City to Middle Class: Just Not That Into You

New York City’s middle class, long an endangered species, may be facing extinction if certain key economic factors don’t soon

New York City’s middle class, long an endangered species, may be facing extinction if certain key economic factors don’t soon change, this according to a comprehensive report (PDF) released today by the Center for an Urban Future, a think tank.

The 53-page report, titled Reviving the City of Aspiration, lays bare the struggles of the middle class in New York: skyrocketing costs; stagnating wages; underfunded public education; and perhaps most frustrating, a disinterested city government. And they’re not taking it sitting down: the plight of the middle class is becoming the flight of the middle class—with the city’s vital center fleeing for more hospitable places like Charlotte, where 1,893 New Yorkers fled to in 2006, and Philadelphia, where 3,635 emigrated in 2006.

The paramount concern is, of course, skyrocketing property costs. In December, the median sales price for a Manhattan apartment was $900,00, an impossible price for the middle class, which is generally defined in the city as those households making up to $150,000. And the effective citywide rent was $2,801 in late ’08 (that’s $33,612 in rent per year).

A good portion of the data in the report was compiled prior to the collapse of the financial markets, so you can imagine how the middle class, a long-suffering segment of the population reeling from years of misfortune, is faring in an economic climate that has heaped fresh piles of misfortune on everyone.

We’ve sat down in the last few months with two of the report’s authors on some of these issues. Here’s the one with Center for an Urban Future director Jonathan Bowles; and the one with urban expert Joel Kotkin.

Here’s more findings from the report, per the CUF:

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 of city residents moving to Charlotte, N.C., also doubled, from 904 to 1,893, while the number relocating to Lehigh County, Pa.—home to Allentown—more than tripled (from 648 to 2,101), and the number leaving for Gwinnett County, Ga.—a suburb of Atlanta—nearly tripled (from 762 to 2,121).

More residents left the five boroughs for other locales in each of the years between 2002 and 2006 than in 1993, when the city was in far worse shape. In 2006, the city had a net loss of 151,441 residents through domestic out-migration, compared to a decline of 141,047 in 1993; every borough except Brooklyn saw a higher number of out-migrants in 2006 than 13 years earlier. Overall, in 2006 the city had a higher net domestic out-migration rate per 1,000 residents (-18.7) than struggling upstate communities such as Ithaca (-8.0), Buffalo/Niagara Falls (-7.6), Rochester (-5.8) and Syracuse (-5.1).

We document in the report that the city has been losing, or is at risk of losing, many key constituencies:

· Individuals with bachelor’s degrees. Even before the economic boom ended, every borough was losing educated professionals. In 2005, New York City had a net out-migration of 12,955 individuals with bachelor’s degrees; a year later, the number had spiked to 29,370—an increase of 127 percent. Brooklyn had the largest out-migration that year, losing 12,933 compared to 5,984 in 2005.

· Families. While much has been made of Manhattan’s so-called “baby boomlet”—the borough’s number of toddlers under the age of four grew 26 percent between 2000 and 2004—our data shows that many of these new families don’t stay into their kids’ school-attending years: the percentage of children in Manhattan over age five drops well below the national average.

· Immigrants. Growing numbers of immigrants who have attained a degree of success in New York—including many business owners—are leaving the five boroughs for other cities, particularly in the Southeast and Southwest, where housing is cheaper and growing immigrant communities present viable new markets. For instance, our research suggests that growing numbers of Hispanics 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 municipal employees today have all but given up on living in the city.

· The black middle class in Eastern Queens. The borough of Archie Bunker has nurtured one of the nation’s largest black middle class communities throughout a handful of adjacent Eastern Queens neighborhoods. But community leaders worry that the precipitous rise in real estate prices during the past decade, combined with stagnant wages, will make it difficult for the current generation of black New Yorkers to afford home ownership in these areas. As it is, the number of black residents in Manhattan and Brooklyn recently declined for the first time since the 1800s.

In addition to middle class flight, the city is increasingly bifurcated, with the path from poverty to the middle class more arduous than ever.

· During the years of economic growth from 2003 to 2007, average weekly wages, when adjusted for inflation, barely increased in the boroughs outside of Manhattan—rising by 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 percent.

· The historical trends are just as bleak: Between 1975 and 2007, while average real weekly wages nearly 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.

What’s making life so tough for the middle class?

Cost of Living:

· The ACCRA Cost of Living Index, an analysis by the Council for Community and Economic Research, finds that Manhattan is by far the most expensive urban area in the United States, with an aggregate cost of living (224.2) more than twice the national average (100) and considerably higher than the second most expensive city (San Francisco, at 173.6).

· The other boroughs don’t necessarily provide much relief: Queens had a higher cost of living (156.2) in the third quarter of 2008 than all but four of the 315 major urban areas measured. Only Manhattan, San Francisco, Honolulu (163.6) and San Jose (157.4) were more expensive.

Housing costs

· In the third quarter of 2008, only 10.6 percent of all housing in the New York City region was affordable to people earning the median income for the area—the lowest share of any major metro area in the United States.

· The city’s “average effective rent” during the fourth quarter of 2008 was $2,801, 53 percent higher than the second place city (San Francisco, $1,827) and almost three times the national average ($995).

Child care costs

· 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. But, depending on the neighborhood, sending a child to daycare for the full day, five days a week can cost as much as $25,000 a year.

· Middle class families 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 often cannot manage the five-figure cost of day care.

