Plummeting Income Shaves Household Cash

I guess the article says we're all broke, but you've never know it here in Manhattan where the price of everything continues to climb and everything is packed, including restaurants, theater, museums, stores, etc.

every noticed all of the recently vacant store fronts in mid-town?

"The number of American households that made money from rent, interest or dividends fell by one-third to 24.2 percent in 2010, including residents of counties that encompass New York City and San Francisco."

with prices going up, I wonder how all those restaurants, theaters, museums, stores,etc continue to be packed with incomes down?

Yes Brooks, interestingly, "all those those restaurants, theaters, museums, stores,etc continue to be packed with incomes down". Just try to get a reservation at the latest greatest restaurant or tickets to The Book of Mormon. NY is amazing, which is why IMHO prices here have not "plummeted" and will not do so going forward.

"Just try to get a reservation at the latest greatest restaurant or tickets to The Book of Mormon. NY is amazing, which is why IMHO prices here have not "plummeted" and will not do so going forward."

Trying to extrapolate the general trend from the outliers is just silly. You're roughly making the argument that since Albert Pujols is about to get a big raise, therefore everyone in St. Louis must be doing pretty well, too. Even if there's limited cash to go around, something that is "the best" that has limited supply and relatively fixed prices (Book of Mormon does not auction off their tickets, even though they could make more money in the short term by doing) is going to have excess demand. If a year ago 1000 people would have wanted the 50 seats each night at the hottest restaurant and this year it's only a 100 people, the restaurant still fills up every night, but this year there's only 50 people that are going to go eat somewhere else whereas last year there would be 950, so other businesses may be suffering while the hot one doesn't take notice at all.

I have to disagree that everything is doing well here. I never saw so many discounts everywhere. Groupon and the like are filling up spots that would otherwise be empty. Book of M has been doing tons of advertising where as there would be no need if things were good. Easy to find discounts to many shows these days and restaurants. I also see all the empty storefronts. So many it's scary. Everything isn't so rosy here unless you are wearing rose colored glasses and always see the glass half full.

RealEstateNY

Agreed. Pretty sure RealEstateNY is a broker trying to sell at these exorbitant prices or is long a lot of NYC RE , is long a lot of RE or is wearing those "rose colored glasses".

tourist help a lot too

"you've never know it here in Manhattan"

while i agree that it's basically perverse to be a constant naysayer, there seems to be a sequential disarray in this sentiment. if manhattan real estate has remained strong it is either because 1) for "local" reasons, being the financial center of what is for like the next 5 minutes still the world's largest economy or 2) "foreign" reasons being an attractive place for foreigners and out of towners to keep a pad.

1) people can pass the blame for the credit and housing bubbles back and forth betweem the "wall steet" that made it possible, and "main street" that made it actual, but the 2 streets need eachother not just in order to prosper but to even exist. you can't possible say, and mean it, that the unemployment and just general state of broke-ness across the country has no consequence on manhattan. without the rest of the country, wall street is just a bunch of geeks playing battleship and monopoly in their best dungeons and dragons costumes. unless it is essintially fused to real material things on the ground, it's just a game, it's not real.

2) new york is a fabulous town that holds a very special place in people's imagination, there is no question about this. but new york only became the place to be in that fabulous way during and after world war 2, when the fancy class who would have normally hung out in paris fled here. there was some influx of fancy titled types and "white" russians after the russian revolution and civil war that no one really mentions anymore and they contributed greatly to establishing and promoting new york as a cultural center. but new york was no one's first choice until paris was occupied by the germans. and many of the fab refugees turned right around and went back to europe as soon as the smoke cleared. what actually cemented new york's place as a cultural powerhouse was jazz. jazz music and culture is what made new york unique on the world stage and absolutely the place to be for anyone who wanted to be cool. so if you ask yourself, how many of these or analogous factors are in place today? that's certainly debatable, but to insist that new york was, is, and always will be the place to be is naive and a little bit ignorant. the world is a big place.

Lucille, excellent point.

