The Manic Incomes of the New York Rich
Conventional wisdom tells us that the rich didn’t feel much of an impact from the recession. And among the least impacted among the rich were the bailed out bankers of Wall Street.
Yet a new report suggests conventional wisdom may have been wrong. According to a report from the New York City Comptroller, the incomes of New York's one percent saw the biggest drop during the recessions of both 2008 and 2000.
The average adjusted gross incomes of New York State's one percent fell by more than 40 percent between 2007 and 2009. That's more than six times the drop for the 99 percent, which saw their average income fall six percent during the same period.
The 2000 recession was similar. Incomes for the one percent fell by more than 37 percent between 2000 and 2002, as the chart below shows, while incomes for the rest barely declined to $41,000 from $42,000.
We don’t need to play any violins for the slightly less rich one percenters, of course. Their incomes were still more than $2 million in 2009 – enough to get by, even in Manhattan. They make more than 30 percent of New York City’s total income, and their incomes likely staged a comeback since 2009.
Yet the graph proves the increasing importance of the “High–Beta Rich” – a new breed of wealthy whose incomes and fortunes are highly dependent on volatile stock markets. (You can read more about them here).
While we shouldn’t feel sympathy for the High-Betas, we should worry about the impact of all this manic money on our tax rolls and spending. The one percent pay more than 40 percent of New York State’s taxes. And they account for an outsized share of spending.
That means that New York, like many of the richest parts of the country, has placed its future on the most manic segment of our economy. Get ready for a rough ride.
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank