Economic indicators ; Public policy ; Income distribution ; New York (N.Y.)

Howard Chernick

English

Research Papers in Economics

FRBNY ECONOMIC POLICY REVIEW / SEPTEMBER 1999 165
Commentary
Howard Chernick
The New York City Social Indicators Survey (SIS), directed
by Marcia Meyers and Irwin Garfinkel, both of the
Columbia University School of Social Work, will prove
to be an invaluable tool in assessing the well-being of New
York City’s residents and in evaluating policy initiatives
that affect that well-being. The survey complements the
Current Population Survey (CPS), up to now the only annual
survey of the economic and social characteristics of the resi-
dent population of New York City. Meyers and Garfinkel
are to be highly commended for undertaking this project. 
Although the SIS sample size is somewhat smaller
than that of the CPS—1,500 households versus about
2,000—the SIS range of questions is broader. By providing
more detailed information about economic and social well-
being in a particular area, the survey will amplify our
understanding of national trends in the well-being of the
population. Although not reported in the first survey, the
sample also includes about 750 households in the New
York City metropolitan area living outside the city. Com-
parisons between city and suburban residents will be
particularly useful in evaluating metropolitan and state-
wide policy issues. In these comments, I focus on issues of
income measurement, perceptions of the quality of public
services, and suggestions on ways in which the survey
could be used to address some important policy issues. 
INCOME POVERTY
Nationally, poverty has become more concentrated in
central cities, with poverty rates rising relative to the rest
of the country. In the 1990s, poverty rates in central cities
were more than double the rates in the suburbs of metro-
politan areas (18.8 percent versus 9.0 percent in 1997).
Although central-city poverty rates have declined since
their peak of 21.5 percent in 1993, they remain stubbornly
high. The SIS finds that the national pattern of high rates
of central-city income poverty is magnified in New York
City, where reported income poverty rates for families are
29 percent. When we add to families below the poverty
line those with incomes that are less than two times the
poverty rate, we see that the survey finds an extraordinary
50 percent of the sample to be income-deprived.
The question is, how accurately do these alarming
rates of poverty and near-poverty reflect the extent of mate-
rial deprivation among New Yorkers? The SIS poverty
rate is higher than the U.S. Census Bureau estimates,
mainly because the SIS definition of the income-sharing
unit is more restrictive than the Census definition. The SIS
counts only the resources of nuclear family members,
Howard Chernick is a professor of economics at Hunter College. The views
expressed are those of the author and do not necessarily reflect the position of the
Federal Reserve Bank of New York or the Federal Reserve System.166 FRBNY ECONOMIC POLICY REVIEW / SEPTEMBER 1999
whereas the Census definition includes all those in the
household who are related by blood or marriage. This
choice was undoubtedly made in an effort to maximize the
accuracy of income reporting in the SIS. However, due to
the high cost of housing and the importance of immigra-
tion, the extent to which extended families share living
quarters and resources is probably greater in New York
City than elsewhere in the country. Hence, the SIS choice
of income-sharing unit may overestimate the extent of
material deprivation by underestimating the extent of
household resources available to nuclear families. The
relatively high cost of housing in New York City also
means that there are probably relatively more unrelated
individuals sharing living quarters. Since these households
are sharing housing costs, income poverty measures may
again overstate real deprivation. These conjectures on hous-
ing are supported by a comparison of the ratio of income
poverty to crowded housing in New York City and the rest
of the nation. While the ratio of substandard housing to
poverty is similar in New York City and the nation,
crowded housing conditions are much more prevalent in
New York City. To address these definitional issues, I
would urge the authors to make some effort to collect
and report income information on a household as well as a
family basis. 
Discussions of urban problems frequently focus on
the declining income of central-city residents relative to
those in the central city’s suburbs. The paper by Edwin
Mills argues that the ratio of central-city to suburban
income levels is primarily a function of the extent to which
central-city residents have relocated to the suburbs, rather
than the income-generating possibilities of the city labor
market. Mills notes that if center-city residents are more
likely to move to the suburbs as their income rises, then
the ratio of income in the suburbs to income in the city
will be highest when the proportion of the metropolitan
area living in the suburbs is very low and very high.
A priori, the relative level of central-city incomes should
be a function both of the rate of exit from the city to the
suburbs of households at different income levels, and the
longitudinal pattern of income growth of those who
remain in the city. The SIS offers an opportunity to explore
the relative role of the Mills hypothesis by asking people
about their income and location in previous years. This
type of inquiry will also help to illuminate the perennial
policy question of the extent to which residents are benefit-
ing from job creation in New York City.
PUBLIC SERVICES
By asking a wide range of questions related to well-being,
the survey offers an opportunity to evaluate the quality of
public services in New York City, and the extent to which
the public sector compensates or offsets highly unequal
private-market outcomes. For example, it is noteworthy that
rates of poverty remain high in New York City, even as
public assistance rolls have declined dramatically—at a rate
of about 8,000 cases per month during 1997. Medicaid rolls
have not declined by nearly as much as public assistance
caseloads. In 1997, 23.4 percent of the New York City
population was Medicaid-eligible. Nationally, some 21 per-
cent of the population lacked health insurance, compared
with 30 percent in New York City. However, the national
poverty rate (using the SIS definition) was 15 percent. If
the national ratio of poverty to health insurance coverage
was to prevail in New York City, then more than 40 per-
cent of the population would lack health coverage. The fact
that lack of health insurance is not as great, relative to
income poverty, as it is in the rest of the nation suggests
that the greater rate of Medicaid availability in New York
City helps to weaken the link between income poverty and
access to health care. 
The SIS results on the perceived quality of public
schools are also interesting. Overall, only 14 percent of
parents definitely agree that their children are not getting
a good education. However, 47 percent of all adults rate
public schools as only fair or poor. To know how well
New York City is doing in education, it would be useful to
compare these evaluations with similar evaluations in other
school systems. As a further research suggestion, it would
be extremely interesting to combine parent evaluations of
the quality of education with information on spending for
individual schools. FRBNY ECONOMIC POLICY REVIEW / SEPTEMBER 1999 167
Blacks are much more likely than Hispanics or
whites to feel that their children are not getting a good
education. Some 28 percent of blacks disagree or some-
what disagree with the statement that their children are
getting a good education, as opposed to 18 percent of
(nonimmigrant) Hispanics and 5 percent of whites. The
difference between Hispanics and blacks is noteworthy,
given that income and poverty rates are similar between
the two groups. It suggests that perceptions may differ
depending on prior experiences, and that different groups
may be more or less willing to criticize the level of public
services received. Among native blacks, the SIS finds that
33 percent are below the poverty line. The close correspon-
dence between the overall rates of income deprivation and
the perceived low quality of public schools suggests that
in at least one crucial public service, New York City is
not very effective in offsetting the adverse effects of low
income. 
As a last point, one suggestion for future use of
the survey would be to track the relationship between city
tax policies to reduce tax burdens on the poor (for exam-
ple, the city’s proposed Earned Income Tax Credit) and
the economic conditions of low-income families.
To conclude, the SIS is a well-designed survey,
providing much useful information on the social condition
of New York City residents. The repeated snapshots that
the SIS will provide in the future will be particularly useful
for studying the effects of policy changes.

Social indicators and the study of inequality - commentary

http://www.newyorkfed.org/research/epr/99v05n3/9909cher.pdf

Social indicators and the study of inequality - commentary

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