Lots of commenting and discussing around the internet on the new report (h/t: Mark Samber) from the Center for an Urban Future (of whose work I am a big fan) on the middle class exodus from New York City.
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. 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).
One commenter points out that looking just at domestic out-migration is a mistake, but leave that aside for now. Felix Salmon writes:
A huge part of this is the sheer expense of living in New York — not just housing costs, although that’s a lot of it, but everything else, too, from car insurance to the price of milk. But it’s also that there simply aren’t middle-class job opportunities in New York any more.
Back to the report:
Of the 10 occupations that are expected to have the largest number of annual job openings in the city through 2014, only two offer median wages greater than $28,000 a year. Taking a wider view, 16 of the 40 occupations projected to have the largest number of annual job openings over the same period pay median wages below $30,000 a year, while another six pay between $30,000 and $40,000.
And Salmon again:
This is a big problem, because a “luxury city”, filled essentially with the rich and those who service them, with very little in the middle, can never be a vibrant and exciting place. College graduates like myself should want to come to New York, not because they think they can make millions here, but just because it’s a great place to live. And that seems to be happening less and less, as New York becomes increasingly unaffordable.
Or as a top executive at Hank Paulson’s old place of business once told me: “We’re the cause, not the effect, of the housing bubble.” He was talking not about financial innovation, but the spiraling prices brought on by then skyrocketing financial pay. The report, once more:
No city has had a greater history as a middle class incubator than New York. As the legendary urbanist and long time New York resident Jane Jacobs once noted: “A metropolitan economy, if working well, is constantly transforming many poor people into middle class people, many illiterates into skilled people, many greenhorns into competent citizens… Cities don’t lure the middle class. They create it.”
Where cities once turned lower class people into the middle class, world cities like NY now turn (a very small number) of hyper-ambitious middle class strivers into the upper class. It’s something I’ve been writing about for years. The Inequality Index developed by my MPI colleague, Kevin Stolarick, shows how the greatest levels of inequality are in our most creative cities. New York came in third, Silicon Valley came in first.
Surprising? Hardly. It’s the spiky workd in microcosm: Bill Bishop’s big sort on steroids. New York City attracts lots of talented people, especially young people, who can get by for a while sharing “cheap” space. Then as time passes they get married, have kids, and so on. And, in harsh Darwinian fashion, only the successful get to stay. The rest move on and out. This is all compounded by the fact that NYC is a global center for talent – the competition is much tougher.
The consequences of this go beyond a missing middle class. If left unchecked they’re likely to erode the very innovative spark which made NYC great in the first place, creating an over-arching dulling down of its creative edge. Or as Jane Jacobs once told me: “When a place gets boring, the rich people leave.”
But then again the research tracks the bubble period 2002-2006. Could it be that its bursting might help this around? NYU’s Thomas Phillipon says financial salaries are likely to decline by say 50 percent. Might NYC again become affordable and creative? More to come on just that soon, in my forthcoming piece in the March issue of the Atlantic Monthly.
February 6th, 2009 at 7:41 pm
Exactly right, Richard: “only the successful get to stay:”
but with a very narrow definition of “success”. My two years in NYC convinced me that I did not want that kind of dog-eat-dog success. So I moved to a city where success was more cooperative and less competitive.
February 7th, 2009 at 9:34 am
Where did you move, if I may ask?
February 7th, 2009 at 11:01 am
Mike – Yep. I think the crisis is going to help “redefine” that. For NYC was a much more interesting place during the 50s, 60s, 70s and early 80s before the financial bubble and run up in financial pay, mass gentrification and the dulling down of its creative edge. One silver lining of the crisis is that perhaps it will help to “reset” all of that.
February 7th, 2009 at 11:30 am
“But then again the research tracks the bubble period 2002-2006. Could it be that its bursting might help this around?”
The 2007-2008 migration data will be available from the IRS in a couple of months. We’ll find out soon enough.
February 9th, 2009 at 1:16 am
The same thing is happening in Australia to Sydney, and (increasingly) Melbourne.
February 9th, 2009 at 9:07 pm
Thanks much for posting this.
As a life long NYC resident I have basically decided to leave quite soon, and perhaps return eventually, but we’ll see.
Enough with analogy, yet this quote:
“The consequences of this go beyond a missing middle class. If left unchecked they’re likely to erode the very innovative spark which made NYC great in the first place, creating an over-arching dulling down of its creative edge. Or as Jane Jacobs once told me: “When a place gets boring, the rich people leave.””
appears to be quite similar to something I wrote about in a few places regarding the unintended consequences of the tremendously high cost of living that has on creative output of a city.
