside o Manhattanrisingby just 0.4 percent on Staten Island, 0.6 percent in

Brooklyn, 1.4 percent in Queens and 2.5 percent in

the Bronx. In Manhattan, the increase was 21.8 per-

cent. The historical trends are just as bleak: Between

1975 and 2007, while average real weekly wages near-

ly doubled (increasing by 96 percent) in Manhattan,

they went up by 1.1 percent in Queens, 1.7 percent in

Brooklyn, 2.5 percent in Staten Island and 8.6 percent

in the Bronx.4

As the gap between earning power and expenses

in New York widened even while the economy added

jobs, the number o working poor has jumped. In 2005,

46 percent o New Yorkers living below the poverty line

held regular jobs, versus only 29 percent in 1990. Per-

haps this isnt surprising given that 31 percent o work-

ers over the age o 18 in the ve boroughs are employed

in low-wage jobs; the share is even higher in the Bronx

(42 percent) and Queens (34 percent).5

Not surprisingly, we conclude that the citys sky-

high cost o living is the single most important rea-

son that so many middle class New Yorkers nd lie

here untenable. But cost is not the only issue: as we

detail, a number o other deep-seated problems put

the squeeze on middle class New Yorkers. These in-

clude a local economy that now struggles to create jobs

that pay middle-income wages and oer clear paths to

advancement; a public education system that count-

less middle class amilies still consider inerior; a mass

transit system that, even beore the recent MTA bud-get crunch and the resultant decision to increase ares


7/52

and cut service, ailed to keep pacing with the growing

demandparticularly in middle class neighborhoods

outside o Manhattan; and a rash o unsightly and un-

planned development that has diminished the quality

o lie in several o the citys low-scale neighborhoods.

The story begins, however, with cost concerns. The

basic cost o living in the ve boroughs has risen much

more rapidly than the incomes earned by most mid-

dle-income New Yorkers. The ACCRA Cost o Living

Index, an analysis by the Council or Community and

Economic Research, nds that Manhattan is by ar the

most expensive urban area in the United States, with an

aggregate cost o living (224.2) more than twice the na-

tional average (100) and considerably higher than the

second most expensive city (San Francisco, at 173.6).6

But the other boroughs dont necessarily provide much

relie: Queens had a higher cost o living (156.2) in the

third quarter o 2008 than all but our o the 315 major

urban areas measured. Only Manhattan, San Francisco,

Honolulu (163.6) and San Jose (157.4) were more ex-

pensive.7 Brooklyn likely is as or more expensive than

Queens, with the Bronx and Staten Island more aord-

able but still well above the national norm.

Not surprisingly, housing costs constitute a sig-

nicant part o the cost burden. In the third quarter o

2008, only 10.6 percent o all housing in the New York

City region was aordable to people earning the me-

dian income or the areathe lowest share o any ma-jor metro area in the United States. According to Reis,

Inc., a New York City-based real estate research com-

pany, the citys average eective renta measure

which actors ree rent incentives and other landlord

concessions into the price o rentduring the ourth

quarter o 2008 was $2,801, 53 percent higher than the

second place city (San Francisco, $1,827) and almost

three times the national average ($995).8

Housing is not the only problem, however. City

residents pay among the highest prices in the nation

or electricity. Telephone service, auto insurance,home heating oil, parking and milk are also higher in

New York than virtually anywhere in the continental

U.S. The combined state and local tax bill is also tops

among major cities. And in recent years all o these

costs rose much aster than salaries or the average

middle class worker: Between 2002 and 2007, the cost

o home heating oil in the city shot up by 125 percent,

the average property tax bill increased by 67 percent,

milk prices rose by 60 percent, electricity bills were

up by 27 percent and telephone service cost 16 per-

cent more. O course, home prices (77 percent) and

apartment rents (16 percent) increased as well.

A signicant share o middle class New York

amilies also end up paying tens o thousands o dol-

lars a year in additional expenses that their counter-

parts elsewhere can minimize or avoid. For instance,

since most middle class amilies in New York today

require the incomes o two working parents just to get

by, child care becomes a necessity or those without

grandparents or other relatives to look ater young

children. These costs typically run rom $13,000 to

$25,000 per child, per yearand amilies oten need

to keep their kids in day care until at least age our,

when they can enroll them in schools.

Second, and perhaps equally signicant, New York

Citys job mix has shited away rom positions that pro-

vide middle-income wages and benets. Indeed, both

the city and the New York metropolitan region have lost

a ar greater share o jobs in blue collar sectors like man-

uacturing and wholesale trade than most other major

cities. In 2007, the manuacturing sector accounted or

just 3.2 percent o all private sector jobs in New York

City, versus 12.7 percent in Los Angeles, 11.3 percent

in Chicago, 10.6 percent in Houston and 7.1 percent in

Boston. On the opposite end, health care and social as-

sistanceone o the lowest paying industriescompris-

es a much larger share o jobs in New York than in othercities. In 2007, it made up 17.4 percent o all private sec-

tor jobs in New York City, up rom 12.7 percent in 1990.

By comparison, Charlotte (8.6 percent), Washington,

DC (9.7 percent), San Francisco (10.8 percent), Hous-

ton (10.9 percent), Los Angeles (11.0 percent), Chicago

(11.8 percent) and Boston (15.8 percent) all had smaller

shares o their private workorce in this eld in 2007.9

Unortunately, even beore the recent Wall Street

meltdown, there were ew signs that the citys econ-

omy will begin producing more middle-income jobs

anytime soon. Almost all o the occupations that areexpected to grow the most in New York City over the

next hal-decade pay low wages. O the 10 occupa-

tions that are expected to have the largest number

o annual job openings in the city through 2014, only

two oer median wages greater than $28,000 a year.

Taking a wider view, 16 o the 40 occupations pro-

jected to have the largest number o annual job open-

ings over the same period pay median wages below

$30,000 a year, while another six pay between $30,000


8/52

and $40,000.10

A third actor working against middle class New

Yorkers is the inerior quality o the citys public

schools, which continue to push large numbers o mid-

dle class amilies out o the ve boroughs. Despite some

improvement in school perormance under the Bloom-

berg administration, our research nds that many ami-

lies who would otherwise stay in the city end up leaving

when their kids are ready to enter elementary or middle

school. Simply put, many parents have no aith in the

citys schools, and either cant aord private schools or

simply preer public schools in another location.

For years, the citys network o parochial schools

provided a quality educational alternative at relatively

aordable rates or many middle class amilies. Though

a number o them undeniably remain standout institu-

tions, several New Yorkers interviewed or this study be-

lieve that parochial schools no longer oer the strong al-

ternative they once did. In many cases, tuition has gone

up considerably; more importantly, dozens o schools

have closed and many o those that remain struggle with

large class sizes and unlicensed instructors.

Fourth, long commuting times on public transpor-

tation have caused a serious diminution o the qual-

ity o lie or countless New Yorkers living outside o

Manhattan, prompting many to consider moving to

suburban communities where commutes might be

shorter or more comortable. As the ever-higher costo housing has impelled these middle class residents

urther out into the other our boroughs, the requen-

cy and quality o public transportation to these areas

has not kept pace. Nationally, the average trip to work

takes 25.5 minutes, but or outer borough residents

it takes ar longerrom 38.5 minutes in Greenpoint

and 45.3 minutes in Bensonhurst to 49.5 minutes in

Co-op City and 51.7 minutes in St. Albans.

