The 2019 American Community Survey: Last Year Compared With Prior Economic Peaks, NYC and the U.S.

The U.S. Census Bureau released 2019 data from the American Community Survey (ACS) last week, and 2019 will almost certainly represent the peak of the recent economic cycle.  Because there are booms and recessions, an enlightening analysis of trends over time requires that similar years be used.  For 2019, the peak of the everything bubble, that would be 2000, peak of the dot.com bubble, and 2007, the peak of the housing bubble.  Unfortunately, when the Census Bureau shut down American Factfinder and replaced it with data.census.gov, it only included data starting in the year 2010 – near the bottom of the last recession.  So this post only compares the latest data with data that I happen to have on my computer, downloaded over the past 15 years, or available on the Department of City Planning website.

In a break from my usual style, I’m not going to bury the lede.  From 2000 to 2019, the number of employed New York City residents soared by nearly 850,000. And the number of households with work earnings — fell slightly, remaining at about 2.5 million!   The number of households with Social Security income increased by nearly 200,000, or about the same amount as the increase in the total number of occupied housing units.  Housing has continued to be occupied by Baby Boomers, now moving into retirement, including cost-privileged housing – rent regulated, Mitchell-Lama, public housing, owned units purchased at pre-housing bubble prices.   Meanwhile, the young workers surging into the city were forced to double and triple up, sharing apartments and even rooms, because rents soared and they couldn’t afford their own place.  No wonder so many left when they became able to work remotely.  Comparing the 2000 Census with the 2019 American Community Survey, the median gross rent increased 42.0% — after adjustment for inflation. The percent of city renters paying at least 30.0% of their income in rent increased to more than 50.0%.

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The important thing to remember, when looking at changes over one or more decades, is that you aren’t looking at changes in individual people’s lives. You are looking at the situations of different groups of people, particularly different generations.  The people at one point in time are not the same as the people at the second point in time.  Some of the people who were in New York City 20 years ago have died or moved away.  Some of the people who are here now were elsewhere, or were children, 20 years ago.

The richest generations in U.S. history are those born between 1930 and 1957 or so, the so-called “Silent Generation” that had the good fortune to reach young adulthood in the booming 1950s, and most of the Baby Boomers, those who came of age in the 1960s or early 1970s.  Those born earlier, and later, are poorer on average.  

In the year 2000 the Baby Boomers were ages 36 to 53, with members of the Silent Generation at ages 54 to 70.  All of the former and most of the latter were working age, with many in their peak earning years.  Most of Gen X, born 1965 to 1979 was also at working age, while the Millennials were children.  And there were still many members of the poorer Greatest Generation, born in the 1920s, still around in old age, particularly in older cities where they were left behind as their children moved to the suburbs. 

By 2019 there were very few members of the Greatest Generation left. The youngest members of the Silent Generation were age 73 and older, and aside from our political leaders, most were retired.  The same might be said of most Baby Boomers aside from the 1970s generation, the disadvantaged cohorts at the back end.  Those born in 1957 were age 62 in 2019, and many Boomers had been forced into early retirement by the Great Recession.  Data on those who are working in 2019 reflects the situation of the last of the Boomers, Gen X and the Millennials.  

So changes from 2000 to 2019 reflect the situation of different generations at the same point in their lives.

I happened to have two “profiles,” one for the U.S. and one for NYC, the Census Bureau released from the early ACS, for the years 2000 to 2003.  I had downloaded these and saved them to my (previous) computer in early 2005.  

These are is compared with the data from the DP03, Selected Economic Characteristics, and DP04, Selected Housing Characteristics, tables from the 2019 ACS, tables that can be downloaded here.

https://data.census.gov/cedsci/advanced

The data shows that median (cash) work income for all U.S. workers was 4.3% lower, adjusted for inflation, in 2019 than it had been in 2000.  I had found a 4.5% decrease from 2005 to 2015, at a mid-point in the economic cycle.

https://larrylittlefield.wordpress.com/2016/10/16/american-community-survey-data-falling-median-work-earnings-by-educational-attainment/

The decrease was a combination of lower pay per hour, and a lower share of workers with full-time-year-round jobs, as a result of the rise of the “gig” economy.   And thanks to that gig economy, among other factors, for the typical private sector worker’s non-wage income (health benefits, retirement benefits) probably fell more than wages.  The median earnings of male full-time year-round workers fell 9.3%, while the median earnings of female full-time year-round workers edged up 0.3%.  