As someone who lives -- at least peripherally -- in the literary universe, I can tell you that during the Roaring 20s and into the '30s, the one and only place for writers to earn their literary stripes was Paris. You just weren't serious about being a writer if you didn't do at least a brief tour of duty in Paris. It was, as you said, World War Two that changed all of that, and the Beat Generation and subsequent "occupation" of bohemians in some of the city's worst neighborhoods (at the time, of course) that cemented New York as the new "place to be" for writers and artists to become writers and artists.

thanks matt. what was also unique to that time is who the new yorkers of that time were, and that is the first american generation of the massive influx of european immigrants. the artists/writers/thinker/dilettantes of that time we creating the new american culture. they brought to it various shades of expression influenced by their home cultures and that was undeniable, but what they were making, together, was intrinsically american and they were proud to be a part of it. the freshness and perspective of their art was new and esciting and so unlike what was happening in europe (for which we won't judge europe too harshly as the continent had been recently incinerated in a horrific war). being locals and not imports, they legitimized new york's art scene and gave it a look and voice. no product can coast on it's brand indefinitely, and a cultural center is only as attractive as the culture it puts out and im not sure artsy kids today are as enthusiastic about being "american" artists and defining what that means. but we digress.

As most things, commerce puts you on the map.
New York's success was really largely due to it having been the shmata capital of the world. Though that business was destroyed by Asia, Finance replaced what was lost with the clothing industry.

Without a powerhouse industry on a global level for this city, you will see it crumble.

no way. women who could afford to bought french clothes, american manufacturers copied french design adding little of their own. this guy is accepted as being the first american heavy weight, but he was very influenced by what was coming out of france.

http://en.wikipedia.org/wiki/Mainbocher

there was no such thing as "american" look until this lady made one up

http://en.wikipedia.org/wiki/Claire_McCardell

>there was no such thing as "american" look until this lady made one up

I dont ever recall a moustache en vogue for ladies.

What the hell is this "recession" people speak of? Everyone I know is making money hand over fist. Friends are buying massive lofts, or renting them at $10,0000/mo. Friends are starting companies and have more work than they can possible handle. Personally, my salary has never been higher and has hit new high-water marks every year since 2005. And I don't even give a shit about making money. People in NYC are trading in weekend BMW's with 24k miles on the clock, barely broken in. The money is everywhere.

Take a walk through Bloomingdale's and Saks this week, both are mobbed and the prices are outrageous. All this talk of a bad economy doesn't seem to translate to real life. Every plane, cruise ship, hotel, restaurant, etc seem to be fully booked. And no I'm not in real estate, just a long time Manhattan resident.

Thankfully the Occupy crap didn't impact much tourism

Now Occupy is doing performance art: http://occupywallst.org/forum/ninjas-wall-street/

Do they find it ironic that to disseminate their propoganda, they use video, which, since bandwidth and hosting isn't free, is supported by video and pay per click advertising?
Occupy YouTube

The story says incomes from investments are down over 30%.

So let me get this straight. Prices up and incomes down are a good thing?

Thanks, Matt and Lucille, for those insights on the 20s and 30s. I had never heard before that New York and Paris had vibrant literary and cultural scenes then. I wonder if there was also a decadent cabaret community in Weimar Berlin?

"Take a walk through Bloomingdale's and Saks this week, both are mobbed and the prices are outrageous. All this talk of a bad economy doesn't seem to translate to real life."

Here's some insight from the rest of the world:

http://www.nytimes.com/2011/11/24/business/black-friday-sales-show-divide-between-shoppers.html

"What the hell is this "recession" people speak of? Everyone I know is making money hand over fist. Friends are buying massive lofts, or renting them at $10,0000/mo. Friends are starting companies and have more work than they can possible handle. Personally, my salary has never been higher and has hit new high-water marks every year since 2005. And I don't even give a shit about making money. People in NYC are trading in weekend BMW's with 24k miles on the clock, barely broken in. The money is everywhere."

Dealboy, let's do lunch.

I'm serious.

I'd love to meet "everyone you know" because it's certainly a better world than the one I'm living in now, because everyone *I* know is hanging on by their fingernails. Just this week, THREE friends of mine lost their jobs -- and they don't give a shit about making money, either, they just give a shit about paying the rent and buying food.