Finally, much recent residential development in the

middle class enclaves that remain oten seems disturb-

ingly out o scale with existing neighborhoods. This con-stitutes a major source o consternation or community

residents, many o whom specically chose their loca-

tions or the amenities o one- and two-amily homes,

quiet streets and ample parking.

To be sure, the citys middle class may nd some

short-term relie as home prices and apartment rents

continue to plunge in the months ahead. And with new

building projects practically grounding to a halt, concerns

about overdevelopment will at least temporarily abate.

Yet, some o the problems we identiy in this report

will only get worse. The acceleration o the citys eco-

nomic crisiswhich is expected to produce 243,000 job

losses over the next two yearswill undoubtedly push

numerous working poor residents deeper into poverty

and bring nancial insecurity to scores o solidly middle

class amilies that bought expensive homes here in re-

cent years based on the expectation that two members

o the household would hold ull-time jobs. Meanwhile,

MTA budget cuts will result in ewer trains and buses

not more. And budget cuts planned or the Department

o Education will strain eorts to improve city schools.

Finally, while some basic expenses will come down

in price, others will stay the same or go up. For instance,

Con Edison recently won preliminary approval rom the

state to raise electricity prices by roughly eight percent.

Subway ares, property tax rates and sales taxes are also

poised to increase.

Unless we nd ways to reverse some o the trends

detailed in this report, the New York o the 21st centu-

ry will continue to develop into a city that is made up

increasingly o the rich, the poor, immigrant newcom-

ers and a largely nomadic population o younger peo-

ple who exit once they enter their 30s and begin es-

tablishing amilies. Although such a population might

sustain the current luxury cityas Mayor Michael

Bloomberg amously described New Yorkit betrays

the citys aspirational heritage. Further, a New Yorklargely denuded o its middle class will nd it nearly

impossible to sustain a diversied economy, the im-

portance o which is clearer than ever in light o the

current nance-led recession.

As a nal consideration, a large and thriving middle

class has always provided the ballast that a great city re-

quires. Throughout modern history, such cities at their

heightor example, Venice in the 15th century and Am-

sterdam in the 17thhave nurtured a large and growing

middle class. But no city has had a greater history as a

middle class incubator than New York. As the legend-ary urbanist and long time New York resident Jane Ja-

cobs once noted: A metropolitan economy, i working

well, is constantly transorming many poor people into

middle class people, many illiterates into skilled people,

many greenhorns into competent citizens Cities dont

lure the middle class. They create it.11

Although some may suggest that this is a role New

York can no longer play, we believe it is one that the city

needs to address i it is to remain a truly great city.


9/52

In most cities, the question o how to dene middle

class is pretty easily answered: researchers generally

consider 80 to 120 percent o an areas median amily

income as the parameters o middle class, a ormula

also used by some government housing agencies to

determine income limits or middle-income housing.

New York Citys median household income in 2007

was $48,631,12 which implies that amilies with an-

nual incomes between $38,905 and $58,937 meet the

denition o middle class.

Given the vastly higher cost o living in New York

City, however, it is doubtul that any New York house-

hold that earns even $60,000 per year enjoys a qual-

ity o lie that remotely approaches what we typically

imagine as middle class. The New York City premi-

um on goods and services rom housing and grocer-

ies to utilities and transportation means that a $60,000

salary earned in Manhattan is the equivalent o mak-

ing $26,092 in Atlanta; $31,124 in Miami; and $35,405

in Boston. In less-expensive Queens, that same $60,000

salary carries only as much purchasing power as $37,451in Atlanta, $44,673 in Miami, or $50,819 in Boston.13

In other words, income levels that would enable a

very comortable liestyle in other locales barely su-

ce to provide the basics in New York City. What

you would call middle class elsewhere you would call

working poor here, says Lilian Roberts, president o

DC 37, the citys largest municipal union. Most o our

members have all the status symbols o the middle

class, including credit cards, TVs and cars. So they

dont see themselves as being poor, even when they

cant aord decent health care or child care.Together, my wie and I make about $160,000

a year, adds one nonprot executive who lives in

Brooklyn with his wie and two kids, one o which at-

tends a private middle school and the other a public

elementary school. In pretty much any other city,

that would put us in the top one percent. Here, were

just digging out o a hole.

A 2006 report by the Drum Major Institute, a

policy institute, concluded it actually takes$75,000 to

$135,000 or a amily o our to have a middle-class

standard o living in New York. For a single individu-

al, the middle class range is $45,000 to $90,000.14

People we interviewed or this report generally

agree that amilies making well over $100,000 are mere-

ly middle class in New York. Some argue that amilies

with two or more kids are still middle class i they have

a combined income o $200,000. Middle class to me

is over $100,000, says Siu Kwan Chan, director o the

Renaissance Economic Development Corporation, a

subsidiary o Asian Americans or Equality. $50,000 is

really dicult to survive on in New York.

Many we spoke with say that income is less rel-

evant to dening New Yorks middle class than when

they bought their apartment. What is middle class?

It depends when you got into the real estate market,

says Jay Greenspan, a reelance writer living in Brook-

lyn. I you got into the market 10 to 15 years ago, you

can earn $75,000 a year [and be middle class]. I youre

trying to get in today, it probably takes $250,000.

Historically, the popularly understood denitiono middle class has oten gone beyond income lev-

els to include education and other intangible actors.

This is how David K. Shipler described the term in a

1969 article about the middle class in the New York

Times: The term middle class is dicult to dene

by income, because it connotes not just earning pow-

er, but a style o lie, a set o values and tastes, a level

o education and a class o occupation.15

We take a relatively loose denition o middle

class. In this study, we use it to indicate those who own

homes or have the prospect o becoming homeowners,earn at least in the middle quintile o wages and en-

joy a modicum o economic stability. The last point may

be the most critical today. In that sense, being middle

class means having enough money coming inor in re-

servethat you can pay your bills every month, have

health insurance, own a home computer or laptop with

Internet access, aord to live in a sae neighborhood,

send your kids to a quality public school and take a va-

cation at least once a year.

WHO IS MIDDLE CLASS IN NEW YORK?


10/52

WHY IS A MIDDLE CLASS IMPORTANT?

Is it really that important to worry about the possible

decline o New Yorks middle class when the city has

added so many well-heeled residents in recent years?

For us, the answer is an emphatic yes.

Theres no doubt that the growing number o a-

fuent New Yorkers has brought considerable benets

to the city. Their outsized incomes and lavish spend-

ing pumped billions o dollars into city coers, ueled

a good part o the now-ading housing boom and the

growth o thousands o jobs in industries that service

their luxurious needs, rom dog walkers to limo driv-

ers. Their purchasing power also spurred countless

entrepreneurs to open high-end restaurants, wine

bars and custom urniture shops.16

Yet, the middle class are ultimately more impor-

tant to New Yorks success and uture growth. The

middle class are the backbone o the citys work-

orcethe book editors, web designers, lab tech-

nicians, architects, nurses, paralegals, actors, uni-

versity proessors, carpenters and bus drivers that

provide the oundation or so many key industries.The middle class are the proessional people that re-

ally make the city run, says Rev. Edwin Reed, chie

nancial ocer o the Greater Allen AME Cathedral,

a Jamaica-based congregation.

The middle class contributes signicantly to the

citys vitality and vibrancy. They are ar more di-

verse than the wealthy, not only ethnically but also

in terms o their backgrounds, shopping habits and

entertainment choices. While they may not regularly

requent boutiques on Madison Avenue or the citys

our-star restaurants, the middle class provides thecustomer base or a wide mix o businesses across the

city, including many o the independent stores, cas,

shops and cultural venues that help give New York its

unique identity. They also add to New Yorks street

lie simply by being in the city; while many wealthy

residents leave the city on the weekends or second

and third homes in Aspen, the Hamptons and other

hot spots, the middle class are more likely to stay put

and spend their weekends in the city.