In New York City, on the other hand, the median earnings of male full-time year-round workers increased 2.4%, while the median earnings of female full-time year-round workers rose 4.4%, a surprisingly good performance compared with analyses earlier in the business cycle.  So the entire 6.1% decrease in the overall median earnings per NYC worker from 2000 to 2019 is due to the rise of unusually large part-time, temp, contract and freelance economy here.  That compares with a 3.6% NYC decrease, adjusted for inflation, from 2005 to 2015 alone.

The following two tables provide additional information on 2000 to 2019 trends for New York City…

Compared with the United States as a whole.

Nationally, thanks to the aging of the large Baby Boom, the percent of people age 16 and older who were in the civilian labor force (working or looking for work) fell from 65.8% in 2000, near the peak, to just 63.1% in 2019. 

The number of households with Social Security income increased by 40.0% over this period, and the number with other retirement income increased 71.3%. For those who hadn’t quite made it to Social Security age in 2019, the number of households with SSI disability income increased 60.7%.  

Meanwhile, the number of households with work earnings increased just 12.7%, and the share of occupied housing units with work income fell from 80.5% to 77.4%.  The national poverty rate ticked up from 12.2% in 2000 to 12.3% in 2019, probably the low point for each economic boom.  Earlier analysis, however, showed that the poverty rate high point during the recent recession was higher than in prior recessions.

The period from 2000 to 2019, and in particular from 2007 to 2019, was a time when New York City was booming compared with the rest of the United States, to the greatest extent, perhaps, since the 1920s.   The data shows this.

Thanks to the large number of Millennials who left areas with weaker economies to come to NYC for work, the percent of city residents ages 16 and older who were in the civilian labor force actually increased from 57.7% in 2000 to 63.9% in 2019.  The “welfare city” had higher labor force participation than the U.S. average!  Meanwhile, the number of employed city residents soared by 847,967 or 25.9% over 19 years, while the number of households with public assistance income fell by 80,039 (35.1%) and the number with SSI disability income increased by just 18,207 (8.1%).  The generation that moved to New York City in the 1960s, just as the jobs were disappearing, ended up on welfare, and then ended up on SSI is largely gone.

I had expected the trend of older households moving into retirement but continuing to occupy the same housing units to take place primarily in the suburbs, not in the New York City, to which many of the children of aging, retiring suburbanites were moving.  Yet in NYC the number of households with Social Security income increased by 29.7% from 2000 to 2019, and the number with other retirement income increased 51.6%.  

The number of occupied housing units in NYC increased by 189,445 over these years, or about 9,971 per year.  That’s a strong record for an older city that is already developed at a high density, where something has to be bought and torn down to build something else.  But the increase of 199,685 in households with Social Security income exceeded the increase in occupied housing units overall.

That left the 847,967 employed NYC resident-workers to crowd into 7,721 fewer households with work earnings.  The number of employed workers per household with work earnings increased from 1.31 to 1.65.  

This shows what “gentrification” has been in the past 20 years. Those moving in aren’t richer, in terms of what they are paid at work, than those who were there before, though they may be better educated and at times have lighter skin.  Instead they have been (had been?) desperate enough to be in New York (given decreasing opportunity elsewhere, and the fact that NYC was considered “amazing”) to pack into less space than those who were there before, with even married couples often having roommates.  

Landlords, expecting tenants to share apartments or even rooms, waived the tenant income relative to rent ratio that had been traditionally required.   Some started renting individual rooms, with shared kitchens and bathrooms, to a rotating case of individual tenants.  This appeared to have the same effect on NYC Millennials that changing the criteria for conforming mortgages did to the price of owner-occupied housing elsewhere in the country– causing the price to be bid up so Millennials had to pay more.

https://larrylittlefield.wordpress.com/2017/12/09/fannies-mae-and-freddie-macs-stealth-economic-war-on-the-millennials/

In any event, while NYC’s mean earnings per worker fell 6.1% from 2000 to 2019, after adjustment for inflation, the median gross rent in New York City apartments increased by 41.7% — from $1,047 in 2000 (in $2019) to $1,484 in 2019.   And since the median rent of cost- privileged rental housing – rent regulated, Mitchell-Lama, public housing – would not have by increased nearly that much, the market-rate housing new arrivals to the city were left with had to have increased even more than 41.7%.   Despite additional workers per apartment, the share of city renter-households paying 30.0% or more of their income in rent increased from 40.7% to 50.1%.  

I checked the data still available for download to see when the increase occurred.   It appears that the percent of NYC renters paying 30.0% or more of their income in rent actually peaked at 55.1% in 2014, before trending down.

