Buck Hill

Let’s say that the number of New Yorkers with more than $500,000 in adjusted gross income has risen to about 30,000, which is surely conservative. If, on average, each of these folks spends $200,000 a year on services locally (remember, the $500,000 is a floor, not an average), then the top 1 percent of earners supports about 153,000 service jobs. One hedge-fund manager who spends $1 million annually on services—a driver and house staff, investment management and real-estate brokers, restaurants and psychotherapists—probably sustains 25 livelihoods.
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More conventional service professions are prospering, too.

Since 2001, when the recovery began, productivity growth has averaged 4.1 percent a year; overall compensation - wages and benefits - has risen about one-third as fast, by 1.5 percent a year on average. By contrast, over the previous seven business cycles, productivity rose by 2.5 percent a year on average while compensation rose roughly three-fourths as fast, by 1.8 percent a year.

"The question is not whether corporations are seeking higher profits; the question is how come they're getting them to such a degree at the expense of compensation," said Jared Bernstein, an economist with the Economic Policy Institute. "I'm struck at how successful they've been at restraining labor costs."

The rich subsidize our public services, too—and graciously don’t use them much. Mayor Bloomberg may pride himself on riding the subway, but your average hedge-fund managing director is not a connoisseur of mass transit.

The MTA not only mentioned the fare hike for 2006 but also warned about another fare hike in 2007, due to the budget deficit that will just keeping ballooning. Why is there a crazy deficit ($400 million more expected for next year, on top of the the current $700 million gap)? The lack of city and state aid in recent years.

The nonprofit world has become a big business in its own right. The Museum of Modern Art raised $858 million—in the teeth of a recession—for its new building. The New York Times reported that 50 trustees—whose members include David Rockefeller, Ronald Lauder, and out-of-towners Thomas H. Lee and Los Angeles developer Eli Broad—kicked in more than $5 million each.

After its celebrated reopening on November 20th, 2004, following a renovation project that cost $858 million, the Museum of Modern Art will begin charging visitors $20 for admission. The cost represents a 60% increase from the previous fee of $12 and makes MoMA one of the most expensive urban museums in the world.
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The $858 million dollars that MoMA has spent in its renovation serves only its own vainglory. That sum could have provided the old MoMA’s 1.8 million annual visitors with free admission for forty years.

The very rich may be carving out more space for themselves. But in this highly uncertain economy, that’s something of a blessing, not an unmitigated curse. The ultimate definition of a city’s health is the ability to attract people, companies, and industries that can choose to be anywhere in the world.