How not to wreck the Western New York economy

The numbers are in from the recent unpleasantness known as the Great Recession, and they are as follows: The richest two percent of people who filed tax returns in Erie County in 2010 made over $200,000. The next eight percent made over $100,000 but less than $200,000; about 20 percent made between $50,000 and $100,000, and the rest—about 70 percent of us—made under $50,000. The next time a developer, a law firm, or, say, the owner of a professional sports franchise asks for a taxpayer handout, remember: Though we have a small upper-middle class, and just over 8,000 high-income households, almost exactly seven out of 10 households here report less income than the household median for New York State. And more than half of all households here—223,000 out of around 413,000 that filed tax returns—had incomes of $30,000 or below.

These numbers come from the Internal Revenue Service. They’re always a long time coming; state-by-state and county-by-county information about the tax returns filed in 2013 won’t be available until three years from now. Fresher, localized data sooner would aid the generally intelligent planning ethos that the Regional Economic Development Council has loosed in our land, but the trends from the first decade of the 21st century are obvious from the national numbers, the ones that some economists out at Berkeley in California peek at: A relatively tiny group of Americans has a very large and growing share of all the income that all households bring in, and that pattern is not confined to Manhattan, Hollywood, Silicon Valley, and a few resort towns. It’s everywhere, even here in Buffalo.

If you filed a tax return on $200,000 or more in 2010, congratulations: You’re in top two percent, a group of 8,500 households here that brought in almost 22 percent of all the income reported by 413,000. Just 1,700 of that elite group reported more than half of that total. Slice it this way: Less than one-half of one percent of the households in Erie County took in almost 12 percent of all the income that came here in 2010. Or this way: Two percent of the people here brought in more income than all the Erie County households that reported incomes of $40,000 or less, which is well over half of the county.

Bloodless numbers, political numbers

The new movie by former labor secretary Robert Reich, Inequality for All, explains much of the recent economic and social history of the United States in straighforward language, using real data from unimpeachable sources. Fewer people will see his movie than will click “like” on a Facebook video of a cute kitten.But since the crash of 2008, there is some halting, fleeting evidence—notably the re-election of Barack Obama—that Americans are generally more aware of income polarization than they were before.

Yet nobody here raised an eyebrow—not a single politician said a word—when the $6+ million pay package for the former CEO of a health insurance company was reported. Not even the unions whose members are being asked to pay higher premiums for their health insurance, or to accept smaller-than-inflation raises, made the connection—that they, and the rest of the low- and moderate-income health insurance rate-payers—were all chipping in to the pay package of an executive who cured no diseases, created no masterpieces, invented no technologies, nor saved a single life, but rather just rode the new wave of the zeitgeist.

Yes, even in greater Buffalo, whose central city and inner-ring suburbs boast unemployment, underemployment, and workforce-disengagement levels almost as high as those in Milwaukee, Detroit, and Cleveland, we have multi-million-dollar paydays for people other than sports stars. A regulated monopoly that sells energy to customers who literally have no alternative paid its CEO even more than the health-insurer paid its leader. An investor-owned bank here just doubled the pay package of its CEO—but at least the bank in question has to fight for its share of the markets it serves, and at least it’s not one of the banks that ex-Rolling Stone reporter Matt Taibbi calls “vampire squid” in Griftopia, his blistering account of what went wrong in 2008.

But imagine what would happen to the regional economy were the middle of the middle class here to take the hit that Carl Paladino, Chris Collins, and the rest of the union-bashing rantocracy here seek to deliver them.

Nine out of 10 households here report incomes of under $100,000, with over half that number reporting less than $30,000. The folks who bring in between $30,000 and $100,000 qualify, broadly, as the middle class. There are just under 150,000 of them. Without further research, it’s impossible to say how many of the two-county area’s 90,000 or so public-sector workers are Erie County residents whose earnings fall within that range, but one expects that most of them live here and earn somewhere in that range. There is no question that the public-sector workforce—teachers, college professors, public safety, public health, assorted parks and public works and environmental and postal workers—constitutes the bulk of the middle class here. Their pay gets spent here; most of their wages and salaries get spent rather than saved or invested; they and their families are full participants in the regional economy, both as taxpayers (especially sales and property tax payers) and as purchasers of local goods and services. Reducing their ability to participate in the regional economy—especially by cutting their pay by privatizing or outsourcing their jobs—would not guarantee even a very slight, very temporary property-tax cut to homeowners here, but would absolutely shift disposable income away from their hands, and thus reduce all-important aggregate demand here.

The question our economic development team here has to ask is this: Given the current distribution of income, which has been the set pattern for the last decade, what can be done to raise wages for the bottom half of households here, and stabilize if not grow the rest of the under-$100,000 households here? The news from the recession of 2010 is that the very well-off 10 percent stayed well-off, taking home a larger share of regional income than they did in previous years. The CEO wave crests on and on—but what will raise the rest of the boats?

The politicians need a little guidance here. The most articulate elected official here today is Carl Paladino, who would de-unionize 3,000 Buffalo Public School teachers, his preference being to replace them with lower-paid charter school teachers, but who has little to say about taxes or about the economy as a whole, except when he angrily snarls at anyone questioning his own taxpayer-subsidized developments.

Subsidies for the few, little for anyone else

The crisis of low incomes here grinds on. So does the crisis of those who will not show up in IRS statistics based on tax returns filed, as they are out of the workforce and won’t be filing with that particular government agency. With half the households here earning such low incomes, our public policy disconnections become more and more difficult to explain: big subsidies for office buildings when the same or fewer numbers of workers will be here to occupy them; big subsidies for the Detroit-based ownership of the National Football League franchise; no plans for expanded public transportation; and no change in plans for locating the worker-training and skills-enhancement centers where the low-income, disengaged would-be-workers are clustered—despite the new, refreshed centrality of the old regional center, the old crossroads, the “hub” for which a longtime Buffalo planner won a national award for restating.

One is tempted to mutter darkly that the lesson of history is that poverty can’t be avoided, ignored, or overlooked for very long, because inevitably, the wretched arise—but this is not actually true. The wretched Russians are allowing their nationalist juices to flow at the repatriation of the poor Tatars’ homeland in Crimea, which distracts them from their sorry, oligarch-run economy. Buffalo can be expected to stay distracted with its football and its never-ending promises of developer-led renaissance, as our own oligarchs make off with all that lovely boodle that keeps a-coming from Albany.

And soon enough, it’ll be spring, and the boomerangs will swing through again, and relatives and expats will swell the festival throngs, and some will come back to enjoy the real renaissance that happens here every spring and summer, thanks to unsubsidized gardeners, and to folks whose incomes aren’t high enough to buy suburban real estate, but who might just have the scratch to plant roots in the poor old hub.

Hope. It springs eternal, as it should.

Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His recent book, Borderland: Essays from the US-Canada Divide, is available at bookstores or at www.sunypress.edu.