Nor is housing the only disadvantage the young workers of the 2010s were faced with, compared with 2000.  As debt, pension, and senior-related Medicaid costs soared, mass transit service and maintenance were cut – rather than increased in proportion to the big increase in employed city residents and subway riders.  By 2014 – at about the same time as the rent peak – subway service began to collapse.  Crowding and delays exploded leading to a “state of emergency” for the subway, declared in 2017, and a temporary increase in maintenance, now likely to be reversed.  

It was at about that time that the U.S. Census Bureau reported that New York City’s population, and the U.S. Bureau of Labor Statistics reported that the city’s labor force, began to fall.  The Millennials, treated like serfs, started leaving.

https://larrylittlefield.wordpress.com/2016/07/31/the-millennials-treated-like-serfs-may-have-started-to-flee-new-york-city/

The median rent also increased nationwide, but not to nearly the same extent – by 12.1% from $978 in 2000 (in $2019) to $1,097 in 2019.  In other words, the U.S. median gross rent in 2019 was slightly higher than the NYC median gross rent in 2000.  But the number of employed workers per household with work earnings also increased nationwide – from 1.55 in 2000 to 1.67 in 2019, or about the same as in NYC.   Although additional workers are occupying larger housing units, on average, nationwide than they are in NYC.  Data from the 2019 ACS (Table DP04, Selected Housing Characteristics) shows that while U.S. housing units averaged 5.5 rooms each, the figure for NYC was just 3.9.  In the U.S. as a whole 60.7% of housing units had three or more bedrooms, compared with just 29.8% for NYC.

Still, even nationwide low wages and high housing costs have prevented many Millennials from leaving their parents’ homes even before COVID-19 hit, meaning more workers were now located in the homes where they had been children.   

https://www.cbsnews.com/news/more-millennials-are-living-at-home-than-at-any-other-time-this-century/

That number has been increasing steadily for the past two decades, and it’s nearly doubled to about 22 percent of people ages 23 to 37 now living with their folks from 11.7 percent of people the same ages back in 2001.

After COVID-19…

As for NYC’s poverty rate, the first year of ACS data shows a rate of 17.9% in 2000 – significantly lower than the 1999 rate reported by the 2000 Census – and the most recent data shows a rate of 16.0% in 2019.  That latter is the lowest NYC rate I’ve seen since the 14.9% rate for 1969, as reported by the 1970 Census, before the city’s 1970s decline.  Poverty rates, however, are not adjusted for the cost of housing in different places and times.  So while NYC residents may have been less likely to be poor than in the prior four or five decades, they may not have been less likely to live poor.  

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For the next two sets of tables and charts, I was unable to get data for the year 2000, but I do have previously downloaded data for the year 2007.  The first is table B19094, median household income by age of householder (the person who filled out the form).   It shows that from 2007 to 2019 median household income increased far more than median work earnings per worker, thanks to a rising number of workers per household, and a generation in retirement that is richer than prior generations of seniors.

The data shows that in 2019, median household income was $65,712 in the U.S., $69,407 in New York City, and $83,160 for the New York metro area as a whole.  NYC’s median household income was higher than the U.S. average for those with householders under age 25 and ages 25 to 44, but below the U.S. average for those with householders ages 45 to 64 and ages 65 and over.  NYC’s median household income is below the NY metro area average for every age group.   

The median household income for Metro New York was 26.6% higher than the U.S. average.  It was 36.4% higher than average for those under age 25, 31.2% above average for ages 25 to 44, 25.8% above average for those ages 45 to 64, and just 12.9% above average for those ages 65 and over.  The small difference for seniors reflects the fact many of the best off residents of Metro New York move south when they get old, leaving less well off householders age 65 and over behind.  Meanwhile, those under age 25 who could afford their own apartment in Metro New York in 2019, rather than living with their parents, were well off indeed.

Nationally, median household income was at $35,999 for those headed by someone under age 25, rising to $72,029 for those ages 25 to 44 and $79,165 for those ages 45 to 64, before falling to $48,893 for those age 65 and over.  In theory, of course, those ages 65 and over also have retirement savings to live off and a paid-off house to live in, while those younger can’t spend as much because they need to pay off their mortgages and save for retirement.  Or at least that’s how it once worked.   Metro New York followed the same pattern, at $49,104, up to $94,480 and then $99,598 before falling to $55,205.

Unusually, however, the median household income of NYC households headed by someone ages 25 to 44, at $86,560, was higher than the median for those ages 45 to 64, at $74,026.  One reason could be “gentrification” and an influx of young affluent suburbanites of the kind referred to as Chad and Trixie out in Chicagoland.

http://www.city-data.com/forum/chicago/1133748-chad-trixie.html

If so, we should not be surprised if the New York City equivalent of Trixie and Chad suddenly fled the city for their native suburbs after COVID hit.  Thus the emptying out of Manhattan.