When neighborhoods become or upper-income

residents only, or are dominated by oreign owners

who live here part-time, street lie declines and en-

trepreneurs take ewer chances with new retail, din-

ing and entertainment ventures.

As such, the middle class provides critical stabil-

ity as well as vitality to neighborhoods across the city.

While the wealthy tend to be concentrated in Manhat-

tan and a ew neighborhoods in the other boroughs,

the middle class are ound in nearly every corner o the

city. They account or a large share o the citys hom-

eowners, who have a built-in sel interest in ensuring

the long-term health o their communities. But whether

they own or rent, middle class New Yorkers tend to be

more engaged in local civic matters than the wealthy,

who have the luxury o being able to move elsewhere

i the going gets tough. In community ater community,

middle class residents have pressured local ocials

and principals to improve the local schools, while a-

fuent New Yorkers typically send their kids to private

schools and have no stake in the public school system.Data indicates that the middle class vote in higher

numbers and take a more active involvement in their

childrens school than the poor. In the 2004 presiden-

tial election, the voting rate o citizens in the United

States living in amilies with annual incomes greater

than $50,000 was 77 percent, compared with 48 per-

cent or those living in amilies with incomes under

$20,000. Similarly, registration and voting rates in-

crease at every successive level o educational attain-

ment: citizens with a bachelors degree have a voting

rate o 78 percent; almost double that o those whohad not completed high school (40 percent).17

Meanwhile, 80 percent o parents with at least a

bachelors degree attended an event at their childs

school, compared to 45 percent o parents with less

than a high school education. At the same time, 45

percent parents in households that are above the

poverty level acted as a volunteer or served on a com-

mittee at their kids school, compared to 27 percent

or parents living at or below the poverty line.18

10


11/52

A great city by its very nature enables possibilities

that could not come to be anywhere else. Perhaps no

place has shown this dynamic through the centuries

more than Amsterdam, the city whose nanciers and

entrepreneurs did so much to shape New York. Des-

cartes observed that, in his day, this great Dutch city

represented an inventory o the possible.19

Hollands expanding middle class proved critical

to its development as both a major business and cul-

tural center in the early 17th century. The greatnesso Amsterdam in particular grew as a highly diverse

and entrepreneurial population made economic, cul-

tural and social innovations unmatched anywhere in

contemporary Europe. In much the same way, by the

mid-1600s, its namesake New Amsterdam, a tiny set-

tlement on Manhattan Island, also lured an astound-

ing variety o citizens among its 1,000 residents. Eigh-

teen languages were spoken and numerous aiths

practiced.20 Appropriately, the counting house, not

the church or any public building, stood as the most

important civic building.

21

Even ater the Dutch were pushed out o the new

colony by the militarily more powerul and more nu-

merous British,22 the bustling island cityrenamed

New Yorkretained its character as a undamentally

commercial city. Seeing the greater opportunities

beore them, most o the Dutch, Walloons, French,

Jews and Aricans chose to remain ater the trans-

er o power and continued to increase their numbers

under British rule.

Those who ollowed came largely because they sawin New York an ideal environment or skilled artisans

and traders with high expectations.23 The citys pre-

eminence rested not on political power but on its role

as the leading port or both goods and immigrants.24

Other important cities o the early 19th century, includ-

ing Philadelphia and Boston, also created great oppor-

tunities or their residents, but New York emerged as

the principal North American bastion or those seek-

ing to improve their lives.25 As historians Charles and

Mary Beard noted o New Yorks residents, All save

the most wretched had aspirations.

26

Manhattan

San Francisco

Queens

Nassau County, NY

Los Angeles/Long Beach

BostonBergen/Passaic Counties, NJ

Philadelphia

Chicago

Atlanta

Charlotte

Houston

HOW MUCH DOES IT TAKE TO BE MIDDLE CLASS?An analysis o what a person living in Manhattan, Queens and other cities needs to make to

enjoy a similar standard o living as someone earning $50,000 a year in Houston

Source: All calculations rom the Cost o Living comparison tool on CNNMoney.com: http://cgi.money.cnn.com/tools/costofiving/costofiving.html. Calculations made on January 29, 2009.

0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000

$123,322

$95,489

$85,918

$83,168

$80,583

$72,772$72,387

$69,196

$63,421

$53,630

$51,430

$50,000

THE CITY OF ASPIRATION: A HISTORICALOVERVIEW

Average Salary Needed

1


12/52

New Yorks 19th century growth was rapid and

mostly unplanned, the result o largely unrestrained

entrepreneurial energies coupled with a strong com-

mitment to development o critical basic inrastruc-

ture. Gotham was to that century what Los Angeles,

Phoenix, and Houston would be to the next. The

sense o opportunity and lack o class stability star-

tled many Europeans. As the French consul to New

York complained in 1810: the inhabitantshave in

general no mind or anything but business.27

Early New York was not inherently pleasant or

culturally ediying. Although its wealth ultimately

would make New York the worlds cultural capital,

visitors rom more genteel Philadelphia and Boston

oten regarded 19th century New Yorkers as crass

and ar too money-oriented: New York did not have

a major public ne arts institution until the late

1870s.28

New Yorks urban culture was shaped ar more by

the eorts o ambitious entrepreneurs than intellectu-

als or philosophers; the result was a dynamic social en-

vironment in which many who got their starts as skilled

artisans and shopkeepers quickly rose into the ranks o

the middle classand, requently, even higher.

NEW YORKS SOCIAL AND ECONOMIC EVOLUTION

By the eve o the Civil War, New York was not onlythe nations premier port but its largest industrial

city, a status it would retain or over a century. Many

o the sectors that contributed to New Yorks preemi-

nencesuch as the garment industry, which was to

become the largest locus o manuacturing employ-

mentcame rom the strenuous eorts o immi-

grants.29

Initially many o those who worked in garments

were poorly paid. But over the 20th century the indus-

try perormed two critical unctions. First, it provided

opportunities or small shop owners, jobbers, lendersand manuacturers, many o them Jewish immigrants,

to enter the middle and even upper middle class. Gar-

ment rms could be started with relatively little mon-

ey; sewing machines and other needed equipment

were relatively inexpensive. Financing was readily

available, and skilled workers, such as cutters and tai-

lors, oten became actory owners and provided an op-

portunity path or upward mobility to newcomers with

limited educational backgrounds.

The second unction emerged throughout the early

decades o the 20th century, as workers in the garment

industry gradually became organized. Although never

as well-compensated as some workers in other indus-

trial sectors, garment workers gradually won benets

such as health care, access to low-cost housing and

pensions. For many, the legacy o the sweatshop may

not have been riches, but particularly in union shops,

work at least oered a path out o poverty and into the

lower reaches o the middle class.

