With the mayoral election coming up in New York in just a couple of weeks, it's time to look in a little on how our super-progressive Mayor Bill de Blasio has done during his first four year term. For today's issue, let's consider income inequality.
If you were around for the last election in 2013, you will not be able to help remembering that income inequality was de Blasio's big issue. In the famous and oft-repeated turn of phrase, income inequality was said to be "the defining challenge of our time." In this post on November 11, 2013 -- immediately after de Blasio was elected -- I included quotes on the subject both from his campaign and from his election-night victory speech. For example, from the victory speech:
That inequality, that feeling of a few doing very well while so many slip further behind — that is the defining challenge of our time. …. But the challenge today is different. The creeping specter of inequality must be confronted, and will not weaken our resolve.
And, to be fair to de Blasio, it wasn't just him. Plenty of others on the progressive side of things were also regularly mouthing the same line, not the least among them being then-recently-re-elected President Barack Obama. For example, in this speech delivered on December 4, 2013, Obama used the same formulation that had been repeated endlessly by de Blasio:
[There is a] relentless, decades-long trend that I want to spend some time talking about today. And that is a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America’s basic bargain -- that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time. . . .
Of course, being ever the contrarian, I went over all the policies that de Blasio was proposing to address income inequality, and expressed extreme skepticism that any of them would have the desired effect. Higher taxes on high earners; universal "pre-K" education; higher minimum wage; more construction of "affordable housing" -- none of these had any real potential to move the published statistics by which income inequality is generally measured. Only one prospective policy offered any real hope:
In the end, there's really only one thing de Blasio can do to reduce measured income inequality, and that is to drive the high earners away. . . . Is that really where de Blasio wants to go?
Now, four years in, where are we? First, on the policy side: Most but not all of de Blasio's main proposals got enacted. The main exception was the proposal for higher taxes on high earners, which got blocked by the state legislature and the governor. (But the usual measures of income inequality are calculated on a pre-tax basis, so higher taxes on high earners would definitely not move the income inequality numbers.) Meanwhile, universal pre-K went through, a higher minimum wage was passed, and at least some "affordable housing" got built. Of course, if you understand how the measure of inequality are put together, none of these had any real potential to move the numbers either. (For example, the implicit rent subsidy of "affordable housing" does not count as "income" in measuring income inequality; and recipients of pre-K education will not see their incomes raised (if ever) until they enter the labor force in the late 2030s.)
So, have the measures of income inequality in fact moved? Alex Armlovich of the Manhattan Institute is out with a new study that analyzes the numbers for 2014 (when de Blasio took office) through 2016 (latest numbers available). Result: no change!
New York City mayor Bill de Blasio assumed office in January 2014, promising to “take dead aim at the Tale of Two Cities ... [and] put an end to economic and social inequalities that threaten to unravel the city we love.” As the de Blasio administration nears the end of its four-year term, income inequality in 2016, the most recent year for which data are available, stood at the same level it was when former mayor Michael Bloomberg left office. During the interim, income inequality has fluctuated—at one point becoming even greater than it was when de Blasio entered office—and only more recently reverted to the Bloomberg-era level.
And the results are even worse for de Blasio's policies than even that summary would indicate. The fluctuations in the metrics had almost entirely to do with changes in pay among high earners, and thus nothing to do with de Blasio's programs directed to the low earners:
A transitory increase in compensation for finance professionals (as a group, the city’s highest paid) led the gap between New York’s rich and poor to increase in 2014 and 2015. In 2016, a modest decline in the concentration of compensation in that sector reduced income inequality to about the same level as when Mayor de Blasio took office.
The good news is that de Blasio is talking a lot less about income inequality this time around. Undoubtedly, he'd like to avoid as much as possible getting confronted with the statistics that prove that his policies have thus far been more or less completely ineffective in achieving the stated goal, even as they make things worse for all by raising the expense of government, complicating the process of housing development, and so forth.