Rich Man, Poor People

The Billionaire Mayor and the Income Gap

Less than three miles downtown, in a neighborhood of embassies and appointment-only art galleries, Michael Bloomberg lives in a five-story, 9200-square-foot limestone townhouse just east of Central Park. Bags of garbage and a rusty bedframe sit in Rosado's hallway, which has been the site of two trash fires in the past six months, but even the service entrances gleam on the mayor's prime block.

The numbers are in keeping with the aesthetics. Average family income in Rosado's housing projects is $22,216; in the three square blocks encompassing Bloomberg's exclusive slice of East 79th Street, the figure is more than 21 times higher—$474,483, according to 1997 estimates (the most recent available). And that doesn't include assets, of which Rosado—and roughly 40 percent of New Yorkers—have none. The stat gatherers say the single largest group of earners in Bloomberg's block make more than $150,000 a year; in the Wagner Houses, the largest number of households make less than $5000 per year.

And Rosado isn't even poor—or not officially anyway. She hovers just above the $17,524 threshold for a single mother of three. In the six months she's had a full-time job, she has somehow managed to purchase the sofa set ($85.90 per month for a year); a cell phone so she can keep track of Timberlee from work ($40 per month); and curtains for her window overlooking the FDR Drive ($19.99). She's been flush enough to make chicken—instead of eggs—along with rice and beans (still, dinner for five usually totals less than $5). And she even has some savings. Rosado has socked away $109 since beginning her job—"for a rainy day," she says.

Sylvia Rosado at home: $1.43 less per hour means "goodbye, couch."
photograph by Sylvia Plachy
Sylvia Rosado at home: $1.43 less per hour means "goodbye, couch."

It's chilling to think of a day much rainier than the one she's already experiencing. The pay cut would be bad enough. Loss of her job, which the temp company plans to phase out within the next year, will almost surely send her back into the depths of poverty she's been trying desperately to escape.

Yet, that downward trajectory is exactly what is in store for Rosado and the millions of other poor and near-poor people throughout the city, according to economists and budget analysts. Though the economic downturn is affecting all New Yorkers, it is compounded by the termination of welfare benefits to millions.

"This is our first post-welfare recession. It's a new situation for us," says Mark Levitan, senior income-security policy analyst at the Community Service Society. "We don't have the same kind of safety net we did before. We're going to see a lot of people hit very dire straits pretty early on because there aren't the public supports."

Even before this fall, inequality indicators were already setting records. In New York State, the richest 20 percent accounted for all the income gains of the 1990s. While the widening of the gap was temporarily stalled by the dotcom bust, which hit the rich hardest, the current crisis promises to continue deepening the great divide. "Income disparity will almost surely go up as the recession deepens," says Bernstein.

The problems of extreme poverty are obvious. "I was thinking about money all the time," Rosado says of the time not long ago when she was trying to manage her household on a $187 welfare check that came once every two weeks. "Every little thing was a struggle." And according to James K. Galbraith, director of the University of Texas Inequality Project, which studies income gaps around the world, the cost of economic inequality is far greater than even the toll on individual poor people. "More-equal societies have less unemployment, fewer poor people, less crime, and better public services," says Gabraith.

It's not just liberal economists who see the disparity as unseemly. Even George Bush's spokesman, Ari Fleischer, recently listed "reducing the income gap" among the president's top priorities. Unfortuately, that gap is increasingly self-perpetuating, according to experts. A precipitous drop in electoral participation among those at the bottom of the economic ladder means the poor have little say in the policies that shape their fate. Meanwhile, as the World Economic Forum and Enron have recently reminded us, a wealthy elite enjoys tremendous political power.

"We're seeing a takeover of the political system by the very wealthy," says Galbraith. Politicians like Bloomberg and New Jersey senator Jon Corzine, a former Goldman Sachs executive, are just the latest symbols of money talking—and holding office.

It remains to be seen if and how having a vast fortune will shape the mayor's response to the budget crunch. Several unions have suggested placing a surcharge on the city's ultra-wealthy—something that's been levied in the past, but now stands virtually no chance of being approved. Mark Rosenthal, president of DC 37's local 983, to which Rosado belongs, is hoping a commuter tax might save his workers' jobs. "If they need to tax people to keep people working, then I'm for the tax. It's morally wrong to take these jobs."

The mayor has said city lawyers are reviewing the parks workers' new contract. Meanwhile, he's focusing on private philanthropy to help close the gap. Though he has been a generous donor himself, giving gifts of up to $100 million at a time, doubters say it's unlikely his fellow billionaires will rush to follow suit.

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