Seriously, do these friends of yours who are starting companies left and right need help? I know some people who are in some serious need.

Thanks in advance.

Dealboy's post is a perfect example of inductive reasoning, which is "commonly construed as a form of reasoning that makes generalizations based on individual instances."

MidtownerVirginEast is so good at looking up definitions in the dictionary. Wonder if he also does steno, dictation and filing?

midtownyeastinfection does "witty", oblivious to The Point shooting swiftly over his head. how out of character.

get all your household cash in fifties...
Grant never needs a shave.

NYCMatt, can your friends write Android apps? I have one friend who is hiring there.

Maybe if you're friends gave a shit about making money, they would be employed. I mean, if you don't give a shit about making money, how hard are you going to apply yourself at work? They sound like a bunch of clock punchers.

I'll give you this, if you're unemployed, yes you're going to have problems. But, for people who are working, there is no recession. It's really all or nothing, with a little bit of variance from year to year.

A quick search on streeteasy would reveal that NYCMatt has been talking for over 2 years about his unemployed friends. Sometimes he mentions them in a way that puts him in a benevolent light when he says he has 2 people sleeping on couches in his apartment. Other times he talks about how their credit scores are irrelevant. Yet other times, he will just mention a recent layoff or 3. For over 2 years, he knows someone this past week or month who was laid off and is "hanging on by their fingernails."

And then, interestingly, in another breath on another thread, on another what he thinks is an unrelated topic, he talks about his proud union rules that become punitive for employers with treble penalty overtime and the like.

"NYCMatt, can your friends write Android apps? I have one friend who is hiring there."

I'll ask around.

***
"Maybe if you're friends gave a shit about making money, they would be employed. I mean, if you don't give a shit about making money, how hard are you going to apply yourself at work? They sound like a bunch of clock punchers."

That's a rather insulting and disingenuous thing to say. You know very well that I was talking about not giving a shit about making *millions* of dollars. Of COURSE they want to make money. Duh.

***
"I'll give you this, if you're unemployed, yes you're going to have problems. But, for people who are working, there is no recession."

Wrong. Nearly everybody *I* know who's working is keenly aware that they can be without a job in the blink of an eye.

Db - I thought your original post was meant to be sarcastic. Clearly not. Your viewpoint is seemingly tethered to an extremely narrow population segment. At some level I think you must realize this. Also, I think you must be quite young - enjoy these years - reality will eventually fly into your airspace, and consequently, compassion.

"I'll give you this, if you're unemployed, yes you're going to have problems. But, for people who are working, there is no recession."

This is why the Occupy Wall Street has so much resonance--so many people who are doing well are so clueless about what's going on for most people.

Even for people that have jobs, real wages have been basically constant for decades. Unemployment is high, and nearly as many people can't get full time work even if they can get a job.

So yeah, for you and your friends, things are probably great. As for the rest of the country, the recession is still very real.

From the article
----------------------------------
http://www.nytimes.com/2011/11/24/business/black-friday-sales-show-divide-between-shoppers.html
Retail analysts are expecting a decent holiday season, with many estimating that sales will increase about 3 percent over last year, with contributions from shoppers across income levels. Yet the Friday after Thanksgiving, the kickoff to the highest-revenue weeks for stores, is expected to lay bare the increasingly parallel universes of retailing in America, the analysts said.
------------------------------------
and the response
---------------------
http://www.ritholtz.com/blog/2011/12/beware-the-retail-hype/

Savvy investors have learned to take these over-the-top declarations with a grain of salt

Prices in some products have risen — in some cases, substantially. The three most noteworthy are gasoline (up 15 percent), food (5 percent) and cotton (a whopping 230 percent).

The price pressures on these — all consumer staples — are reflected in the total retail sales data. When we look at total sales, we get a sense of how much the nation is spending — but, because of inflation, not how many goods people bought. Based on that data, we can conclude that a decent amount of the total dollar gains in retail sales are not improvements, but rather price inflation.