A more likely explanation, however, for the higher median household income of those ages 25 to 44 in NYC, compared with those ages 45 to 64, is their disadvantaged position in the housing market due to their later arrival, after all the deals were taken and prices exploded.  Thus the need for more income earners per household, whether family members or roommates or boarders.   

These young adults are apparently not leaving the city, based on the greater stability in the outer boroughs.  If rents decline, some of the latent, suppressed housing demand from those who are already here and forced to live with roommates or family may manifest itself, re-filling vacant units.  The median household income would decline, but there would be more households.

Median household income was higher adjusted for inflation in 2019 than it had been in 2007 across all age groups, a big change from 2015 compared with 2005.  A rising number of adults with income per household, along with fewer children, may be the explanation.  For the U.S. as whole the increase was 5.0% overall, 9.2% for households with householders under age 25, 5.4% for those ages 25 to 44, 3.6% for those ages 45 to 64 – and fully 23.3% for those ages 65 and over.

With regard to how much better off those in the over 65 category have become, recall the discussion at the top.  It isn’t that people who are seniors are becoming better off.  Not with interest rates at zero on their savings.  It is that the generations who have always been better off are now seniors, with prior generations who were poorer now mostly dead and gone, and later born generations who are also poorer still below age 65.  

The situation is likely to be much different when all of the Silent Generation and most of the Baby Boomers are gone, and those over age 65 are late Boomers and Gen X.  While Millennials are even worse off, Late Boomers and Gen X never adjusted their lifestyle for the fact that they were poorer than the generation before, and for the most part will be retiring with neither pensions nor retirement savings, and perhaps with debt.

https://www.marketwatch.com/story/all-the-ways-gen-x-is-financially-wrecked-2019-02-08

For New York City, there were large inflation-adjusted increases in median household income for every age cohort, with a 15.7% increase overall, a 17.5% gain for those headed by someone under age 25, a 25.2% increase for those ages 25 to 44, a 10.4% gain for those ages 45 to 64, and a 29.2% increase for those ages 65 and over.  Again, the residents of New York City in 2007 were not the same as the residents of New York City in 2019.  Rather than people who live in New York City becoming richer, it may be that people who are richer became more likely to live in New York City and less likely to live in the suburbs or, say, Ohio.  Up until this year anyway.

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The final table and charts, on the median earnings of individual workers by educational attainment, shows what might have induced so many working young adults, particularly young adults with higher education, to move to Metro New York in general and NYC in particular.  

Comparing Metro New York with the U.S. as a whole, in 2019 the median earnings per worker was 25.2% higher locally.  It was 11.0% higher for high school dropouts, just 4.9% higher for high school graduates, and just 8.4% higher for those with some college or an associates degree.  But it was 18.6% higher for those with a bachelor’s degree and 20.4% higher for those with a graduate or professional degree.   Overall, men earned 20.5% more than the U.S. average in metro New York, while women earned 34.2% more.

Those residing in New York City specifically earned less than the NY Metro area average at every education level, perhaps because they are less advanced in their careers and move to the suburbs as their pay rises. New York City’s high school graduates, however, actually earned less than the U.S. average, as well as less than the Metro New York average.

For New York City, the 2019 median earnings per worker was $25,153 for those with less than a high school diploma, $32,004 for a high school or equivalency diploma, $40,855 for those with some college or an associate degree, $66,818 for those with a bachelor’s degree, and $85,533 for those with a graduate or professional degree.  NYC men earned more than NYC women in 2019, at every education level and overall.  The overall gap had nearly closed at a worse point in the economic cycle, implying male incomes are – or were – more volatile. 

The fact that those with higher educational attainment earned more in 2019 shows that education still paid, but it paid in a different way. Whereas once additional education was a way to get ahead, today it is a way to avoid falling even further behind.

While overall U.S. median earnings per worker was 4.3% lower, adjusted for inflation, in 2019 than it had been in 2000, it was nonetheless 1.3% higher in 2019 than it had been in 2007.  But only because the Millennials, now fully in the labor force, have even higher average educational attainment than the generations that proceeded them. 

Looking at those in different education cohorts separately, one finds that the median earnings of workers with high school diplomas was 3.6% lower in 2019 than it had been in 2007 after adjustment for inflation.  It was 5.9% lower for workers with some college or associate degrees, 2.4% lower for those with bachelor’s degrees, and 0.1% for those with graduate degrees.  All these declines were much less than the decreases I had found previously for the 2005 to 2015 period, at the mid-point of the economic cycle.   But even so, nationwide, measured from the economic peak in 2007 to the economic peak in 2019, and adjusted for inflation and for educational attainment, median earnings fell once again. 

