To live in one of the busiest, cosmopolitan, and cultural hubs on the planet certainly has its costs. Namely, financial ones.
While the country has suffered massive economic hardship, New York City has had its rent rise surprisingly consistently over the last six years, and now the average New Yorker is starting to feel the squeeze. Unfortunately, this may only intensify the economic inequality that has become to define Manhattan.
New York University's Furman Center for Urban Policy recently released a study that concluded that between 2007 and 2011, the citywide median income decreased while rent prices rose. That means that even though people have less income on average (which technically should drive down demand), the price of homes has increased, which actually shows an increase in demand.
More specifically, average monthly rent increased by 8.6%, from $1,096 to $1,191, while the average income decreased by 6.8%, to $50,433. Any New Yorker (or any big city slicker for that matter) knows that with numbers like that, its not surprising that close to a third of New Yorkers spend over half of their annual income just on rent.
While you may think that this would begin to drive away any demand the city many have today, surprisingly, despite the tough financial climate, people continue to pour into the city even though NYC claimed a new record of having the highest income inequality in the entire nation.
"The recession did not stop people from moving to New York City; we have seen sustained population growth and the rental vacancy rates remained the lowest among the five largest U.S. cities," stated Furman Center Director Vicki Been.
Ultimately, this points to a level of snowballing economic inequality that shows no signs of slowing. In fact, according to recent data from the U.S. Census Bureau, "If the borough of Manhattan were a country, the income gap between the richest 20% and the poorest 20% would be on par with countries like Sierra Leone, Namibia, and Lesotho."
The percentage of corporate profits going to employees is at its lowest level since 1966 and unemployment, although improving, continues to plague the country's middle class. "We have an unemployment crisis and only a debt problem," says Peter Diamond, a Nobel laureate at M.I.T. New York. Manhattan in particular only exemplifies the issue. Mirroring the rest of the country, New York City wealth disparities from 2009 to 2011 —the years of the financial crisis and the recovery — showed that the income of the top one per cent rose 11.2% while the income of the bottom ninety-nine per cent actually shrank 0.4 per cent.
Without any form of restraint, the hyper-elitism of the city may begin driving out the very people who make up a majority of the city, setting up the field with the same fuel that sparked the Occupy movements only a year ago.