The Unequal Recovery of New York City’s Economy
In the rest of the United States, low-wage workers made big economic gains during the pandemic and the recovery, with the largest pay gains in the workforce. In contrast, in New York City, high-wage workers did the best while low-wage workers’ pay increased at a much lower rate. As a result, inequality has grown in New York City while it has declined nationally.
A Uneven Recovery
"There has been a recovery, but it has been more unequal than the rest of the U.S.," said Mohamed Obaidy, senior analyst and economist at the Center for New York City Affairs, which released an in-depth report on wages between 2019 and 2023 in New York and the nation.
The report comes at a time when the data appears to be at odds with Mayor Eric Adams’s talk of a robust city economy. The mayor regularly trumpets good economic news, emphasizing the city has a record number of jobs, with new businesses being formed at an impressive pace and a dramatic decline in Black unemployment.
Job Growth and Wages
The majority of recent job gains have come in health care, especially home health care, which are among the lowest-paying positions available. Nationally, workers in the bottom 20% by wages saw pay grow by 13.2% between 2019 and 2023, outpacing inflation. The top 20% of wage earners saw pay move up only 4.4%.
In New York City, the lowest-paid workers’ pay rose 6%, while the highest-paid workers saw pay jump 18.2%. This reflects the strength of the city’s economy, with Wall Street, the city’s most important sector, seeing strong profits and paying out big bonuses during the pandemic. Tech, another high-paying industry, powered through the recession, surpassing Wall Street in jobs. Pay also increased in law and accounting firms and other professional service jobs that primarily serve those industries.
Middle-Wage Job Losses
At the same time, New York is seeing its economy being "hollowed out" by losing middle-wage jobs, according to Jaison Abel, an economist at the Federal Reserve Bank of New York. In a major study of the post-COVID economy, the Fed found that in the decade before the pandemic, annual salaries between $35,000 and $75,000 grew less than 2% in the New York region compared with 26% for low-wage jobs and 27% for high-wage jobs. Since then, middle-wage salaries have declined by 7% while the other two categories both increased by 38%.
The Stagnant Minimum Wage
The Center’s report also blames the stagnant minimum wage in the city for the widening of inequality. Between 2019 and 2023, 29 states and the District of Columbia raised their minimum wages an average of 29%, outpacing inflation. New York City’s minimum wage stayed at $15 for most of that time. Gov. Kathy Hochul rejected a large increase in line with those in other states, forcing a compromise in which New York City’s minimum wage rose by $1 last January and will rise by 50 cents in each of the next two years, after which it will be indexed for inflation.
Conclusion
The recovery in New York City has been marked by significant growth in high-wage jobs, but stagnation and declines in middle-wage jobs and low-wage jobs. The stagnant minimum wage and the increasing inequality have widened the gap between the rich and the poor, making it more challenging for low-income residents to improve their economic situation.
Frequently Asked Questions
- What are the key findings of the Center for New York City Affairs’ report on wages?
The report found that the recovery in New York City has been more unequal than the rest of the United States, with high-wage workers doing best and low-wage workers lagging behind.
- What is the current minimum wage in New York City?
New York City’s minimum wage is $15, but it will increase by $1 last January and will be indexed for inflation in the future.
- What is the explanation for the decline in middle-wage jobs?
The Federal Reserve Bank of New York attributes the decline in middle-wage jobs to the "hollowing out" of the economy, with the loss of jobs in production, sales, administration, security, construction, education, and arts and entertainment.
- What are the implications of the findings for low-wage workers?
The findings suggest that low-wage workers may face significant challenges in improving their economic situation due to the widening gap between the rich and the poor.