Although garments represented the citys larg-

est manuacturing industry, this pattern o smaller

shops prolierated throughout the economy. Unlike

the industrial Midwest, New Yorks economy was

dominated not by large-scale production but by liter-

ally thousands o smaller shops, each representing an

opportunity or at least one amily to climb into the

middle class and beyond. French historian Fernand

Braudel noted that this unique industrial structure

lay at the root o New Yorks mid-century prosper-

ity, and that prosperity evaporated as that structure

began to decay: Over the twenty years or so beore

the crisis o the 1970s, New Yorkat that time the

leading industrial city in the Worldsaw the decline

o one ater another o the little rms, employing less

than thirty people, which made up its commercial

and industrial substancethe huge clothing sector,

hundreds o small printers, many ood industries andsmall buildersall contributing to a truly competi-

tive world whose little units were both in competition

with, yet truly dependent on each other.30

This economy o the little men, as Braudel de-

scribes it,31 absorbed not only oreigners, but new-

comers rom rural America, including by the early

20th century many Arican-Americans. As sociologist

Gunnar Myrdal noted in 1944, the Great Migration

o Arican-Americans rom the rural south to places

such as Harlem created a undamental redenition

o the Negros status in America. Urban lie had itshorrors, but in the cities it became increasing dicult

to restrict a person into tight caste boundaries. A-

rican-American migrants rom the South may have

been dierent in many ways rom immigrants rom

Italy, Ireland or Russia, but their undamental aspi-

rations were oten very much the same.32

While barriers o racial and ethnic prejudice,

resistance to newcomers rom local business elites,

and periodic recessions all lined the road to upward

12


13/52

mobility, opportunities generally expanded or the

middle class through the period o years between the

1930s and the 1970s. This epoch can be seen as a kind

o golden age o the aspirational city, with the mid-

dle and working classes making unprecedented new

gains, particularly ater the Second World War.33

THE RISE OF THE OUTER BOROUGHS

These gains were not just monetary. Modern urban-

ists might romanticize lie in the dense, crowded in-

ner cities, but or millions o New Yorkers, the move

out o the core oered a vastly improved way o lie.

As the city expanded outwards, amilies could enjoy

both access to the urban economy and a more bucolic

setting. This process was accelerated by the incorpo-

ration o the outer boroughs into New York City in

1898 and urther enabled by rail construction and, or

better and or worse, new intra-city highways.

The consolidation not only made New York the

empire city, but also allowed or the evolution o a

new kind o urbanity spread across 322 square miles,

by ar the largest city east o the Mississippi. New

York, as demographer Andrew Beveridge has noted,

was the Sunbelt o the 1910s and 1920s, with a pop-

ulation that doubled between 1900 and 1930.34

Most o this growth took place outside Manhattan.

The massive public works constructed under RobertMoses in New York allowed places like Queens, long a

rural backwater, to nurture the creation o new bedroom

communities.35 Notably, the construction o the Bronx

Whitestone Bridge in 1939 opened up then-airly ex-

clusive northwest Queens to working class settlers rom

highly congested parts o the Bronx or Manhattan.

The rapid growth o the outer boroughs not only

relieved the burgeoning inner cityNew Yorks pop-

ulation nearly doubled in the rst hal o the 20th

centurybut also created a new kind o urban lie,

which added the pleasures o the single amily homeand automobile to older patterns o settlement. Critics

derided the tracts o Tudors, ranches, and colonials

that rose chock-a-block as tasteless; historian Robert

Caro described them as blossoming hideously.

Yet these new placessimultaneously urban

and suburbanoered willing occupants an attrac-

tive alternative to the tenement lie that they suered

in Manhattan, Downtown Brooklyn, and the South

Bronx. In the 1920s alone, more than a million people

joined this exodus outward. The movement, acceler-

ated by highway construction, also brutalized many

neighborhoods and worsened conditions or the ur-

ban poor who were now let behind.36 Yet overall, the

dispersion o New York oered millions something

that they wanted: an aordable place that provided

a middle landscape o tree-lined streets, parks, and

broad car-riendly boulevards. 37

This pattern o decentralization supported not

only the expansion o Manhattans oce economy,

which could be accessed by public transit, but also a

geographically diversied economy based around such

activities as manuacturing, warehousing and local

business services. The port was king; by the 1920s hal

o the countrys imports and exports ran through New

York Harbor. Although Manhattan always retained its

preeminence, Downtown Brooklyn and many other

smaller regional centers maintained their own vital

economies. The city spent a signicant portion o its

vast wealth on bridges, tunnels, transit lines and other

inrastructure to knit the boroughs together.38

The third quarter o the 20th century saw the

decimation o this diverse economy, and with it much

o New Yorks wherewithal to create and sustain

middle class jobs and liestyles. In less than a quar-

ter century, the city lost 80 percent o its generally

well-paying 50,000 longshoreman jobs and hundreds

o thousands o similarly compensated industrial po-sitions. The high-end service economy based in Man-

hattan continued, on and o, to expand and contract,

but this more diverse economyboth in geographical

and sectoral termswaned, with the outer boroughs

taking a disproportionate hit.39

Traditional middle class bastions in the outer

boroughs shrank, as did their diversied economy.

Manhattans wealth has been a curse to Brooklyn,

suggests Cooper Union historian Fred Siegel, himsel

a long-time resident o Flatbush. The citys inra-

structure was allowed to collapse because Wall Streetwas doing well and Manhattan thought the city didnt

need an old-ashioned industrial base.40

With that Wall Street-dominated economy in

deep trouble, this danger o the citys dependence on

Manhattan has never been greater. As we will sug-

gest below, there is a clear need to return to some

semblance o the geographic and industrial diversity

that served New York so well in the rst hal o the

last century.

1


14/52

WHY THEY CANT MAKE IT HERENew Yorks eorbitant cost o living is making the city out o reach

or many in the middle class

$40

$35

$30

$25

$20

$15

$10

$5

$0

TALK IS CHEAP, ExCEPT IN NEW YORKMonthly telephone costs are signiicantly higher in New York than other major cities

Source: Federal Communications Commission, Reerence Book o Rates, Price Indices, and Household Ependitures or Telephone Service, 2007.

$34.00

Monthlyflat-ratetelepho

nebill,October2006

NewYork Bost

on

Philade

lphia

Houston Miam

i

Washing

ton,DC

Chicago

LosAng

eles

SanFran

cisco

$29.80

$24.68$23.12 $22.36

$21.34 $21.27

$18.76$17.10

PART II

I it wasnt already clear that the cost o living in New

York City is greatly out-o-whack with the rest o the

country, it certainly became apparent in early 2008

when a new condo development in Brooklyn Heights

began selling individual parking spacesnot apart-

ments, parking spacesor as much as $280,000.41

O course, many New Yorkers dont even own cars,

and ew o those who do pay such absurd prices: a

garage today generally rents or between $2,000 and

$5,000 a year in neighborhoods like Sunnyside and

Park Slope. Yet, the case illustrates a sober reality

about lie in the ve boroughs: New Yorkers not only

pay among the highest prices in the country or basic

necessities, but they also requently have to dig into

their wallets to pay or things people elsewhere get

or ree or much less.

New Yorkers pay considerably more or hous-

ing, on average, than people in every other city

in the country. (See Through the Roo, page 19)

But housing constitutes only one element o New

Yorks out-o-sight cost o living. City residents

also pay more in taxes, electric bills, groceries,

phone bills and virtually every other imaginable

expense. And many New Yorkers also have to

shell out some o the highest prices anywhere or

child care, secondary education and, yes, park-

ingcosts that many people in other cities are

able to avoid.

All o this adds up to exert enormous pressure

on city households. Even though New York salaries

tend to be somewhat higher or middle class proes-

sionals than those in other parts o the country, the

overall cost o living makes it dicult, i not impos-

sible, or most to enjoy the money they make in a

manner they could elsewhere. A comparison below

between the actual cost o living and average sala-

ries in New York, Houston, Dallas and other cities

makes this clear.

