The City of New York's economic landscape has become increasingly polarized, according to a recent analysis by the Center for New York City Affairs (CNYCA). Mohamed Obaidy, associate director of CNYCA's economic policy team, noted that from 2024 to 2025, income inequality deepened even as overall worker productivity improved. Mayor Zohran Mamdani's campaign has highlighted concerns about living costs and the disparity between those benefiting from the city's economic growth and those who are not.
Read More
The latest data indicates that, aside from the top 20 percent of wage earners, all other wage groups experienced declines in hourly wage growth compared to their performance from 2019 to 2024. High-wage industries exhibited the most substantial growth, while wages for the bottom 80 percent have stagnated.
Between 2024 and 2025, real hourly wages for the top 20 percent increased by 5.1 percent, whereas the bottom 20 percent saw only a 0.6 percent increase. The bottom wage earners averaged $14.21 per hour, compared to $102.21 for those in the top category. The middle of the distribution fared poorly, with lower-middle-wage earners seeing a decline in real wages by 1.3 percent and upper-middle-wage earners by 1.2 percent. In fact, earnings for those in the middle tier, averaging $28.11 per hour, stagnated entirely during this period.
Job growth trends in New York City were also examined. While the data showed less polarization in job creation compared to wage growth, upper-middle-wage industries added 5,678 jobs at a growth rate of 1.1 percent, while high-wage industries only added 3,631 jobs, growing by a mere 0.3 percent. Conversely, lower-middle-wage industries experienced a loss of 2,592 jobs.
High-wage industries are distinctly capturing the gains; finance, management, and information sectors are where most high-wage job growth occurs. This raises concerns about the future impact of Artificial Intelligence on wages and employment. While AI could enhance productivity, the critical question remains as to who will benefit from these gains.
Despite the city's growth in real Gross Domestic Product (GDP) remaining steady around 2 percent since 2021, the disparity between productivity gains and wage growth continues to widen. Between 2001 and 2024, hourly productivity in New York City increased by 36.3 percent, yet real hourly wages for most workers remained stagnant, leading to a pronounced wage-productivity gap.
Economists suggest that factors such as globalization and technological change contribute to this gap, but other social factors, including weak labor laws and declining union power, also play significant roles. The stagnant minimum wage from 2019 to 2024 has particularly impacted wage growth for lower- and middle-income workers.
The implications of rising inequality are profound, affecting not only individual households but broader economic growth as well. Stagnating wages reduce consumers' spending ability, which can stifle demand and weaken the tax base, creating fiscal pressures. This highlights a pressing challenge for New York City's administration: ensuring that economic growth is shared equitably, particularly as the potential benefits of AI and increased productivity loom.