Broken Clouds 41° Good Evening
Broken Clouds 41° Good Evening

Top earners on LI make 6 times more than bottom, study says

William C. Dudley, president of the Federal Reserve

William C. Dudley, president of the Federal Reserve Bank of New York, speaks to journalists on Thursday, Aug. 10, 2017, in Manhattan. Photo Credit: Newsday / James T. Madore

Long Island workers near the top of the pay scale earn six times more than those near the bottom, according to a study of wage inequality released Thursday.

The Federal Reserve Bank of New York found that the 2015 earnings of full-time employees in the 90th percentile — meaning they earn more than 90 percent of the population — were 6.1 times higher than the earnings of those in the 10th percentile.

The ratio in Nassau County was slightly higher, 6.3 times, and in Suffolk County, 5.7 times.

On the Island, the 90th percentile is defined as 2015 individual wages of about $140,000; the 10th percentile is about $23,000, according to the most recent available data from the U.S. Census Bureau used in the study.

The Island’s wage gap is narrower than the gap for the metropolitan area, which is seven times, said Jaison R. Abel, a bank economist and research officer. The metro area encompasses New York City, its northern suburbs, Long Island and northern New Jersey.

Abel said the metro area data are a better overall reflection of the local labor market because of commuting patterns.

The metro area is the eighth most unequal in the country, tailing Fairfield-Bridgeport Connecticut and San Francisco, he said.

Nationwide, the 2015 individual wages of those in the 90th percentile, about $105,000, are 5.3 times those in the 10th percentile, about $20,000.

“Since the early 1980s, wages have increased more rapidly for workers toward the top of the income distribution than for the median worker, and much more rapidly than for workers toward the bottom of the distribution,” New York Fed President William C. Dudley told reporters Thursday at the bank’s headquarters in lower Manhattan.

He said this wage inequality is driven primarily by technology, which puts a premium on highly skilled workers, and by globalization, including free trade agreements and immigration, that increase competition. Both factors have fueled the rise of information systems, health care and professional services while manufacturing has shrunk.

Dudley said the decline of union membership in the private sector and the failure of the minimum wage to keep up with inflation haven’t contributed significantly to wage inequality.

In the past 35 years, the wage gap has increased more in the metropolitan area than nationwide.

The New York Fed found that wages of the metro area’s 90th percentile were 4.3 times higher than the 10th percentile in 1980, compared with seven times higher in 2015. Nationwide, the ratio was 4.1 times in 1980 and 5.3 times in 2015. A similar comparison for Long Island wasn’t available.

Dudley said wage inequality is an issue that needs to be addressed though he acknowledged there are no quick remedies. He suggested that education at all stages of life is important.

“We need to look for ways to provide high-quality education regardless of where people live,” Dudley said, adding property taxes shouldn’t be the primary funding source for elementary and secondary schools.

In addition, he said, “We ought to step up efforts to help workers build skills necessary to adapt to change” in the workplace.

Wage inequality

Difference between the 2015 individual wages of full-time employees in the 90th percentile — those who earn more than 90 percent of the population — and those in the 10th percentile:

  • 8.7 times — Largest gap (Fairfield-Bridgeport, Connecticut)
  • 7 times — New York metro area (including LI and northern New Jersey)
  • 6.1 times — Long Island
  • 5.3 times — United States
  • 3.9 times — Smallest gap (Johnstown, Pennsylvania)

SOURCE: Federal Reserve Bank of New York

More news