1


15/52

250

200

150

100

50

0

LUxURY CITYManhattan tops the list o the nations ten most epensive urban areas; Queens is ith

Source: ACCRA Cost o Living Inde

224.2

CostofLivingIndex,

Q32008

Manhatt

an

SanFran

ciscoHon

olulu

SanJose Que

ens

OrangeC

ounty,C

A

NassauC

ounty,N

YOak

land

LosAng

eles/Lon

gBeach

173.6 163.6 157.4 156.2 152.2 151.2

146.5 146.5

Stamford

,CT

146.1

The NYC premium also makes it exceedingly

diicult or poor and working class New Yorkers to

get out rom under their debts and develop a mea-

sure o economic security. It creates high barriers

to home ownership, orces a broad range o New

Yorkers to devote unds towards immediate ex-

penses instead o saving or a home, retirement or

a childs college education and leaves little wiggle

room or both the poor and the moderately well-o

to weather unexpected events, such as a layo or

medical emergency.

The citys steep costs are perhaps the single big-

gest reason why so many middle class New York-

ers leave the city every year. I know lots o people

whove let when they have kids. They just cant a-

ord it, says Heather Chaplin, a reelance writer and

author who lives in Park Slope. Though she made

around $65,000 in income in 2007 and lives in a con-

do she bought in 2001, prior to the recent run-up in

housing prices, Chaplin says that its dicult to stay

ahead o her bills living here. I dont shop. I dont

eat out. I dont get cable. I dont get any magazines.

I cancelled myNew York Times subscription. I can-

celled my [landline] phone. I dont have a retirement

account, she says. But its hard to keep my expenses

under $5,000 a month between mortgage condo ees,

membership at Brooklyn Writers Space [a acility in

the neighborhood used by reelance writers], Con Ed,cell phone and groceries.

New York has always been an expensive place to

live, but the costs have gone up signicantly in recent

years, as expenses have risen much aster than wages.

Gas, housing, electricity, ood. . . it has all gone up and

our wages have not [kept pace], says Jim Tucciarel-

li, president o Local 1320, which represents roughly

900 sewage treatment plant workers. It has become

impossible to live in the city on a sewage treatment

workers salary.

David Galarza, a community leader in Sunset

Park, says that the citys escalating costs are not

only making pushing longtime residents out o the

working class neighborhood where he works; theyre

actually prompting people living in Puerto Rico to

think twice about moving to New York. According

to Galarza, Puerto Ricans are again in the process

o migrating to the States, in part due to recent eco-

nomic problems on the islandbut not to the abled

Nuevo York.

A lot o olks are leaving the island [Puerto Rico]

and coming back to the U.S., but not to New York, Galar-

za says. Years ago it was a given that you came to the

largest Puerto Rican community outside o Puerto Rico

[New York]. But many cant make it here anymore.

According to the U.S. Bureau o Labor Statistics,

the cost o living in New York climbed aster than

most other cities during the past decade. Between

1997 and 2006, the citys consumer price index, aleading indicator o changes in the prices paid by

1


16/52

consumers or a representative basket o goods and

services, increased by 29.2 percent while the nation-

al average or cities jumped by 25.6 percent.42 Addi-

tionally, New York Citys cost o living continued to

climb in the last ew years while prices steadied or

declined in several other major cities. For example,

the ACCRA Cost o Living Index rose by 11 percent

in Manhattan and 4 percent in Queens between the

third quarters o 2005 and 2008, while it actually ell

or other expensive cities like San Francisco, Los

Angeles and San Jose.43

Today, Manhattan is by ar the most expensive

urban area in the country, with a cost o living thats

more than twice the national average and ar ahead

o any other city, according to a cost o living index

developed by ACCRA. The only other New York City

borough included in the ACCRA analysis is Queens,

which has the th highest cost o living in the coun-

try, behind only Manhattan, San Francisco, Honolulu

and San Jose.

An individual in Houston who earns $50,000

would have to make $123,322 in Manhattan and

$85,918 in Queens to live at the same level o

comort, according to ACCRAs Cost o Living

Calculator. Someone moving rom Houston to

Manhattan would pay 68 percent more or grocer-

ies, 447 percent more or housing, 54 percent more

or utilities, 22 percent more or transportation and38 percent more or health care.44

Our analysis shows that this data might not even

capture the ull extent to which costs in New York out-

pace the rest o the nation and create an overwhelm-

ing burden or middle class New Yorkers. Consider

the ollowing set o expenses:

ELECTRICITY

Electricity bills are higher in New York than any-

where in the nation except Hawaii. And theyve

climbed sharply in recent years. Residential elec-

tricity prices increased by 27 percent between

2002 and 2007.45

Commercial customers in New York paid an av-

erage o 18.37 cents per kilowatt hour (kWh) in

2006, almost twice the national average o 9.46

and substantially higher than other major cities

such as Chicago (7.65 cents per kWh) and Los

Angeles (14.45).46

Between 2001 and 2006, average prices increased or

Con Ed commercial customers in the city by nearly

18 percentrom 15.69 cents per kWh to 18.37.47

HEATING OIL

Home heating oil prices in New York City in De-

cember 2008 were down considerably rom the

previous winter. Yet, even ater the recent de-

cline, prices in the ve boroughs are nearly triplewhat they were a decade ago: the monthly average

Apartment Rents

Home Prices

Property Taes

Milk

Water

Telephone

Home Heating Oil

Electricity

BREAKING THE BANKOver the past ive years, New Yorkers have had to pay signiicantly more or

everything rom milk to home heating oil

Source: Energy Inormation Administration; Federal Communications Commission; NYC Water Board; New York State Department o Agriculture and Markets; NYC IndependentBudget Oce; NYC Department o Finance; CitiHabitats. Property ta levy is or the average 1, 2 and 3 amily home in NYC. Telephone bill is or fate rate service rom 2002through October 2006. Home prices are median sales prices or single amily homes in NYC. Apartment rents are average Manhattan rents or a 2 bedroom apartment.

0 20% 40% 60% 80% 100% 120% 140%

16%

77%

67%

60%

34%

16%

125%

27%

1

Percentage Increase in Selected Prices, 2002 2007


17/52

home heating oil price rose by 243 percent rom

December 1998 to December 2008, rom $1.08 per

gallon to $2.78 per gallon. (In December 2007, the

cost was $3.51 per gallon.)48

According to an October 2008 analysis byForbes,

New York Citys home heating costs were the sev-

enth highest among the nations leading cities.

One Astoria homeowner interviewed or this re-

port says that heating oil prices have jumped

rom 99 cents a gallon in 1997, when he bought

his attached, two-amily house, to $4.20 a gallon

in early 2008. I, as he says, he lls up his 275-gal-

lon tank about once a month between September

and April, his annual uel bill would have gone up

rom $1,906 to $8,805.

AUTO INSURANCE

For this analysis, we computed ballpark auto in-

surance rates on Allstate.com or people living in

each o the ve boroughs and a handul o other

major cities. We received rate quotes or individu-

als with the same characteristicsa 37 year-old

married male driving a 2006 Toyota Corolla who

has been in no accidents in the previous ve years

and has an excellent bill payment history. We

then calculated rates or parts o New York and

other cities with similar income levels.