Other costs

· Between 2002 and 2007, New Yorkers have had to pay significantly more for everything from home heating oil to water bills. During this period, the average property tax bill for a 1, 2 or 3 family home went up by 67 percent; home heating oil costs increased by 125 percent; telephone bills by 16 percent, water bills by 34 percent, electricity costs by 27 percent; milk prices by 60 percent and apartment prices by 16 percent.

NYC’s Economy is not producing middle income jobs

· Manufacturing jobs have disappeared all over the country, but New York City and its metropolitan area have done worse in retaining this sector than almost anywhere else. In 2007, the manufacturing sector accounted for just 3.2 percent of all private sector jobs in New York City and 4.6 percent in the New York City metro region. The sector employs a much larger share in other major regions, such as Los Angeles, where manufacturing accounts for 12.7 percent of all private sector jobs; Chicago, in which 11.3 percent of private sector jobs are in manufacturing; Charlotte (10.8 percent), Houston (10.6 percent), San Francisco (8.0 percent) and Boston (7.1 percent).

· New York has done almost as poorly in other blue collar sectors. Nationwide, employment in the wholesale 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 declined 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, while it declined by comparatively smaller percentages in Chicago (a 4.2 percent decrease), San Francisco (4.9 percent), Philadelphia (11.9 percent) and Boston (13.4 percent).

· Like other U.S. cities, New York has seen substantial growth in low-wage sectors like retail and hospitality. But another sector that pays poorly, health care and social assistance, accounts for a much larger share of all private sector jobs in New York than other cities. In 2007, the sector accounted for 17.4 percent of all private sector jobs in New York City and 16.9 percent in the metro region, up from 12.7 percent and 12.1 percent respectively in 1990. By comparison, Charlotte (8.6 percent), Washington, 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 of their private workforce in this field in 2007.

· Unfortunately, the industries expected to grow the most in New York during the decade ahead almost exclusively pay low wages. Of the 10 occupations that are expected to have the largest number of annual job openings in the city through 2014, only two offer average annual wages greater than $28,000.

Commuting times are too high in most middle class neighborhoods

· With housing prices in Manhattan practically out of reach for all but the affluent, the other four boroughs have become increasingly crucial to the city’s hopes to retain its middle class. But one tradeoff for many middle class New Yorkers who moved to city neighborhoods outside of Manhattan in search of reasonably priced housing is a transportation infrastructure that is unable to meet the growing demand. The dismal result is overcrowded subways and buses and some of the nation’s longest commuting times.

· And it isn’t only people living in Far Rockway, Tottenville and other communities on the city’s outer reaches who suffer through super long commutes. The average commuting time is 38.5 minutes for those living in Greenpoint; 37.6 minutes from Astoria; 49.5 minutes in Ditmas Park; and 41.7 minutes in Bay Ridge. These communities have all experienced a significant increase in middle class professionals in recent years.

· The commutes are typically even longer in a number of other traditional middle class enclaves, some of which have attracted growing numbers of first-time homeowners, such as Richmond Hill (with a 46.1 minute average commuting time), Co-op City (49.5 minutes), Bensonhurst (45.3 minutes), St. Albans (51.7 minutes) and Springfield Gardens (52.3 minutes).

· Between 1998 and 2006, 81 percent of the increase in bus ridership across the city occurred outside of Manhattan. The number of people in Manhattan riding city buses rose by 11 percent, but this was far less than the increase in Queens (24 percent), Staten Island (23 percent), Brooklyn (22 percent) and the Bronx (18 percent).

· Thirty-nine of the 50 subway stations with the largest percentage increase in ridership between 1998 and 2006 were in the boroughs or in Manhattan north of 96th Street. Twenty-two of the 50 were in Brooklyn.

Haphazard development in the city’s low-scale neighborhoods

· A growing number of affluent New Yorkers are choosing to raise their families in upscale parts of Manhattan, at least until school age. But many middle and working class New Yorkers have opted for neighborhoods across the five boroughs with a decidedly more suburban feel. New York has dozens of these traditional middle class neighborhoods, from Bay Ridge to Whitestone, that are dominated by one- and two-family homes and offer quiet streets and a family-friendly environment. But in recent years, a number of these neighborhoods have been marred by a flurry of development not in scale with the physical character of the community, executed in a haphazard fashion and lacking the necessary infrastructure upgrades to meet the new demand.

· Few have associated concerns about unsightly or unplanned development with the struggles facing New York’s middle class. However, nearly as many of those we interviewed cited this issue as one of the key threats to New York’s ability to retain a middle class as those who listed the city’s skyrocketing cost of living.

Finally, we cite a previously unpublished study sponsored by the city that surveyed out-migrants about why they left NYC. The findings include:

· an internal study conducted for the Bloomberg administration in 2006—titled “NYC Movers Study—found that high housing costs were the number one reason people are now moving out of the city. The Movers survey attempted to duplicate a similar city study done in 1993 that specifically examined what factors had caused people to relocate out of the five boroughs.

· In 1993, the three most commonly cited “major reasons” for leaving were to have a better lifestyle (59 percent), to live in a better home or neighborhood (55 percent) and to live someplace safer (54 percent). Thirteen years later, one concern dominated: housing costs, cited by 64 percent of those asked for their “major reason” for departing.

· “What drove people out of New York City in 1993 was basic quality of life issues—crime, safety, neighborhoods,” concluded the authors of the 2006 Movers study. “What is driving people out today is basically one issue—money and the cost of living.” City to Middle Class: Just Not That Into You