Study Shows a Dwindling Middle Class

[krulltime]

Study Shows a Dwindling Middle Class


http://graphics8.nytimes.com/images/2006/06/22/nyregion/0622-met-webINCOMEch.gif


By SAM ROBERTS
June 22, 2006

New York has a smaller share of middle-income families than any other major metropolitan area in the nation, and like residents of most American cities and suburbs, they live in a dwindling number of middle-income neighborhoods, according to a new analysis of census figures released yesterday.

Only Los Angeles has a smaller proportion of middle-income neighborhoods than New York, and not by much.

In metropolitan New York, 16.2 percent of the families and 28.3 percent of the neighborhoods were identified as middle-income.

"Middle-income neighborhoods are vanishing faster than middle-income families," said the nationwide analysis, done by the Brookings Institution in Washington.

The analysis attributed the shrinking number of middle-income communities to, among other factors, gentrification of more marginal neighborhoods and a bunching of high-income families in more homogenous surroundings.

"It sounds like it's a function of changing income distribution," said John H. Mollenkopf, director of the Center for Urban Research at the Graduate Center of the City University of New York. "What happened between 1990 and 2000 in metropolitan New York and especially New York City was that the number of really high-income households went up, and low-income went up and the middle shrank."

"What looks like a shrinking middle is partly an upgrading of income," he added.

The hollowing out was most pronounced in Manhattan, where 51 percent of neighborhoods were identified as high-income, 40 percent as low-income and only 8 percent as middle-income. Long Island ranked second only to Scranton with the highest proportion, 65 percent, of middle-income neighborhoods of any metropolitan areas in the nation.

The analysis found "increasing heterogeneity in some neighborhoods," but concluded that "by and large, however, families at either end of the distribution appeared to occupy more economically homogeneous neighborhoods in 2000 than they did in 1970."

In New York City, between 1970 and 2000, the share of neighborhoods classified as lower-income rose to 31 percent from 20 percent, middle-income neighborhoods declined to 30 percent from 42 percent, and higher-income neighborhoods remained almost unchanged, about 38 percent.

"You see a dramatic shift between 1970 and 1980 and then more stability since then, although the proportion of families with so-called middle incomes continues to decline," said Alan Berube, a fellow in the metropolitan policy program at Brookings.

While concentrated poverty, where 40 percent or more of the population live below the poverty line, declined in many areas, those neighborhoods still tended to have incomes far below the median, which was about $42,000 in 2000.

"The share of New York City neighborhoods with very low incomes decreased in the 1990's, from 12.1 to 9.1 percent, and the share with low incomes increased, from 17.8 to 21.6 percent," Mr. Berube said. "This may capture the decline in concentrated poverty, but it did not result in an increase in middle-income neighborhoods."

The decline in the share of New York City middle-income families was smaller than in most other cities, including Atlanta, Chicago and Philadelphia. The 12-percentage-point drop in the share of New York City neighborhoods classified as middle-income was less than the much steeper declines in Baltimore, Chicago and Philadelphia.

"Queens and Brooklyn actually seem to remain havens for middle-income families," Mr. Berube said. "Moreover, strong immigration to New York City during this period may have helped replenish its stock of moderate-income families and neighborhoods."

The analysis suggests that further changes may have taken place since 2000, but does not quantify them.

"The question is whether, since 2000, housing price gains and gentrification might have 'tipped' lower-income neighborhoods into middle-income status, or middle-income neighborhoods into high-income status," Mr. Berube said. "Just looking at the Greenpoint-Williamsburg section of Brooklyn, it's notable that only 8 of roughly 50 census tracts had median family incomes above the city median in 2000. So here and elsewhere we might see evidence of increasing middle-income neighborhoods by 2010."

Staten Island had the highest percentage of very high-income neighborhoods, 56 percent, of any borough. In the Bronx, 56 percent were classified as low income, with fully 25 percent as very low, defined as less than 50 percent of the median.

Nationwide, the analysis found that middle-income neighborhoods declined in 2000 to 41 percent of all metropolitan neighborhoods, from 58 percent in 1970. In 12 metropolitan areas studied in greater detail, they declined to 23 percent from 45 percent in the central cities. Even in the suburbs, their share shrank to 44 percent from 64 percent.

"Families earning between 80 percent and 120 percent of their metropolitan-area median incomes — what many would consider to be the 'middle class' — shrank from 28 percent of the total in 1970 to less than 22 percent by 2000," according to the analysis, by Jason C. Booza, Jackie Cutsinger and George Galster of Wayne State University for Brookings.

While the growing share of high-income families in some areas could be considered positive, the analysis said, the sharper increase in lower-income families and the decline in middle-income families "overshadowed that good news."