The results indicated that New York City resi-dents pay signicantly more or auto insurance

than their counterparts elsewhere. An individual

with the set o characteristics noted above would

pay $880 a year on New Dorp, Staten Island;

$1,040 in Co-op City, the Bronx; $1,140 in Mas-

peth, Queens; $1,250 in Bensonhurst, Brooklyn;

and $1,310 in Inwood, Manhattan. In contrast,

the rates would be $450 in Atlanta; $610 in Wash-

ington, DC, $640 in Chicago, $840 in Houston and

$920 in Philadelphia; the Bensonhurst resident

would pay between 36 percent (Philadelphia) and178 percent (Atlanta) more or the same policy.

GROCERIES

New Yorkers pay higher prices or milk than resi-

dents o all but our other cities. In September 2008,

a gallon o whole milk in the city cost an average

o $4.08. Only New Orleans ($4.95), Minneapolis

($4.46), Miami ($4.19) and Kansas City ($4.15) had

higher prices. The national average was $3.82.49

Between 2002 and 2008, milk prices rose by a

higher percentage in New York City than any

other U.S. city except Milwaukee. The price o

milk here rose by 50 percent; nationally, milk

prices jumped by 33 percent.50

Manhattan was the most expensive city or ground

bee, toothpaste and a bottle o wine, according

to ACCRA. It was the second most expensive city

to buy groceries, behind only Honolulu, the most

expensive place or veterinary services and the

th most expensive place or a cup o coee.51

PHONE BILLS

New York City had the ourth highest monthly

landline phone rate among 95 major U.S. cities

tracked by the Federal Communications Com-

mission (FCC) in October 2006, the most recent

month or which comparative data is available.

Verizons fat rate service in New York City cost

$34 at the time, only behind Milwaukee ($37.01),

Racine, WI ($36.99) and Bualo ($35.71). The

rates in the ve boroughs were considerably high-

er than other large cities, such as Philadelphia

($24.68), Miami ($22.36), Chicago ($21.27), Los

Angeles ($18.76) and San Francisco ($17.10).52

Telephone rates in New York City increased by 36

percent between 2000 and 2006. Phone bills didnt

rise as ast elsewhere, such as Los Angeles (withan 11.2 percent increase during this period), San

Francisco (11.6 percent) and Philadelphia (27.2

percent).53

It costs signicantly more in New York or telephone

connection charges including touch-tone, sur-

charges, and taxes than most other cities. The rate

is $64.53. O the 95 cities examined by the FCC, only

Tampa, Ansonia, CT and Norwalk, CT had higher

rates. Los Angeles and San Francisco are $35.26.

Chicago is $38.39. Boston is $14.59.54

WATER RATES

In 2008, the city approved a 14.5 percent increase

or water and sewer rates in the ve boroughs,

the largest increase since 1992. Overall, water and

sewer rates in the city have risen by 77 percent

since 2001.55

City ocials project that the average owner o a

single-amily home will pay $800 or water in scal

year 2009, compared to $700 in scal year 2008.56

1


18/52

TAxES

New Yorkers pay higher taxes than people in any

other major U.S. city, roughly 50 percent more

than the average in other large cities. City taxes

alone are 90 percent higher than the average in

other major cities, according to a 2007 study by

the Independent Budget Oce.

The average property tax bill or homeowners o

a one-, two- or three-amily home in New York

City increased by 87 percent rom scal year 2000

to scal year 2009 (rom $1,626.74 to $3,375.85).

Businesses also pay more. The average eective

tax rate on businesses is 7.5 percent in the city,

more than twice the rate in Westchester and 70

percent higher than Los Angeles, according to

the Citizens Budget Commission.

New York is one o just 11 states to impose mort-

gage recording tax on the sale o homes. Partly as a

result, it has the most expensive mortgage origina-

tion and closing ees in the country. According to

a 2008 survey by Bankrate.com, a resident o New

York City getting a $200,000 mortgage would pay

an average $3,830 in origination, title and closing

costs40 percent higher than the U.S. average.

1

CHILD CARE COSTSTo get by in New York, most amilies need both parents to work ulltimewhich means spending thou

sands per year in child careLiving in New York City presents a number of challenges for young families, but none is greater than nding quality, affordable day care.

The four years between birth and pre-kindergarten which marks the beginning of public school for 54,000 toddlers in New York each

year57 can set parents back nancially even more than the cost of paying for college, experts say.

According to government estimates used to gauge the value of vouchers and other subsidies, the market rate cost of nursery school

for toddlers in New York City is $13,260 per year; for infants it is $19,240.58 But, depending on the neighborhood, sending a child

to day care for the full day, ve days a week can cost as much as $25,000 a year.59 And thats not for a top-of-the-line program on the

Upper East Side, but for basic child care at standard neighborhood organizations.

New York has an acute shortage of day care centers, says Betty Holcomb, policy director at Child Care Inc, a Manhattan-based

non-prot. Regulated arrangements can only accommodate about half of the families that need care. And that affects everybody regard-

less of income.

Middle class families, however, are the most likely to feel the squeeze. They earn well above the $47,700 cut-off for city-issued

vouchers or federally subsidized programs like Head Start, but cannot manage the ve-gure cost of day care. 60 Holcomb says that at

current rates, a family of three earning $55,000 a year will have to pay nearly half of their income for early childhood care. Families

making $100,000 will often pay more in day care costs than they do in monthly mortgage payments or rent.

Until their recent move to Forest Hills, Noemi Altman and her husband sent their one-year old to a nursery school called Kiddie Korner

in Brooklyn Heights and paid $18,000 a year for full-day care. That meant that they still would have had three more years before they

could send him to public school, costing the parents, who are in their 30s, a grand total of $54,000. At that price, Altman said she had

to think long and hard about going back to work at all. The job had to pay a whole lot more than $18,000 a year for it to be worth

my while, she said in a 2008 interview. I wasnt going to go back just for the sake of working.

Manhattans so-called baby boomletthe boroughs number of toddlers under the age of four grew 26 percent between 2000

and 2004has been well-documented and publicized in recent years.61 But theres some evidence of drastically increasing numbers of

young children in the other boroughs as well. Kiddie Korner director Shternie Raskin reports that demand has never been higher. Ive

been here [in Downtown Brooklyn] 18 years, and Ive never had a longer waiting list, she says.As a result, day care centers are receiving more applications than they can accept, forcing families to apply to at least ve or six differ-

ent places. Besides costing hundreds of dollars in fees, lling out the applications are time-consuming and stressful; more often than not an

interview and play-session are a required part of the admissions process. One place we applied to, says Altman, had a lottery for spots

on the tour, and only on the tour could you get an application. We got into one place out ve, and only then after a cancellation.

According to Holcomb, the citys day care shortage adversely affects young families most of all, since they typically earn less and

have little in savings. Affordable, high quality nursery schools can lift up a neighborhood in the same way public schools can, she says,

but we dont invest in the infrastructure and facilities needed to make them accessible.

Yet the real issue for the middle class is not having babies in the cityNew Yorkers seem increasingly comfortable with thatbut

in being able to support their families as the children age and as families expand. In this context the crisis in day care could be directly

related to the phenomena of more families with children ultimately choosing to leave the city despite their oft-stated desire to stay.


19/52

80%

70%

60%

50%

40%

30%

20%

10%

0%

IS THE AMERICAN DREAM OUT OF REACH IN NEW YORK?In the third quar ter o 2008, a smaller share o homes in the New York City region were

aordable to those earning the median income than any other metro area

Source: Housing Opportunity Inde, compiled by the National Association o Home Builders and Wells Fargo, third quarter 2008.

