Study Finds More Than One in Four Downtown Residents Struggle Financially
If you can’t shake the sense that you are barely making ends meet in Lower Manhattan, you are not alone. A new study produced by the United Way of New York City and the Fund for the City of New York examines economic snapshots of various communities through the five boroughs and concludes that 28 percent of residents in Community Districts 1 and 2 (CD1 and CD2) do not earn enough to cover expenses. (This “South Manhattan” zone corresponds to the area below a jagged line formed by 14th Street, the Bowery, Canal Street, and the Brooklyn Bridge, and includes the West Village, Soho, Tribeca, Battery Park City, the Financial District, Greenwich South, the Civic Center, and the South Street Seaport.)
The analysis, “NYC True Cost of Living: Overlooked and Undercounted,” tabulates a bare-bones list of expenses incurred by residents of South Manhattan, using as examples families of various sizes. Consider a two-parent household with two school-age children. The report documents that such a family in this community would have to allocate each month $3,442 (for housing), $1,851 (for childcare), $1,969 (food), $753 (healthcare), $254 (transportation), and $998 (for miscellaneous expenses), along with $3,128 (for taxes) and $405 (for emergency savings).
This budget requires both parents to work full-time and earn at least $33.98 per hour, for a combined monthly wage of $11,963, or annual household earnings of $143,550. This is deemed the “true cost of living” for Lower Manhattan, and the proportion of those who earn less is termed the “income inadequacy rate.” The report finds that 28 percent of residents in CD1 and CD2 fall below this threshold, which in most cases means that they are either cutting corners on basic requirements, taking on debt, or depleting savings. In many cases, such households are likely resorting to a combination of all three responses. The total number of Lower Manhattan residents described by this tally is 16,242 adults and children.
Moreover, some of these costs will likely strike area residents as understated, particular those for housing and childcare. For example, the online real estate database RentHop indicates that the $3,442 monthly cost for housing cited in the report would pay for a studio apartment in the Financial District, which would likely be untenable for a family of four. A two-bedroom unit in the same neighborhood (still a tight squeeze for two adults and two children, but more realistic) costs $6,463 per month. The same family in Tribeca would be paying $7,295 each month, more than double the price cited in the report.
In this context, the actual proportion of local families who are unable to meet expenses in a sustainable manner may be much higher than 28 percent in CD1 and CD2. The report addresses this disparity by noting that among households that pay between 30 and 50 percent of their monthly income toward housing costs, the tally of those not meeting the local “true cost of living” baseline rises to 41 percent. For the subset who pay more than 50 percent of their income on housing, the rate of income inadequacy rises to 87 percent of local residents.
Another inflection point is the availability of health insurance coverage. Among those who have no coverage, 61 percent of Lower Manhattan residents earn below the true cost of living. For those who purchase their coverage directly from private insurers, the rate drops to 57 percent. And in the cohort lucky enough to have employer-provided health coverage, the rate falls to 22 percent.