The analysis defined very low income as less than 50 percent of the median in the area studied, low as 50 to 80 percent, high as 120 to 150 percent and very high as more than 150 percent above the median. In the 12 areas studied more thoroughly, moderate income ranged from $59,313 in Atlanta to $72,247 in Washington.


Copyright 2006 The New York Times Company

[Ninjahedge]

It is harder for middle income to live in the city. They need some of the same space requirements, and have the capital to get it in the suburbs, so why stay cramped and poor in the city when you can move to the suburbs and get a yard?

The poor would not be able to get much of anything without displacing themselves far from their family support and teh rich can afford what they need in the city itself.

One thing, the charts seem to show the same relative percentage distribution for the past 25 years. What's with the articles title "Dwindling"? It "Dwindled" in the 80's, and since then it seems to be about the same.

I hate it when the media uses disparaging descriptors to gte your attension.

I also hate it when I fall for them!

[krulltime]

^ Exactly...

Looking at the chart... It looks like the biggest loss of the middle class happened during the 70's. There was almost a 10% drop in the middle class at that time! I mean people were really leaving NYC in big numbers... Just like those movies from the 70's that show that NYC was going down in a spiral. At the same time the poor population rose up about 10% aswell!

But it just look like in the 80's and the 90's the percent of each group either drop some or rose some.

[Eugenious]

I think that theoretically there were a group of middle income people that moved into the high income group while majority just moved out of the area. I mean look at manhattan, the wealthy are pushing the housing prices up and the poor end up getting subsidized by the city anyway. Soon what you'll have is slums where you got 5 poor families in a one bedroom apt while the rich live lavishly in large apts. This is already happening. The tenaments of early 20th century are coming back, and NY will be full of them.

[deezee]

I think that theoretically there were a group of middle income people that moved into the high income group while majority just moved out of the area. I mean look at manhattan, the wealthy are pushing the housing prices up and the poor end up getting subsidized by the city anyway. Soon what you'll have is slums where you got 5 poor families in a one bedroom apt while the rich live lavishly in large apts. This is already happening. The tenaments of early 20th century are coming back, and NY will be full of them.

the land is too valuable for there to be many "tenements" left....at least in manhattan. though i totally agree that it's going to be the "poor" and the "rich". the middle class is basically going one way or the other with most going down. any democracy is based on the strength of it's middle class and it's slowly being eroded both here and nationwide.

as a third generation native of manahattan, it grieves me that very few of the people who i know that grew up here can afford to buy/ live here even if they still wanted to. what always made this city unique was it's diversity. but barring a depression the size of the one in the 30's..this will be an island of real estate developers and investment bankers soon. way scary.

[Kris]

July 23, 2006
Cities Shed Middle Class, and Are Richer and Poorer for It
By JANNY SCOTT

SOME big American cities are flourishing as at no time in recent memory. Places like New York and San Francisco appear to be richer and more dazzling than ever: crime remains low, new arrivals pour in, neighborhoods have risen from the dead. New York is in the throes of the biggest building boom in 30 years, its population at an all-time high and climbing. Mayor Michael R. Bloomberg proudly promotes his city as “a luxury product.”

But middle-class city dwellers across the country are being squeezed.

This time, they are being squeezed out by the rich as much, or more so, as by the poor — a casualty of high housing costs and the thinning out of the country’s once broad economic middle. The percentage of middle-income neighborhoods in metropolitan areas like Los Angeles, Chicago and Washington has dropped since 1970, according to a recent Brookings Institution report.

The percentage of higher-income neighborhoods in many places has gone up. In New York, the supply of apartments considered affordable to households with incomes like those earned by starting firefighters or police officers plunged by a whopping 205,000 in just three years, between 2002 and 2005.

Does it matter if there is less room for a middle class? In strictly economic terms, plenty of economists say, it may not. But they also say that in the long run, those cities may become places where they and other city lovers would prefer not to live.

Obviously, cities benefit economically from the presence of the rich. Tax revenues go up when the rich pour into what some economists now call “superstar cities,” places like New York, San Francisco, San Diego, Boston and Washington that attract highly skilled people but have limits on the ability to build housing. In New York, fewer than 13,000 of the 2.3 million households that pay income tax are expected to account for nearly 30 percent of city income tax paid in 2006.

In the San Francisco Bay Area, the percentage of households earning more than $100,000 a year rose to over 30 percent in 2000 from approximately 7 percent in 1970, said Joseph Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. “Is that area worse off?” he asked. “At least so far, there’s a lot of evidence that economically they’re better off. Land prices are really high, lots of people want to move there.”

Edward L. Glaeser, a Harvard economist who studied 300 large cities with a range of levels of income inequality in the 1960’s and 1970’s, says he found little evidence that those levels later affected the growth of housing prices, income or population there.