Let’s start with this whopper from an utterly breathless statement from the National Retail Federation (NRF):

“Traffic and spending were up both online and in stores, reaching historic highs. According to the survey, a record 226 million shoppers visited stores and Web sites over Black Friday weekend, up from 212 million last year. Digging deep into their holiday budgets, the average holiday shopper spent $398.62 this weekend, up from $365.34 last year. Total spending reached an estimated $52.4 billion.”

That would suggest that retail sales climbed 16 percent. They did not. Surveys where people forecast their future spending are pretty much worthless. They are far too unreliable to base sales forecasts upon.

When you conduct a survey, you are asking people to say what they plan to do. Hence, what you learn is what they believe about their future behavior. We are an unreliable bunch. If you want to learn how much people actually spent, you need to measure that at the cash register.

History has shown again and again that there is little correlation between our expectations and our actions. Yes, we want to save more for retirement, lose weight, get into shape. We say so each January. And by February, you will discover the yawning chasm between intentions and action.

still sounds to me like prices are up and incomes are down. I am still trying to figure out how this is good?

"Even for people that have jobs, real wages have been basically constant for decades. Unemployment is high, and nearly as many people can't get full time work even if they can get a job."

I can't speak for other industries, but I can tell you from my first-hand experience in the media, this is certainly the case (despite some crazy survey I saw a couple weeks ago that said that salaries in media were "skyrocketing" -- HUH?? Maybe for Diane and Katie, but not for everyone else!); when I moved to New York City in 1995, the salary range in broadcast news was thus:

Tier 1: $22K-26K - desk assistants, production assistants ("DAs" and "PAs")

Tier 2: $26K - 42K - associate producers ("APs")

Tier 3: $42K - 85K - producers

Tier 4: $85K - $125K - writers

Tier 5: $85K - $500K - senior producers (MOST, however, in the $125K range)

Tier 6: $500K+ - executive producers (most in the seven figures, but keep in mind there are fewer than about two dozen of these positions in the entire industry)

(I'm leaving out the on-air talent since that's a whole other ballgame, and they're such a tiny sliver that populates the newsrooms.)

Now, in 1995, the numbers pretty much broke down thusly:

Tier 1: Desk Assistants/Production Assistants -- 15%

Tier 2: Associate Producers -- 15%

Tier 3: Producers -- 40%

Tier 4: Writers -- 15%

Tier 5: Senior Producers -- 14%

Tier 6: Executive Producers -- <1%

As you can see, it was a near-perfect bell curve; you had the vast majority of journalists in newsrooms in Tier 3, pretty much in the prime of their careers; 30-45 years old, with a solid 10-20 years of experience. At the bottom you had entry-level desk assistants who answered phones, Xeroxed and distributed scripts, ran errands, etc. Producers were given full responsibility for their stories/segments (in the corporate world they'd be called "project managers"), and delegated many responsibilities to associate producers. Writers put it all together in the final script. Senior producers oversaw the writers and producers, and were responsible for the "bigger picture" long-term view of the broadcasts, as well as signing off on all the stories and segments. And of course executive producers oversaw the entire operation. But the real engine of the newsroom was the "producer".

That's who was working in network television and radio newsrooms in New York City in 1995, and what they were earning. Back in 1995, you could rent a studio apartment pretty much anywhere south of 96th Street for $1000/month -- or considerably less if you lucked into a rent-stabilized lease (which were still relatively aplenty, if you were OK with apartments that were a bit ragged around the edges). Or you could save money by going into Brooklyn and living in either Brooklyn Heights or Park Slope, where a studio there would run you $500/month. Or, if you were still OK with spending $1000 (or even $1500), the trade-off for commuting over the East River gave you one (or maybe even two) bedrooms. REAL bedrooms. And if you REALLY wanted to save money, you could look outside those two neighborhoods in Brooklyn (not TOO far, mind you, since much of the borough was still very sketchy, to say the least), you could find a nice one-bedroom in, say, Dyker Heights, for the unbelievable price of $350/month.

That's what your $70K or so bought you in 1995.

