Mayor de Blasio is finally de-emphasizing inequality – and that’s a good thing

Mayor Bill de Blasio ran his first campaign on ending the “Tale of Two Cities” in New York. That appealed to many low- and middle-income New Yorkers concerned about Mayor Michael Bloomberg’s vision of New York as an exclusive luxury product. Yet economic equality is the definitional opposite of economic diversity – and ending the tale of two cities means one of the two would have to go. 

De Blasio’s keynote speech at the recent Crain’s Summit suggests a grasp on this reality, as he highlighted strong job growth but conspicuously downplayed local income inequality. This pivot provides an opportunity to embrace economic diversity and inclusive growth.

At the economic top of our “two cities,” New York has been America’s global financial gateway for all of modern memory. In a new paper for the Manhattan Institute, I find that wage inequality in the five boroughs has seen a moderate increase during de Blasio’s tenure and is almost entirely driven by our hometown superstar industry, finance. But would it really be a good thing to evict the goose that lays our golden tax base? It doesn’t take a Sim City all-star to figure out that evicting automakers from Detroit or tech from San Francisco would be a perverse local governing strategy.

New York’s unusually high local income and business taxes – which fund our unusually massive local government – are only sustainable because of how unusually desirable it is as a place to work and live. True, the top 1 percent alone already pays more than 45 percent of New York City’s income tax revenue, but it’s hard to see those taxes going higher without damaging the long-run income tax base. It’s rather easy to move to New Jersey, Connecticut or Florida – as many wealthy non-resident New Yorkers would be happy to tell you in person approximately 182 days per year.

What about the bottom half of the “two cities”? A stream of poor, job-seeking immigrants flows continuously through our city for their first taste of American opportunity. Some 3.2 out of 8.5 million New Yorkers are foreign-born, and the vast majority has arrived since 1990. Only two things could stop these first-generation Americans from coming: an economic collapse in New York, or a housing supply so tightly regulated that it’s utterly inaccessible – either by price or by government waitlist – to the next wave of opportunity-seekers.

Of course, when we talk about “mixed-income housing” and looser zoning regulations in general, everyone understands that’s intended to help low- and middle-income people stay in the city. But “mixed income” housing is just another term for “unequal income” housing. The more affordable and economically diverse New York is, the more unequal it is. Diversity is inequality. New York isn’t Mayberry, and it shouldn’t be.

De Blasio has utterly failed in making New York City more equal because in practice he’s trying to help it remain diverse without destroying our booming economy. That, by definition, will boost measured income inequality. And that’s a good thing: we should want a city that is economically successful and economically accessible. The great irony is that a homogenously wealthy, anti-growth “luxury” vision would actually be the most effective means of achieving a perverse sort of economic equality in the city. Tear down the New York City Housing Authority and down-zone the whole city to freeze the housing supply: That’s San Francisco, East-Coast edition. 

Our mayor has found his way into doing an okay job of things – irresponsible on the spending side, but not as destructive or perverse as his original campaign rhetoric suggested. And if he could get his deregulatory land use plans in order, his housing plan could actually add more housing of all kinds, subsidized and market-rate, than even the Bloomberg administration. We simply mustn’t forget that a city with room for everyone – open to princes and paupers alike, from all over the world – will inevitably have unequal incomes by the very virtue of its inclusiveness.

Bottom line: Thinking about inequality qua inequality in a small jurisdiction with open borders isn’t just a distraction, it’s actively harmful. The sooner we stop talking about local inequality, and start focusing on housing abundance and efficient, excellent public services, the better off (and the more accessible) our city will be for everyone.

Alex Armlovich is a fellow at the Manhattan Institute. He is the author of the new report, “Poverty and Progress in New York X: Income Inequality Trends Under de Blasio