The Paradox of Coexistence: One City, Many Economies

The Paradox of Coexistence: One City, Many Economies

At 9:30:00 a.m. Eastern Time on a Tuesday in October, a brass bell rings inside the neoclassical trading floor at 11 Wall Street, and the New York Stock Exchange begins its day. Traders in colored jackets shout, screens flash green and red, and within minutes tens of billions of dollars in equity value will change hands. Six miles to the north, in a windowless back kitchen in the South Bronx, a line cook finishes the breakfast shift at a Dominican diner, his hands still warm from the griddle; he is paid in cash, has no health benefits, and will leave for a second job at a catering hall before the lunch rush. Eleven miles to the northeast, in a one-room studio in Jackson Heights, a Bangladeshi seamstress irons a sari she will sell that afternoon at the open-air stall her family operates on 73rd Place, where dozens of languages will be spoken within a single block before sunset.

These three scenes do not occur in different cities or different countries. They occur on the same morning, within the same municipal boundary, governed by the same mayor, the same city council, and the same housing court. They are part of the same urban economy, yet they obey almost entirely different rules. The financial trader earns an order of magnitude more per hour than the line cook, but he could not function without the line cook's labor to prepare his dinner and clean his office tower. The seamstress in Jackson Heights sells to customers whose median household income is a small fraction of the trader's annual bonus, but her commercial rent is also a small fraction of the rent paid by a hedge fund on Park Avenue, which is precisely why she can stay in business at all. Each economic world depends on the others, yet they remain stubbornly distinct in wages, prices, technologies, and demography.

This book begins with a question that this single morning makes unavoidable. How can radically different economies coexist within a single city? Why does the coexistence persist rather than collapse into uniformity? What tools does economics possess to explain the persistence of such heterogeneity? These are the questions the opening chapter frames, the questions the rest of the book will answer.

A Single Day in Eight Acts

Before the day begins at the opening bell, it has already been running for hours in the outer boroughs. Consider what is happening at 6:30 a.m. in the Hunts Point section of the Bronx. The nation's largest wholesale food market, situated on 329 acres along the Bronx River, is in full operation. More than 6,000 workers in the Hunts Point Terminal Market unload, sort, and redistribute approximately 2.5 billion pounds of food per year, supplying more than 22 million people in the region. These workers arrive on jitneys from Washington Heights, on commuter vans from the Lower East Side, on the 6 train from Brownsville. Their median wage is roughly $35,000 a year. Their employers, the wholesalers and truckers, operate on margins so thin that a one-day delay at a checkpoint can erase an entire week's profit. This is one New York economy.

At 9:30 a.m. in Lower Manhattan, a different economy begins. The opening bell at the NYSE triggers a global cascade: orders flow from Tokyo and London, algorithms adjust positions, market makers in Jersey City and Stamford update their books, and within the first five minutes the value of trades executed on the floor exceeds $1 billion. The median compensation for employees in the financial services sector in New York City is approximately $200,000 a year, more than four times the citywide median wage across all sectors. The lawyers, accountants, compliance officers, and software engineers who surround the traders earn multiples of the city's overall median. The buildings they occupy are the tallest and most expensive in the city. The lunch they eat, served by workers from the Bronx and Jamaica, costs less than the bottle of water on their desks.

At 11:00 a.m. in Chelsea, the third economy appears. A gallery on West 24th Street opens an exhibition of a young painter. The visitors are collectors, curators, art advisors, and a few journalists. Works priced at $20,000 and $200,000 hang on freshly painted walls. The gallery itself pays rent of roughly $80 to $150 per square foot per year, an order of magnitude higher than the rent of the workshop where the painter produced the canvases, located in a former factory in Bushwick. The painter, who has a studio she shares with two other artists in Brooklyn, pays $4 per square foot per month for unfinished space she has converted with drywall and salvaged fixtures. Her income, when she sells a piece, is uneven and unpredictable, but on a good year she clears more than the line cook earns in five. The gallerist, meanwhile, takes a 50 percent commission and survives on a thin portfolio of relationships with collectors, often subsidizing losses on emerging artists with gains on established names.

At 1:00 p.m. on 73rd Place in Jackson Heights, the immigrant economy is in full swing. Sidewalks overflow with fruit vendors, sari sellers, money-transfer agents, and small restaurants offering biryani, tacos, and ceviche within the same fifty-foot stretch. The dollar amounts transacted per square foot are tiny by Wall Street standards, perhaps a few hundred dollars per day, but the transaction density is extraordinary. The block functions as a marketplace whose existence cannot be explained by high-rent equilibrium models, because the rents it would need to pay in a competitive market would make the marginal vendor unprofitable. It persists because the vendors occupy storefronts whose formal zoning allows residential use, and the formal lease is often secondary to a cash sublease from an absentee landlord. The economy is informal in the sense that it operates partly outside the formal regulatory apparatus, but it is dense, networked, and intensely productive.

At 3:00 p.m. in Sunset Park, Brooklyn, another version of the immigrant economy is at work indoors. The garment district that once dominated Midtown has migrated south and west, and Sunset Park, with its concentration of Chinese and Latino workers, has become a major node. Approximately 14,000 people work in garment manufacturing in the five boroughs, more than 90 percent of them foreign-born. Contractors operate out of fourth-floor walk-ups with no freight elevator. The federal minimum wage sets a floor for some, but a substantial share of workers are paid by the piece, and the hourly rate for skilled tasks such as pattern-making may be only $12 to $15. The output of these workshops feeds a fast-fashion supply chain whose end customers shop at H&M, Zara, and Shein. The wage differential between Sunset Park and the high-end fashion houses along Madison Avenue, which use the same building stock but employ designers and pattern-makers at three to ten times the wage, is one of the most dramatic in the city.

At 5:00 p.m. in Brownsville, Brooklyn, a community meeting convenes in the basement of a public housing development. Approximately 41 percent of Brownsville's residents live below the federal poverty line, and the area has historically suffered from high rates of unemployment, incarceration, and asthma. The meeting addresses the announced rezoning of a nearby parcel. Residents worry that new construction will raise rents and accelerate displacement; advocates argue that without new construction the neighborhood will remain starved of capital. The discussion involves the city planning department, three nonprofit housing organizations, a faith leader, and a retired schoolteacher who has lived in the development since 1972. None of them disputes that the neighborhood is economically distressed. The question is what kind of intervention, if any, will shift the trajectory. This is the political face of urban economics, and it operates on a different register than either Wall Street or t