Fast-forward to 2011, and a major shift in the newsroom breakdown:

Tier 1: $22K- $26K - Desk Assistants and Production Assistants -- 10%

Tier 2: $25K - 60K -- Associate Producers -- 55%

Tier 3: $60K - 100K -- Producers -- 20%

Tier 4: $85K - 125K -- writers -- 5%

Tier 5: $85K - 500K -- senior producers -- 5%

Tier 6: $500K + -- executive producers -- <1%

Salaries essentially have not budged, even though on the surface it looks like they have. But there are now fewer true desk assistants; many have been promoted into "associate producer" status -- with only a very marginal boost in pay. But here's where things really change: rather than working as an associate producer for a few years and being boosted into the "full" producer ranks -- they are now languishing as associate producers pretty much indefinitely. I know some APs who've been working as APs for more than ten years, still making under $50K.

Meanwhile, slowly the networks have been shedding writers and producers; the latest round of layoffs affected that crucial middle layer the most. So now you have many inexperienced (and cheap) APs doing the jobs of full producers, and as a result, the remaining senior producers having to take a more active hand in the actual *producing* of individual stories and segments -- while their more administrative tasks get pushed off to the side (scheduling, reviews, etc.). All these senior producers still have their offices, but good luck trying to find them there, as most of the time they've now got their sleeves rolled up and they're out in the newsroom or in editing, doing the jobs of what the producers would have been doing, while the APs essentially take a back seat because they still don't really know how to *produce*.

So ... more APs working their old salaries doing both their jobs and the jobs of what would have been their superiors. And since they're not really seasoned enough to do those producing jobs, what's left of the senior producer ranks have to step in and finish the job.

More work all around. And everyone's getting paid essentially the same.

And they're relying even more on "freelancers" who get paid a flat day rate -- slightly less than what they would have been paid as full-time staffers -- but enough to keep them coming back for more shifts. Minus, of course, health insurance.

And housing costs are now roughly TRIPLE what they were in 1995. Food is about double. Utilities have skyrocketed. As have clothing.

But hey, as long as they're working, there's "no" recession for them, right?

Oops ... a whole chunk of my response got cut off. Fuck I should have "saved".

The bottom line is this: MOST of the newsrooms are now populated by "associate producers" making less than $50K. Networks have largely shed the more expensive "full" producers, writers, and senior producers.

And everyone remaining is still making 1995 salaries.

And welcome the rise of the "freelancer" -- who's paid just UNDER what they would have made as a full staffer -- but just enough to keep them desperate enough to keep coming back for more shifts. Minus health insurance, of course.

And yet, since 1995, housing costs in this city have roughly TRIPLED. As have food, clothing, and utilities.

But hey, as long as they're working, there's no recession for them, right?

As to the OP's excellent use of statistical samples:

Pauline Kael on the election in '72 said "How could Nixon have won? Nobody I know voted for him!"

>This is why the Occupy Wall Street has so much resonance--

That's a ridiculous overstatement of the impact of Occupy Wall Street. The disproportionate attention given to them is merely because they are a nuissance - they take over public places that they feel entitled to, they are violent, in the way, disruptive, and agitate for arrest which they then express shock over.

>The bottom line is this: MOST of the newsrooms are now populated by "associate producers" making less than $50K. Networks have largely shed the more expensive "full" producers, writers, and senior producers.

That's a load of hogwash. The reason that the traditional media industry's wages have been stagnant is because the industry has been declining while new media has increased significantly.

Television dollars have moved to the internet where audiences can be better segmented and the results can be better measured.

Reporters for the local newspaper were paid by classified advertising dollars. Now that those advertising dollars moved to online classifieds (some free like craigslist) and search.

The associate producers or former full producers for whom Matt has his hat out, are in a declining industry, and have been since the mid-1990s.

So if you look at this recession that supposedly impacts Matt's precious television media industry, the reasons are endemic to that industry. But, in typical NYCMatt fashion, someone else is to blame because they aren't stuck in the mud 20-50 years ago, and he should still get treble penalty overtime.

"That's a load of hogwash. The reason that the traditional media industry's wages have been stagnant is because the industry has been declining while new media has increased significantly."

Really. Is that YOUR first-hand experience from inside the industry?

***
Television dollars have moved to the internet where audiences can be better segmented and the results can be better measured."