10.6%

NewYork

SanFran

cisco

LosAng

eles Boston

Chicago

Houston Dall

asCha

rlotte

Phoenix

16.6%

20.7%

42.8%47.3%

60.4%64.1%

68.4%71.6%

Atlanta

72.3%

Percentofhomesaffordabl

etothoseearningthe

medianincome

,Q32008

With the average apartment in Manhattan selling

or more than $1.4 million (and the median price

$900,000) and studios renting or an average o $1,800

a month in December 2008, its hardly surprising that

soaring real estate prices dominated the discussions

in many o the ocus groups we held.62 The cost o

buying or renting a house or apartment has risen as-

tronomically over the past ve to 10 yearsnot only

in Manhattans toniest neighborhoods, but in commu-

nities rom the Northeast Bronx to the South Shore o

Staten Island.

Many New Yorkers are throwing up their hands

in surrender and moving elsewhere. Meanwhile,

those who stay are being orced to dig deeper and

deeper into their wallets just to pay the rent or mort-

gage. O course, the worsening economy, touched

o by a mortgage crisis, seems likely to reduce some

o these sky-high pricesat least in the outer bor-

oughsover the coming years. But mortgages will

be harder to come by as banks impose much stricter

loan requirements to guard against urther cata-

strophic losses. The mortgage meltdown, which

started in heavily low-income parts o the city, now

appears to be spreading to more traditionally middle

class areas.63

Under any circumstances, whether they rent or

own, New Yorkers are likely to continue paying a

higher percentage o their incomes or housing than

anywhere in the country, and ar more than they did

a decade ago. At the same time, skyrocketing costs

have pushed home ownership out o reach or a large

majority o working New Yorkers in both boom and

bust times.

In the third quarter o 2008, only 10.6 percent

o housing in the metro region was aordable to

people earning the median area income, the low-

est share o anywhere in the country.64 Even though

housing prices rose steadily throughout the nation

during the 1990s, most other major cities had a sig-

nicantly higher share o housing that was aord-

THROUGH THE ROOFThe rising cost o housing over the past decade, in virtually every corner o the city, is the

single biggest actor pushing the middle class out o New York

1


20/52

able to middle-income earners, including Boston

(43 percent), Philadelphia (37 percent), Houston (60

percent), Charlotte (68 percent) and Atlanta (72 per-

cent).65 Even high-cost San Francisco (17 percent)

and Los Angeles (21 percent) had a notably higher

share o aordable housing.

The aordability gap shouldnt come as a shock

given the sustained spike in housing prices. Between

1999 and 2006, the median sale price or single-amily

homes increased by 209 percent in Manhattan, 147 per-

cent in Queens, 145 percent in Brooklyn, 142 percent

in Staten Island and 131 percent in the Bronx.66 Not

only did sales prices jump through the roo during the

past decade; so too did the amounts that homeowners

pay each month in mortgage and maintenance costs.

According to an analysis by proessors at Queens Col-

lege, the share o city homeowners spending 35 per-

cent or more o their income on housing jumped rom

15 percent in 1990 to 32 percent in 2005.67

Renters havent had it any easier. In act, the av-

erage eective rent in New York was $2,801 in the

ourth quarter o 2008, according to Reis, Inc. That

is down slightly rom the previous quarter ($2,856),

but still by ar the highest in the nation. The citys to-

tal was 53 percent higher than the second place city

(San Francisco, where the average eective rent was

$1,827), almost double high-priced San Jose ($1,506)

and nearly triple the national average ($995).

68

Even amidst the nancial crisis, the citys apart-

ment vacancy rate in the ourth quarter o 2008 was

a tight 2.3 percent, the lowest among the nations 79

major apartment markets. Thats notably lower than

San Francisco (3.6 percent), Los Angeles (4.5 per-

cent), Chicago (5.4 percent) and Boston (6.0 percent).

The national average was 6.6 percent.69

The U.S. Department o Housing and Urban De-

velopment (HUD) considers households that pay more

than 30 percent o their monthly income on housing

to be cost-burdened and those paying more than

50 percent o their income to be severely cost-bur-

dened. But a recent study showed that nearly 28 per-

cent o New Yorkers529,171 rentersare paying 50

percent or more o their income toward rent, a 15 per-

cent increase since 1999.70 Perhaps even worse, our

analysis o Census data rom 2006 ound that a whop-

ping 40 percent o renters in the city spent 35 percent

or more o their income on rent.71

The citys infated housing costs contribute to the

high level o out-migration rom the ve boroughs. In

act, an internal study conducted or the Bloomberg

administration in 2006titled NYC Movers Study

ound that high housing costs were the number one

reason people are now moving out o the city. The

Movers survey attempted to duplicate a similar city

study done in 1993 that specically examined what

actors had caused people to relocate out o the ve

boroughs. In 1993, the three most commonly citedmajor reasons or leaving were to have a better lie-

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

THE BIG SQUEEZERents are on their way down, at last, but in the ourth quarter o 2008 New York Citys average eective rent

was still 53 percent higher than the second place city and nearly triple the U.S. average

Source: Reis, Inc. Monthly rental gures or apartment complees with 40 units or more (20 or more in CA or AZ). Eective rentsinclude ree rent incentives and other landlord concessions.

$2,801

AverageEffectiveRent,Q42008

NewYork

SanFran

cisco

Fairfield

County Bost

onSan

Jose

LongIsla

nd

Norther

nNewJe

rsey

LosAng

eles

Ventura

County

$1,827$1,752

$1,651 $1,506 $1,500 $1,475 $1,410 $1,392

20

Metro Regions


21/52

style (59 percent), to live in a better home or neigh-

borhood (55 percent) and to live someplace saer (54

percent). Thirteen years later, one concern dominat-

ed: housing costs, cited by 64 percent o those asked

or their major reason or departing.72 What drove

people out o New York City in 1993 was basic qual-

ity o lie issuescrime, saety, neighborhoods, con-

cluded the authors o the 2006 Movers study. What is

driving people out today is basically one issuemoney

and the cost o living.

Our interviews certainly conrmed that this is the

case. Can you live a middle class lie in New York,

even in Brooklyn, when it costs $650,000 to buy a two

bedroom apartment in Fort Greene? asks Jay Greens-

pan, a writer living in Brooklyn.

Greenspan and his wie, who works or a non-

prot, have a combined income o about $160,000. But

because they cant aord to buy a place in one o the

Brooklyn neighborhoods they like, he and his wie are

going to relocate, most likely to Providence or West-

ern Massachusetts. Weve just decided to move. Its

heartbreaking because we want to stay.

Jeremy Lauer, district manager o Brooklyn

Community Board 7, which represents Sunset Park

and Windsor Terrace, says the property costs in

those neighborhoods are signicantly less than in

nearby Brooklyn neighborhoods like Park Slope and

Carroll Gardens. But that doesnt make it aord-able. I think it would be relatively hard or a amily

making $60,000 to buy in our area, Lauer says. So

many people say to me: My kids cant aord to live

here anymore.

Clearly, many New Yorkers made sacrices to re-

main in the city. Some simply moved to neighborhoods

arther away rom Manhattans central business dis-

tricts. Others overextended themselves and went deep

into debt to aord the cost o a home in New Yorkall

too oten, more deeply than they could sustain. A case

in point is the 163 percent spike in oreclosures in New

York City between the third quarters o 2006 and 2008

(rom 425 to 1,118), the majority o which occurred in

Queens and Staten Island.73

A number o others are cramming into tight

spaces. In act, several community leaders inter-

viewed or this report say that there are growing

instances o immigrants doubling and tripling up

in neighborhoods such as Manhattans Chinatown

and Sunset Park. Thomas Yu, director o Downtown

Manhattan Community Development Corporation,

an aliate aordable housing developer o Asian

Americans For Equality recently said that its not

uncommon to see 10 Chinese immigrants living in

a one-bedroom apartment. Immigrants sharing

apartments is extremely common, adds Olga Djam,

a Columbia native who sells insurance in Jackson

Heights and Elmhurst. Some o my clients will rent

a single amily house or $2,100 and split it up be-tween three amilies.