My concern is that if the nearly all of the most “creative cities” that are most attractive to “open to experience” types are so costly to live in, what are the consequences for not just these cities, but the nation’s creative output?
I have come to wonder if the way to undo this, and perhaps gentrification, is to look at your research and increase tolerance in more cities in the United States. While increasing supply to meet demand can be problematic (I can think of building more highways to improve traffic as one example), at this point I am unsure what other strategies could be most effective, at least for a few decades or so.
I have yet to read the study yet, but I believe another factor for demographic changes has been the decline of the dollar’s strength over the past few years compared to that of the Euro, which has attracted an increasing number of Europeans to buy property, or even young people to come and just “have fun” in New York for however many months their money can take them.
Increasingly, I have observed strong growth in new nightlife and the club scene that is far more European and International in music taste, particularly in Brooklyn (where I barely meet any Americans and even less native New Yorkers), as well as a more “college town” feel in old “hipster havens” like the East Village and Lower East Side, that is more filled with recent college grads. These contrast to traditional New York night life, and is, I believe, indicative of not only the migration of life long New Yorkers elsewhere, but a risk for creative output that is unique to New York which used to be strong in things like Electronic Dance Music (House, for example).
February 9th, 2009 at 9:10 pm
btw, I am looking to Berlin, for the short term, and as an aspiring EDM artist.
February 9th, 2009 at 9:13 pm
RF – And I do hope you are right about the financial crisis “resetting” all of the dulling of the creative edge.
A recent article in the NY Times reported that tenants are renegotiating their rents and that free rent for one month has began to be offered, which I have never heard of here otherwise.
February 10th, 2009 at 9:03 am
This is entirely a consequence of housing policy. Housing regulations are such that it only pays to build high end housing. Deregulation of housing would go a long way towards making middle classness affordable.
Just one example of something that you might not normally think about, New York’s building code is not to the national standard, and requires expensive techniques of dubious value (electrical run in conduit, water run in copper pipe, etc.)
This is great if your a licensed, union plumber or electrician, but is not so great if you want a new condo at a fair price.
February 10th, 2009 at 11:47 am
Buzzcut,
I’ve heard your point before and while I’m not suggesting it isn’t supported by evidence, and I hope it was that easy (except it wouldn’t be with the potential squelching power of patronage workers), I still suspect the incredibly high demand that exists for people to want to live in New York City around the world — willing to shell out more than they can afford for whatever “experience” they are hoping to attain — is perhaps more significantly behind high prices.
Manhattan is not a huge area of land. While the economic crisis may change this, there have still enough people willing to pay exorbitant rents for apartments that keeps the prices high. As a result all of the most expensive places to live are closest to lower Manhattan and midtown, as well as have the easiest access to public transportation (the subway) that directly connects to the island. This did not used to be this way even when we had rent regulations before. Some areas like the Lower East Side, Alphabet City, Bowery, even parts of the West Village (Meat Packing District), Williamsburgh, etc. were not considered expensive.
Now, neighborhoods like Long Island City in Queens, and Williamsburgh in Brooklyn are even more costly than upper Manhattan. A good deal of this is because it is only 1-3 train stops to get into the city. Where as a place like Green Point in Brooklyn is not serviced by a direct Manhattan line and is less costly and seems to not be developing as fast as those other two areas.
I believe two linked factors were highly significant. One was the idea of living farther from the city (i.e. the suburbs) was more ingrained in the culture since the 1950s, which was also encouraged with a single fare subway/bus cost that did not harshly penalize residents (financially at least) for living farther from the center of the city with zone fares, which cities like London do, and probably encourage inequality seemed to disappear because of perhaps THE major reason many were hesitant to live in New York. Crime.
When crime dropped in the late 90’s suddenly landlords could start to develop these areas and charge FAR more than ever before. If there were no rent regulations these folks who had rent stabilized or controlled apartments (which I believe is mostly a VERY small % of elderly residents who have been in their homes for many years, and an even smaller % of Secton 8 tenants who are very poor) would have been thrown out on the street. In fact, I personally know some elderly folks that had rent controlled apartments and were harassed in the early 00’s when the market exploded because the landlords knew the market dictated that they could charge sometimes 10 times more than what the person was paying. Certainly some costs and taxes may force landlords to charge more, but the local government, especially Giuliani and Bloomberg seemed to encourage this approach to increase tax revenues and make the city more “attractive” to tourists.
