Opinion: NYC’s Growing Income Inequality Threatens Pandemic Recovery

‘To overcome the wounds of this public health crisis, the city and state need additional funding to address the social and economic vulnerabilities that existed prior to the pandemic, which are heightened now and risk widening income inequality even further.’

New data from the Census Bureau reinforce a disturbing trend: over the last decade, New York City’s income inequality has worsened. The growth of incomes at the top continued to outpace growth at the bottom, expanding the gap between. Citizens’ Committee for Children of New York’s (CCC) analysis illustrates how that rising inequality placed low-income families and children at far greater risk than the highest-income families, driving the inequities at the core of the COVID-19 pandemic.

The pandemic has entrenched extreme inequalities in New York City. Insecurities surrounding employment, health, education and basic safety are affecting many New Yorkers today, but they are disproportionately experienced in communities with the lowest incomes. The sheer rate of COVID-related deaths is more than two times higher in zip codes with very high poverty rates (where 272 out of every 100,000 residents have died) than in zip codes with low poverty rates (125 out of 100,000). New Yorkers with the lowest incomes are feeling the impact of the pandemic on all sides—living in fear of eviction, struggling to put food on the table, and having trouble getting devices to support remote learning for their children. 

To overcome the wounds of this public health crisis, the city and state need additional funding to address the social and economic vulnerabilities that existed prior to the pandemic, which are heightened now and risk widening income inequality even further. 

A decade of rising inequality

Following the end of the Great Recession in 2009, New York City experienced a decade of job growth and rising incomes. However, the latest data from the American Community Survey show how gains were not evenly distributed for households at the tail ends of the income spectrum. Since 2010, households earning at the 20th  percentile have experienced only modest increases in annual income, up from $20,000 to $22,000 in 2019. Meanwhile, the 80th percentile earners have seen income growth at double that rate, rising from $126,000 to $154,000 over the same period. In 2019, incomes at the 80th percentile were 6.9 times those earned at the 20^th percentile (a measure of inequality known as the 80:20 income diversity ratio). 

One reason for sustained income divergence is that the last economic recovery concentrated job growth at opposite ends of the wage spectrum. As CCC has observed, from 2009 to 2018, the two fastest growing industries were hospitality/accommodation/food-related services and professional/technical services. These are fields with vastly different levels of compensation and job security. While New York City and New York State took the important steps of increasing the minimum wage, enacting paid family leave and expanding sick leave benefits, we must go further to ensure these protections cover all employees—particularly independent contractors—in restaurants, accommodations, and gig services. Now, in the midst of a deep recession brought on by the coronavirus pandemic, it is low-wage workers who face the greatest job losses and furloughs, while high-paying jobs have rebounded.

The lowest-income families look very different than those at the top

As the gap between New York’s rich and poor widens, the racialized and gendered nature of economic inequality is made even more apparent. A closer look at data from the American Community Survey demonstrates the extent to which disparities along race/ethnicity, gender, and marital status fuel the deep class divide.

CCC analyzed the income distribution among families with children, splitting them into income quintiles to consider how the lowest quintile families (making $24,834 or less annually) compare with the highest quintile families (making $156,017 or more). The Census Bureau will release the most recent detailed household level data for 2019 later this month, but data from 2018 already point to key challenges. 

Among families with children in the lowest quintile, nearly half (48 percent) are headed by someone who is Hispanic/Latino and a quarter (25 percent) are headed by someone who is Black. Further, almost two-thirds (63 percent) are headed by a single female. In contrast, the highest quintile families are predominantly (57 percent) White-headed households, and overwhelmingly (84 percent) married couples.

These findings highlight the unique challenges that Black and Latina single mothers face and underscore how inequality is not purely a matter of economic class. Tackling income inequality requires taking account of labor market barriers, housing discrimination, equality in health care access and other structural inequities. 

Extreme inequality results in vast gaps in risks and resources

What do living conditions look like for New York’s families at opposite ends of this income spectrum? CCC’s analysis shows how extreme inequality reproduces economic, health, housing, education, and digital inequities, posing immense risks to the well-being of low-income children and excessive barriers to their economic mobility.

Across families with children in the lowest quintile, roughly one in ten lack health insurance, compared to just one in fifty among families in the highest quintile. The same is true for lack of access to broadband internet. The discrepancy is even more pronounced for housing risks: more than three-quarters (78 percent) of families in the lowest quintile are severely rent burdened, paying more than half their income on rent; conversely, zero percent of families in the highest quintile are severely rent burdened. 

Further, the data reflect a steep gap in opportunities for families to get ahead through education and the workforce. Among adults heading families from the highest quintile, 79 percent have an associate’s, bachelor’s degree or higher, and 90 percent are participating in the labor market (either employed or actively seeking work). For adult household heads in the lowest quintile, these rates are just 21 and 58 percent, respectively. Even at the earliest stages of development, children from the highest quintile have higher rates of enrollment in public or private early education for 3- and 4-year-olds. 

These data, collected prior to the pandemic, make clear how income inequality placed low-income families and children in especially vulnerable circumstances. The present crises—the pandemic, economic fallout, and racial injustice—will only compound these challenges unless we act decisively.

Governments must act now to address inequality

As low-income families are forced into stress-inducing choices around paying rent, having enough food, finding childcare and supporting loved ones, we should be strengthening support at the federal, state and local levels to promote pandemic recovery. Instead, the economic fallout of the pandemic has led New York State and city to adopt budgets with multi-billion-dollar gap closing actions. Additional state and local budget reductions are anticipated, as negotiations on much-needed federal stimulus legislation have stalled. 

There is no mistake: Federal, state and local actions are desperately needed to avoid budget cuts and service reductions that would trigger costly human impacts and contribute to a prolonged economic recession. Enactment of the revised HEROES Act is critical, as it would result in billions in direct aid to states and municipalities. Even with its passage, additional federal aid will likely be needed. New York State must also pursue progressive tax policy reforms and grant New York City borrowing authority, as both actions raise needed revenue. Leveraging the revenue achieved through these actions to make robust investments—in child care, education, health and mental health care, housing, food and employment supports—will not only help New York City’s children and families, it will also promote economic recovery.

There is no time to waste. 

Jack Mullan and Bijan Kimiagar are research staff at Citizens’ Committee for Children of New York (CCC) which is home to data.cccnewyork.org, the most comprehensive database on child, family and community well-being in New York City.