According to a report recently released by the city’s Independent Budget Office, the rich in New York City are getting richer while the poor are getting poorer. While this may be good news for the wealthy, it is certainly a concern for those who are not quite so well off. Furthermore, this growing disparity can have a negative effect on real estate, making it even more difficult for those with less money to find an affordable place to live in the city.
Half of the City’s Population Contributes Less Than 8 Percent of Total Income
To create its report, the Independent Budget Office examined the annual earnings of 770,700 income tax returns between 2006 and 2014. After adjusting the figures for inflation in order to make them directly comparable, researchers found that the bottom 50 percent of income earners in 2006 brought in $20.7 billion. While this may seem like a large figure, it only represents 7.4 percent of the city’s total income while coming from half of its population. This figure grew even smaller by 2014 when the bottom half of earners contributed only $17.7 billion, representing 5.6 percent of the city’s income. Overall, this means that the median income for the bottom half of filers fell from $14,153 per year to $12,360, representing a 13 percent drop in earnings.
Wealthy Residents Earn Bulk of City’s Income
For those who are in the top ten percent of the top one percent, the picture is completely different. In fact, the total income for the top 10 percent was $28.6 billion between 2006 and 2014. More than a third of this was earned by those in the top 0.1 percent. In other words, a group of approximately 3,700 filers with incomes of more than $5.2 million took home nearly 24 percent of the city’s total income.
Middle Income Earners See an Increase in Cash Flow
For city’s 1.5 million middle income earners, their overall slice of the city’s income stayed pretty much the same at 29 percent. During this time, their cash flow has increased from $81.8 billion in 2006 to $91.5 billion in 2014.
So, while middle income earners have remained pretty well steady, the bottom 50 percent have experienced a drop. In addition, when looking at the top half of earners, it initially appears as though they have enjoyed a healthy gain. When taking a closer look, however, it is clear that it is really the top one percent that has enjoyed these gains. An even closer look reveals that the top 0.1 percent has enjoyed the most significant gains. This growing disparity can certainly have negative effects on all aspects of the city’s economy, including on the real estate market. Growing concerns about the increasing gap combined with the shortage of housing available to meet demands are among just a few of the reasons why the city continues to look at developing affordable housing options.