With one exception: workers without high school diploma.  Those workers had an inflation adjusted increase in median earnings at 8.1% overall, 10.2% for male workers, and 14.5% for female workers.  This may reflect the higher minimum wages required by law in some states and cities, along with the restaurant boom that pushed up wages even where the law did not require. COVID-19, however, has apparently reversed all these gains with a vengeance. 

The median earnings per NYC worker was 7.6% higher in 2019 than it had been in 2007, despite being 6.1% lower than it had been in 2000.  It was a strong expansion for the NYC and a small number of booming “superstar” cities and metro areas that drew in workers from less favored areas around the country, causing housing prices to explode.

New York City’s inflation adjusted increases in mean earnings per worker exceeded the U.S. average in nearly every sex/educational attainment category, aside from  men without a high school diploma, up 10.2% nationwide but just 4.5% in New York City, women with just a high school diploma, down 1.3% in the U.S. and 5.3% in NYC, and women with some college or an associate degree, down 5.1% in the nation as a whole and 5.6% for the city alone.  

NYC residents with college and graduate degrees fared especially well compared with the U.S. average, with increases of 7.4% and 5.0% respectively compared with small decreases for the U.S.  The mean earnings of NYC men increased 8.9% for those with bachelor’s degrees and 4.7% for those with graduate or professional degrees.  The increases for NYC women were 7.8% and 7.5% respectively.   This may explain why so many young workers with college degrees, and graduate degrees, were willing to flock to the city despite a soaring cost of living and a deteriorating quality of life.

On the other end of the spectrum, with a $15 per hour minimum wage in effect in 2019 the median earnings for NYC workers without high school diplomas was 9.5% higher than in 2007 overall, 4.5% higher for men, and 18.4% higher for women.

Back in 2017 in this post…

https://larrylittlefield.wordpress.com/2017/11/26/the-executive-financial-class-the-political-union-class-and-the-serfs-redux/

I had written the serfs continue to become worse off, adjusted for whatever point we are in the economic cycle. Today they may be a little better off than the were in 2010, but they will still end up worse off than they were in 2007, at the prior peak, which was worse off than they were in 2000, the one before, which was worse off than they were in 1987, etc. The next bottom can be expected to follow the same pattern.

An apparent big increase in median earnings from 2017 to 2019 means that I was wrong about that with regard to New York City, though the national picture was worse.  However it now appears certain that I will not be wrong about the next bottom following the same pattern.

Looking back, however, the 2000 to 2019 period, and in particularly the 2007 to 2019 period, in New York City and some other places such as San Francisco, Boston, Seattle, etc., appear to a textbook case of the land economics first described by economist, philosopher and former third party candidate for NYC mayor Henry George.  Based on his observations of gold rush-era San Francisco and Robber Barron-era New York City.

When an economic and demographic boom is concentrated in certain areas, George found, the wages of labor are competed down, the earnings of entrepreneurs are competed down, and the returns on capital are competed down.  All the excess value created by the boom ends of falling to existing landlords, in the form of higher prices for existing space and development sites.  Even new landlords and developers don’t come out ahead, as the price of existing buildings and places to build new ones is bid up to levels that ensure limited future profits, or even losses.

The two most politically powerful interests in New York are the public employee unions and contractors, and (until recently) the real estate industry.  These are the interested that have our state legislators, and to an extent mayors, governors, and members of the city council, bought and paid for.  Perhaps never in NYC history have these to sets of interests been able to take more, and more, and more at the expense of everyone else, and at the expense of the future, than in the 2000 to 2020 period.  With property price and rent increases for the latter, and cost-deferred retroactive increases in pension benefits and excess staffing for less work for the former.

The coronavirus has accelerated a reckoning, as entrepreneurs close up shop, and workers and capital flee New York City.   Of the four factors of production land is the last to be paid.  It takes all the marbles in a geographically concentrated boom, but takes most of the losses in a bust – since unlike entrepreneurs, workers and capital it cannot move away.

A desperate attempt to force someone else to bear the financial consequences, preferably in the future, is what is happening now, as I noted here.

https://larrylittlefield.wordpress.com/2020/07/16/the-coronavirus-and-commercial-real-estate-in-the-long-run-neither-is-the-real-threat-to-new-york/

A spreadsheet with the tables and charts used in this post is here.

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