NYC: more unequal than Brazil

The New York City Independent Budget Office is just out with an analysis (pdf )of income distribution in the city. It’s no surprise that it’s very unequal. The surprise is that it’s far more unequal than Brazil’s.

Full details are available in the letter—which was in response to a request from City Council member James Oddo—but here are some highlights:

  • The poorest tenth (decile) of the city’s population has an average income of $988, and claim 0.1% of the city’s total income. Since the source of this data is tax returns, the very poor no doubt have hidden sources of income. Taxable income doesn’t include many social benefits, like public housing or Food Stamps. Even allowing for that, my god.
  • The bottom half of the city’s income distribution has 9% of total income; the bottom 80%, 29%. Comparable figures for the U.S. are 19% for the bottom half and 44% for the bottom four-fifths.
  • The richest 10% of New Yorkers have 58% of total income, and the richest 5%, 49%. The national average is 42% for the top 10%, and 32% for the top 5%
  • And here’s where the action is, the proverbial 1%: it has 34% of total income, compared with 19% for the U.S. as a whole.

Some dollar amounts to make those percentages more concrete:

  • The average income of the poorest 30% is $6,373, on a par with Egypt and about $1,200 below China’s (computed on a purchasing power parity basis, which attempts to adjust for price differences across countries).
  • The city’s median income—the level at which half the population is richer and half is poorer—is $28,213. That’s roughly the level of Greece.
  • The average income of the top 10% (a category that begins at $105,368) is $387,259.
  • The average income of the top 1% (a category that begins at $493,439) is $2,247,515. These are the people that Andrew Cuomo was very reluctant to tax.

How does the city’s income distribution compare with that of Brazil, a country with a worldwide reputation for stunning inequality?

  • The income of the top 20% of New Yorkers is 64 times that of the bottom 20%. In Brazil, that ratio is 17 times.
  • The income of the top 10% of New Yorkers is 582 times that of the poorest 10%. In Brazil, that ratio is 35 times.

The New York and Brazilian comparisons are pretty rough, since the Brazilian figures are based on survey data reported by the World Bank. Rich people don’t answer surveys, so the incomes of rich Brazlians are probably way underestimated by that data. But if you look a little down the scale, to the second-richest quintile (20% slice) of Brazilians, they have incomes about 6 times the poorest quintile. In New York, the comparable ratio is 14 times.

So there you have it: New York City makes Brazil look almost like Sweden!

23 Comments on “NYC: more unequal than Brazil

  1. It says here that *average* GDP per head in China around the same as income of the *lowest 30 per cent* in New York.
    I appreciate that New York’s fabulously wealthy are fabulously wealthy, which is no doubt painful for the less wealthy to live with, but are the less wealthy New Yorkers really less wealthy than the less wealthy in the rest of the world? When you say, ‘New York City makes Brazil look like Sweden’, you mean in terms of the spread of incomes, but that does not necessarily mean that New Yorkers overall are not much better off than those elsewhere.

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  3. This is a comparison of a city with a country. Wouldn’t it make more sense to compare New York with a Brazilian city?

  4. Comparing cities to countries on comparative data like inequality completely misses the obvious. Whatever one thinks of the merits of inequality rankings, in the case of a country, you’re looking at a relatively self-contained economic unit. With cities, there is an obvious phenomenon that makes a HUGE difference, namely the existence of suburbs which act as an alternative residential magnet, particularly, and this is essential, for the middle class. Suburbs offer a net positive package to middle class residents (moderately priced housing, safety, and decent schools for higher property tax and poorer public infrastructure) which are not attractive (as a trade off) to the poor, the very wealthy (or at least not as attractive) and to the young, unattached professionals.
    Cities offer a more attractive deal to the poor (public transport, small apartments for cheaper rent, and higher social spending) and to those who don’t require the services that the city is bad at providing (i.e. the super rich who send their kids to private schools or who can afford a 4 bedroom apartment in Manhattan or the childless who don’t need public schools). Therefore, it is no surprise whatsoever that cities will skew towards the higher and lower end of the income distribution. Countries don’t have neighboring countries as ‘suburbs’ the way cities do, so the comparison is hopelessly inapt.