Housing costs

Educational opportunities or kidsChange in job or you/spouseBetter weather/environment

Closeness to amily/riendsWanted a dierent liestyle

Quality o neighborhood/home

Cost o living not housing relatedChange in household

Had always planned to leaveCrime

Possibility o terrorismNone o these

Ease o commutingAcademic opportunities

To be near more similar people

WHAT DRIVES RES IDENTS OUT OF NEW YORK?

Source: Survey o outmigrants rom New York City, published in NYC Movers Study, a report by Harris Interactive or the Cityo New York, 2006

0% 5% 10% 15% 20% 25%

23%10%10%

9%9%

8%8%

6%4%

2%2%2%2%

1%0%

1%

ACADEMIC OPPORTUNITIES

2

Percent o outmigrants who say this is the most important reason they moved out o NYC


22/52

New Yorks uniquely high cost o living is a major

reason why so many New Yorkers today are strug-

gling. But these problems are magnied by a local

economy that no longer produces vast numbers o

jobs that pay middle-income wages and oer clear

paths to advancement. The result is that large num-

bers o people in the ve boroughs are working but

not earning enough to live comortably, save money

or get ahead.

During the citys middle class heyday in the

mid-20th century, New Yorks highly diversied

economy was a powerul and steady engine creat-

ing decent-paying jobs or people with a range o

skills and backgroundsrom educated proession-

als and artisans to people with only a high school

degree and immigrants with limited English lan-

guage abilities. With strong assistance rom the

powerul labor movement and relatively progres-

sive local government, many o these jobs oered a

chance or mobility.

Unortunately, the story o New Yorks economy

over the past ew decades has been a relative hol-

lowing out o middle-income jobs in avor o ewer

jobs that coner great wealth and many more that just

oer bare subsistence. Worse, this trend has only ac-

celerated in recent years.

By 1970, New York had already lost hundreds o

thousands o manuacturing jobs. Despite those loss-

es, more than one in ve city residents (20.6 percent)

were employed in the manuacturing sector. But in

2000, the sector accounted or just 6.6 percent o all

jobs held by New Yorkers, and the number has con-

tinued to drop.74

Manuacturing jobs have disappeared all over

the country, but New York City and its metropoli-

tan area have done worse in retaining this sector

than almost anywhere else. In 2007, the manuac-

turing sector accounted or just 3.2 percent o all

private sector jobs in New York City and 4.6 per-

cent in the New York City metro region. The sec-

tor employs a much larger share in other major re-

gions, such as Los Angeles, where manuacturing

accounts or 12.7 percent o all private sector jobs;

Chicago, in which 11.3 percent o private sector

jobs are in manuacturing; Charlotte (10.8 percent),

Houston (10.6 percent), San Francisco (8.0 percent)

and Boston (7.1 percent).75

New York has done almost as poorly in other blue

collar sectors. Nationwide, employment in the whole-

sale trade sector grew by 12.6 percent between 1990

and 2007. However, in New York City and the New

York metro region, employment in the sector de-

clined by 22.2 percent and 22.1 percent, respectively,

during this period. Other major metro areas did much

better: the sector grew by 29.0 percent in Charlotte,

by 23.9 in Houston and 0.6 percent in Los Angeles,

NO TICKET TO RIDEThe steady erosion o middleincome jobs in New York has led to alling or stagnant wages

and allbuteliminated a longstanding path to social mobility

22

The industries expected to grow the most in New York during the decade ahead

almost exclusively pay low wages. O the 10 occupations that are expected to

have the largest number o annual job openings in the city through 2014, only

two oer average annual wages greater than $28,000.


23/52

while it declined by comparatively smaller percent-

ages in Chicago (a 4.2 percent decrease), San Fran-

cisco (4.9 percent), Philadelphia (11.9 percent) and

Boston (13.4 percent).76

Like other U.S. cities, New York has seen sub-

stantial growth in low-wage sectors like retail and

hospitality. But another sector that pays poorly,

health care and social assistance, accounts or a

much larger share o all private sector jobs in New

York than other cities. In 2007, the sector accounted

or 17.4 percent o all private sector jobs in New York

City and 16.9 percent in the metro region, up rom

12.7 percent and 12.1 percent respectively in 1990.

By comparison, Charlotte (8.6 percent), Washing-

ton, DC (9.7 percent), San Francisco (10.8 percent),

Houston (10.9 percent), Los Angeles (11.0 percent),

Chicago (11.8 percent) and Boston (15.8 percent) all

had smaller shares o their private workorce in this

eld in 2007.77

Citywide, 31.1 percent o workers over the age

o 18 are employed in low-wage jobsan alarming

ratio.78

The movement towards an economy domi-

nated by high-end sectors like nance and busi-

ness services and low-end industries like retail and

healthcare explains in large part why wages have

remained fat or a signicant number o New York-

ersa critical problem as expenses have soared. In

act, between 1975 and 2007, average weekly wages,

when adjusted or infation, barely increased in the

boroughs outside o Manhattan. During this peri-

od, real weekly wages went up by just 1.1 percent

in Queens, 1.7 percent in Brooklyn, 2.5 percent in

Staten Island and 8.6 percent in the Bronx. In con-

trast, real weekly wages in Manhattan jumped sig-

nicantly (96 percent).79

You have to have three jobs now [to be mid-

dle class in New York], says Zoe Gaby, a housing

lawyer who works or a community development

organization in Elizabeth, NJ and lives in Park

Slope. Thats why middle class people move out

[o the city]. I you have three jobs, when do you

see your kids?

Unortunately, the industries expected to grow

the most in New York during the decade ahead al-

most exclusively pay low wages. O the 10 occupa-

tions that are expected to have the largest number

o annual job openings in the city through 2014, only

two oer average annual wages greater than $28,000.

The top 10 occupations or total job openings, along

with their average annual wages, are:

Retail salesperson ($20,690)

Cashiers ($16,800)

Waiters & waitresses (n/a)

Nurses ($76,490)

1.

2.

3.

4.

14%

12%

10%

8%

6%

4%

2%

0%

WHERE ARE THE MIDDLE-INCOME JOBS?Industrial jobs are down nationwide, but manuacturing accounts or a much smaller

share o all private sector jobs in New York than other major cities

Source: U.S. Bureau o Labor Statistics.

3.2%

NewYor

kCity

NewYork

Metro

Boston

SanFran

cisco Houston

Charlott

eChic

ago

LosAng

eles

4.6%

7.1%

8.0%

10.6% 10.8%

11.3%

12.7%

2

Manufacturingjobsasap

ercentofallprivate

sectoremploym

ent,2007


24/52

20%

16%

12%

8%

4%

0%

WHERE ARE THE MIDDLE-INCOME JOBS?Health care and social assistance, one o the lowest paying sectors in the economy, accounts or a

much larger share o all private sector jobs in New York than other major cities

Source: U.S. Bureau o Labor Statistics.

17.4%

NewYork

City

NewYork

Metro

Boston

Chicago

LosAng

elesHou

ston

SanFran

Documents

New York City of Aspiration Middle Class Report