Here in famously expensive Manhattan, there is virtually no such thing as an available unsubsidized apartment that does not cost more than the entire Federal Poverty Level income for the smallest family that can fit in that apartment. So just about everyone in Manhattan lives in a home whose rental value alone exceeds FPL. The obvious conclusion from that is that there can be no such thing as poverty in Manhattan. Right?
Not so fast! According to the Census Bureau the official poverty rate for New York County (basically the same thing as Manhattan) is 17.6% for the most recent 2007-11 data. That's actually higher than the 14.5% rate for all of New York State. With a population exceeding 1.6 million, Manhattan supposedly has about 285,000 people in "poverty." Yet essentially all of them live in apartments whose annual rental value alone exceeds FPL. What are we missing? The answer is highly relevant to understanding the so-called "crisis of income inequality."
The answer is not that there are terrible neighborhoods, slums, where the housing is falling down and poor people are forced to live. We don't have slums in Manhattan any more, at least not slums in the sense of places where the housing is inexpensive. Harlem and the Lower East Side have both become desirable neighborhoods while nobody was looking. A search of the very comprehensive Streeteasy data base reveals just one apartment for rent in Manhattan for under $1000 per month. It's a very small (400 sq. ft.) walk up studio in Harlem only suitable for one person, for $950 per month. That's $11,400 per year, as against FPL for a single person of $11,490. Every other Manhattan apartment on Streeteasy has a rent above FPL. This Manhattan Rental Market Report for August 2013 shows that Harlem is still the least expensive neighborhood to rent an apartment, but the average price for a studio there is now $1481, or $17,772 per year, which is well above FPL for a family of 2.
No, the answer is that the people deemed to be in poverty do not pay full price, or anything close to it, for their Manhattan apartments. There is a dizzying array of subsidies and handouts available to people to get them into housing in Manhattan if they can define themselves into poverty. There is low income public housing, Section 8 vouchers, and "affordable housing" and "income restricted" housing of many sorts. Critical to the entire enterprise is the fundamental proposition that nothing about the apartment you live in counts as income for purposes of determining your income or poverty status. Obviously, if a the value of a Manhattan apartment, measured by the market rent that everyone else pays for a comparable apartment, counted as part of "income," then it would be impossible for anyone in Manhattan to be counted in poverty.
Thus, a few blocks from where I live we have the neighborhood of Chelsea, where the cheapest 2 bedroom apartment you can find on the market goes for about $4000 per month. The neighborhood also has several large public housing projects, where residents are almost all deemed to be in poverty, and pay nothing or next to nothing for their 2 bedroom apartments. In a very real sense they are receiving income of at least $48,000 per year in the form of the housing -- far above the FPL. None of it counts in the official measures of income or poverty.
Compare the lives of two families of four living in Chelsea in 2 bedroom apartments. One earns about $100,000 per year. It pays about $25,000 off the top in income taxes. Then $48,000 for the apartment. Transportation to work is several thousand per year. Cell phone service is another couple of thousand. No food stamps or clothing allowances. This is a very tight budget. The family across the street in poverty gets the $48,000 apartment for free. Food stamps pay for the food. The cell phones are free. Medical care is free. In measured income statistics, the difference between these two families is $100,000 and zero, enormous income inequality. In actual consumption, the difference between them is not very large at all.
The so-called "crisis of income inequality" is all over the news right now, from the de Blasio mayoral campaign, to many, many articles from the left-wing punditry. Try this one today from E.J. Dionne of the Washington Post if you can stand it. Not one of these people uses remotely honest data to measure poverty or income inequality.