    All this said, the following two observations are in order:
    1. New York, as opposed to most cities, is better off insofar as that it actually is attractive to people on the higher end of the income bracket. The typical American city skews to the left end of the income bell-curve (i.e. plenty of poor but no ‘1%ers’). Is that really better? The interesting phenomenon in New York is that unlike most American cities it is not exclusively attractive to the poor.
    2. If you’re an angry egalitarian reading this, ask yourself first, why would NYC of all places score so ‘badly’ on this ranking? Isn’t NY full of bleeding hearts who want to improve our egalitarian ranking? The answer is obvious. New York (and other cities) has income inequality BECAUSE of social and redistributive policies (which attract the poor to the cities) and NOT in spite of such policies. This suggests that the surest way to ‘improve’ our egalitarian ranking is to end such policies. If this strikes you as too rash, you should realize that you’ve now seen the problem with comparing cities to countries (or to suburbs for that matter) in terms of inequality.
    The real lesson though is that cities that attract poorer residents actually benefit from also attracting moneyed residents to cover the tax burden and make the place liveable (inequality then follows as a matter of definition!!). One question you might want to ask is how to make the city more amenable to the middle class (hint: it does not primarily involve taxing the rich).

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  6. Objecting to comparing cities to countries misses the obvious: it’s a polemical way of making a complex point. If I hadn’t used the Brazil comparison, the piece wouldn’t have been the most viewed post in the history of this blog, and wouldn’t have been noticed by the OWS folks. I’m very careful with numbers, always have been, but you’ve got to weaponize them or no one will care.

  7. Wow, I can’t believe people are picking on the comparison. The apples-to-oranges faults don’t mean a thing to New Yorkers. In real life they live in a society with Brazil-like inequality.

  8. It is true, as Philosophy Student says, that there are “pull factors” that draw the desperately poor to New York–especially the $988 decile–and thus skew the inequality stats.

    The New York subway, for example, is an extraordinary resource for beggars. A homeless man who collects 50 cents per car panhandling on an eight-car subway train can make $4 in an hour–enough for a meal at McDonalds.

    No other city in Anglo North America offers that kind of opportunity: a captive audience of working-, middle-class and occasionally rich people who can be personally and intensively panhandled for minutes on end. Imagine a beggar trying to corral hundreds of motorists speeding past on a Dallas expressway to listen to his spiel–can’t be done.

    That’s just one of innumerable ways in which the brute collectivism of New York life makes it a mecca for the destitute. In a sense, New York’s extremes of inequality work to the advantage of the poor, because they are a marker of a proximity between poor and rich that occurs nowhere else in America. Instead of being geographically and politically separated by far-flung suburbanized settlement patterns, rich and poor in NYC live in the same city and vote in the same local elections. That means the poor share a civic infrastructure–mass transit, cultural institutions, police protection–built to accommodate the rich, and can assert to a limited extent a political claim on the wealth of the rich.

    Disclaimer: No, I am not touting entrepreneurial panhandling as a solution to the problem of homelessness. I support ruinous taxation of the rich and a guaranteed income for all. Equality is better than inequality. I’m just saying.

  9. And … I am. Gov’t programs cost the public say, $20,000 a year to give me maybe $2000 a year in actual benefits. Panhandling is consensual. A person gets more out of giving to a panhandler than they get out of having their money taken by force by a government, to keep most of it, and then give a pittance to the same poor person. Panhandling can do wonders for developing interpersonal skills, and in a society where people don’t talk to each other, panhandling teaches a person how many good people are out there – a lot. Keep people apart and scared, and they’ll think their only friend is the government. Allow them to panhandle during hard times, shine shoes, clean windows, wash cars, and they’ll discover that the real help is in “swimming like a fish in the sea of the people”.

  10. From observation income inequality seems less pronounced in small town ‘red’ areas. For one thing, almost everyone attends the local public school. For what it’s worth.

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  12. as anyone who lives here knows, new york city is a country, or more accurately, a neo-feudal city-state loosely modeled in the classical style of athens or rome. as the numbers show, it has almost nothing to do with the rest of the US, even as the rest of the nation is becoming an explicitly two-tier society that’s now simply the status quo in the five boroughs, claims for ‘equality’ aside.

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