New York City is facing a political and economic moment defined by a basic contradiction. It is one of the richest local economies in the United States, but gains from that wealth are not broadly shared. Affordability is now the central issue in the city’s political economy.
Mohamed Obaidy, Ph.D., associate director and economist at CNYCA, examines a distinct dimension of inequality: the distribution of income between labor and capital. While wage inequality describes how labor income is distributed among workers, functional income distribution examines how economic output is divided between compensation to workers (labor) and compensation to business owners (capital). This approach can reveal whether labor, as a collective unit, receives a growing or shrinking share of the economic output they help produce.
Taking this approach, the report offers several startling findings:
The report concludes with recommendations to address functional income inequality in New York City. Policymakers could strengthen New York workers’ rights and bargaining power, while also examining what and how income is taxed to best capture where capital income is generated in the economy today.
Mohamed Obaidy, Ph.D.
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