COMPLETELY WRONG.

Internet advertising is virtually impossible to meter, and most major media outlets are still allocating the least amount of their recourses in their "dot-com" divisions as a direct result.

***
"Reporters for the local newspaper were paid by classified advertising dollars. Now that those advertising dollars moved to online classifieds (some free like craigslist) and search."

I'm not talking about PRINT media.

***
"The associate producers or former full producers for whom Matt has his hat out, are in a declining industry, and have been since the mid-1990s."

Wrong again.

The world of broadcasting has, if anything, expanded its reach into online, rather than online encroaching into broadcast.

Who do you think is "producing" all that online video content? HELLO! Television producers. For a fraction of what they used to make when they produced for real TV.

I doubt desk assistants, associate producers and writers were ever big buyers of Manhattan real estate. The people who made money were always the people who owned the shows , the actors, and the anchors. It is important to recognize the advertising dollars that fund television are now spread out across cable and the internet and we're also back to a phenomenon first seen in the 1950's where the advertisers help co-produce and create the shows(E.G. HGTV).

and we haven't even broached the topic of new media, such as Facebook which is expanding in NY, alongside Google, Linkedin, etc.

So where did the idea that broadcast media was a major source of real estate demand?

This is amusing, I'm being schooled by a guy who is his own best evidence of the decline of the traditional media industry.

Internet advertising is impossible to meter? Really?
Major media outlets still have "'dot com' divisions" that are separate?

>Really. Is that YOUR first-hand experience from inside the industry?
No, I'm not inside the traditional media industry. That's why I'm not stuck lamenting pay scales from 1995.

>and we haven't even broached the topic of new media, such as Facebook which is expanding in NY, alongside Google, Linkedin, etc.

What do you think I had just said that NYCMatt responded to?

"I doubt desk assistants, associate producers and writers were ever big buyers of Manhattan real estate. ... So where did the idea that broadcast media was a major source of real estate demand?"

Um, but they still RENTED.

***
"Internet advertising is impossible to meter? Really? Major media outlets still have "'dot com' divisions" that are separate?"

Um, YES. That's pretty much how it works. I can give you a tour of both CBS and ABC if you'd like.

***
"and we haven't even broached the topic of new media, such as Facebook which is expanding in NY, alongside Google, Linkedin, etc."

LOL. And how much do you think these "new media" jobs pay? Barely enough to get one's own RENTAL apartment deep into Brooklyn or Queens.

"New Media" jobs largely pay in the $40-60,000 range. Most of these jobs are going to 20-30-somethings.

That salary would have been quite decent in 1995.

Today, fuhgettaboutit.

That's the point I'm trying to make. Media salaries have been stagnant for quite some time -- despite putting "new" in the title.

Um, but they still RENTED.

still do with room mates and/or mom and dad helping, just like the rest of Manhattan.
and like most industries, if they make it to the next ladder the income rises.

Yes, median salaries in the traditional media industry have remained flat, whereas the industry has been declining in favor of other industries. Sounds not too bad after all.

>I can give you a tour of both CBS and ABC if you'd like.
So exciting, I can hardly wait to see Walter Cronkite's office and Peter Jenning's office. Maybe you can take me to the parking lot too where I can see where they park their Oldsmobiles or their Cadillac Fleetwoods.

This article does not specify which industry's income is declining. It's investment income that is down over 30%. That doe could have been made in any industry, so I don't understand what you are fussing about?

>so I don't understand what you are fussing about?

Who is "you"?

do you ever have anything positive to say?

Thread title: Plummeting Income Shaves Household Cash

If Incomes were rising, the brokers saying RE was going up would most likely be right. There would be no need to post. Just trying to add some balance to this site.

but real estate went up everywhere over the last 10 years regardless of income, which has not. so even if incomes do go up, which of course any normal person wants, that still wouldn't translate to rising housing prices. it was a coordinated effort across several industries that made housing prices go up. if people bought based on their income there would not have ever been a bubble in the first place.

ANd incomes going down definitely will not translate to higher real estate prices..

The Unregulated mortgage market was the reason we had a RE Bubble! Not incomes.