Many Americans used to say about New York, “It’s a nice place to visit, but I wouldn’t want to live here.” Much of this was due to crime fears, in my view. That was one of the consequences of a drop in crime in many areas outsiders were afraid of, and we are still feeling its effects today.
February 10th, 2009 at 12:07 pm
IB, I think I’ve said to you before that if you look at development in Manhattan in the ’50s and ’60s, the buildings were on the order of 50 stories high.
Development today is much smaller, maybe 30 stories at most. This trend is totally because of the wants and desires of existing residents. Developers have changed their project scope to respond to NIMBY.
So… despite Manhattan being an island and all, there ARE redevelopment opportunities out there, and the market COULD provide cheaper housing. But the powers that be don’t want it developed that way.
If you go out a little farther into the boroughs, this is even more true. High rise development, which is the key to affordability, just isn’t done.
And if you include the near suburbs… it’s even more true. Development like this should be everywhere… but isn’t.
BTW, my brother used to rent on Grenwich street downtown. His building, a converted office building, went condo, and his studio was going for half a million. 8(
Luckily, the company he works for moved from lower Broadway to Jersey City, and he bought a condo there. So it may be that a lot of the middle class movement out is just across the river. Manhattan’s loss is Hoboken’s gain.
February 10th, 2009 at 1:34 pm
IB – You’re right on two plus counts. In Rise, I actually argue as you do, that the a key way around these rising prices is to make other, especially wonderful older industrial cities, say like Pittsburgh or Buffalo, more open-minded and tolerant thus providing an option for some of this “demand.” You are also right that globalization of talent flows has compounded the problem. It increases the competition for scarce space in “super-star” locations, just as it does for equally scarce spaces in leading universities. And you are right on your demographic observations. Young people can go to NYC because they can live on “entry level” salaries by sharing apartments. Much more difficult with a family and children. BTW, my brother, his wife and three kids live in Hoboken.
February 10th, 2009 at 4:20 pm
Part of the problem is that, if you’re going to work on Wall Street, publishing, Broadway, fashion, etc. etc. etc. you need to be in New York. You’re not going to live in Buffalo and work in those industries.
I wonder how things are going to change now that Wall Street has driven off a cliff. The insane sallaries are gone. We’re already seeing what that does to tax revenue. What will it do to home prices and other costs of living?
February 14th, 2009 at 12:20 pm
I just finished reading your new article in the Atlantic, which touches on this same issue. In it, you posit that creative innovation happens only in cities. Perhaps you are speaking of financial innovation. Well, that might be true, but look where it got us.
Artistic and literary innovation are another story. My father was a California scene painter (Charles F. Keck, estate represented by the California Art Gallery in Laguna). We lived in west Los Angeles when it was uncrowded and safe. (You could leave doors unlocked at all hours.) You could drive out into open farmland within 20 minutes to a half an hour. There were, at that time, several art schools in the city.
Even then, painters wanted to be farther away. Those more “successful” than my dad didn’t move to the center city. They moved to Laguna, which was, at that time, open farm and ranchland by the shore.
Even today, many painters and writers seek out uncrowded places where rents for large spaces are cheap and they can hear themselves think. For example, the farming community of Bakersfield in California’s central valley has been attracting many visual artists.
On the east coast, Woodstock and Connecticut have long been havens for creative types.
On a more personal level, my husband and I were both born and raised in Southern California. When, after 50 years, we moved to a small city in western Colorado, I thought it would be the end of my writing and painting career. Just the opposite has happened. I have worked on more than 40 book projects with a number of different publishers on both coasts and places in between. I share ideas daily with people all over the world, the same way I am speaking with you now–on the internet.I would NEVER return to that dangerous (my 80-year-old father was mugged a half a block from the family home in a “good” neighborhood), ugly, hostile, noisy, polluted environment!
I have been to Manhattan. I enjoy brief visits, but I would not want to live there. It’s prime territory for psychological service workers for good reason. It’s just not a good place for sensitive creative people. Remember the famous study about rising anger and hostility in rats when placed in a crowded environment?) Certainly, the markets are in urban areas, but artists don’t necessarily live there.
I agree that we must invest more in rail transportation. That is imperative, not just for passenger service, but also for freight. This upgrade must take place across the country, and not just around “megacenters”. However, that does not mean everybody has to live within an hour’s rail trip from some urban pit. Many office workers can “commute” electronically. There is no reason more people can’t work from home, or for that matter, from beautiful small cities in Colorado where the streets are uncrowded and the rare murders are still reported in the papers. (In LA, they happened so often, they were no longer news.)