Of course, cities need police officers, firefighters, teachers. But as long as they can get the labor they need from somewhere nearby, some economists say, middle-class shrinkage may not hurt. In Southern California, developers import construction workers from Las Vegas and put them up in hotels; costs go up but rich clients can pay. Firefighters who want to live in high-priced cities can work two jobs, said W. Michael Cox, chief economist for the Federal Reserve Bank of Dallas. “I think it’s great,” he said. “It gives you portfolio diversification in your income.” Pay for essential workers like plumbers and cabdrivers will tend to go up, he said.

Professor Glaeser said: “There’s no obvious smoking gun saying cities will be substantially worse off. There’s a whole lot of America that does a very good job of taking care of the middle class. The great sprawling edge cities of the American hinterland provide remarkably cheap housing, fast commutes, decent public services and incredibly cheap products available in big box stores. As a New Yorker, I understand the view that exile from New York is consignment to hell; but that’s not accurate. The majority of middle-class people that have moved out have presumably found themselves better lives out there.”

But sociologists and many economists believe that there can be non-economic consequences for cities that lose a lot of middle-income residents. The disappearance of middle-income neighborhoods can limit opportunities for upward mobility, the authors of the Brookings study said. It becomes harder for lower-income homeowners to move up the property ladder, buy into safer neighborhoods, send their children to better schools and even make the kinds of personal contacts that can be a route to better jobs. The Brookings study, which defined moderate-income families as those with incomes between 80 and 120 percent of the median for each area, found that the percentage of middle-income neighborhoods in the 100 largest metropolitan areas had dropped to 41 percent from 58 percent between 1970 and 2000. Only 23 percent of central city neighborhoods in 12 large metropolitan areas were middle income, down from 45 percent in 1970.

Meanwhile, New York University researchers reported last month that the number of apartments affordable to households making 80 percent of the median household income in New York City dropped by a fifth between 2002 and 2005. Nationally, median household income ranges from just above $20,000 in Miami to around $40,000 in New York and Boston and about $60,000 in San Francisco.

With a dwindling middle class, rich and poor become more separate. Alan Berube, an author of the Brookings study, said a two-tiered marketplace can develop: Whole Foods for the upper classes, bodegas for the lower, with no competition from stores courting the middle. “If the two models are check cashers on the one hand and major national financial institutions on the other, who’s thinking about how to hold down costs for the basic consumer?” he asked.

School systems may suffer, too. While some upper-middle-class families rely on the public schools, many that can afford private-school education opt out. Urban school systems tend to be dominated by middle- and lower-income families. Middle-income parents have the ability and leverage to demand improvements. Similarly, studies show that lower-income students benefit by being in economically mixed schools.

Politics can become polarized without the moderating force of an engaged middle, sociologists and economists said. And while cities can import middle-level workers, there is a cost in productivity, family time and other intangibles.

“People have a stake in the place that they’re living in,” said Chris Mayer, a professor at Columbia Business School. “If you have a police and firefighting force saving their city as opposed to somebody else’s city, it makes a difference. In the same sense, local shopkeepers just seem to be better. What happened on 9/11 was really about ‘our city.’ ”

Mr. Mayer, who recently moved with his wife and three young children to New York, said he believed that it was important for children to grow up in a place that is racially, ethnically and economically diverse. He calls those places more vibrant. In most places, the upper middle class is less diverse than the middle, he said. New York would be less attractive to him without its still-expansive and lively middle.

“This trend toward living and interacting with people who are like you is intensifying a lot,” said Professor Gyourko, who lives in the affluent suburb of Swarthmore, Pa. “I do not meet the full range of incomes and social classes within my neighborhood. Well, think about what happens if metropolitan areas like New York, San Francisco and the like turn into my suburb. You’ll have even less interaction. The most interesting and potentially foreboding implication of this sorting is that it changes the way we view life.”

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Copyright 2006 The New York Times Company

[milleniumcab]

^ Exactly...

Looking at the chart... It looks like the biggest loss of the middle class happened during the 70's. There was almost a 10% drop in the middle class at that time! I mean people were really leaving NYC in big numbers... Just like those movies from the 70's that show that NYC was going down in a spiral. At the same time the poor population rose up about 10% aswell!

But it just look like in the 80's and the 90's the percent of each group either drop some or rose some.

Maybe you are right but you should also consider how unsafe NYC had become during the 70s.. I am certain that had something to do with people moving out....

[Ninjahedge]

The more of a social seperation you get, the bigger a chance for discord.

If you do not have the plumbers and electricians, nurses and the like out there, you only get a very defined rich and poor segmentation that sometimes can be difined by being on one side of a street or another.

You get that much of a potential difference, you get social "sparks" that show themselves in various ways.

I don't know if NYC is destined to do teh same thing it did in the 70's, but driving out the middle class completely from a large, diverse neighborood is not good.

[Anarchy77]

The small middle income demographic are really rich people who have been rendered middle class by the cost of living while a significant number of poor people are really middle income people who are rendered poor for the same reason.