Hipster haven's divided economyMarch 12, 2014: 9:26 AM ET
Brooklyn's economy is really heating up. But it's not all good news for the New York City borough now synonymous with coolness, hipsters and gentrification.
While some rapidly changing areas are driving much of the growth, poverty and unemployment remain high in the area as a whole, according to New York Fed President Bill Dudley.
When Dudley visited Brooklyn last week, he painted a picture of a Brooklyn success story. The job market there barely skipped a beat during the recession. Home prices are rising quickly. And demand for commercial office space is on fire.
Dudley attributes this strong growth in part to industrial neighborhoods transforming into residential and commercial neighborhoods. (He pointed to hipster bastions like DUMBO, Red Hook, Greenpoint, East Williamsburg, Gowanus and Bushwick, specifically).
But at the same time, this rapid transformation is failing to help all the borough's residents. Brooklyn has a higher poverty rate and unemployment rate than the state and national levels.
Behold, Brooklyn's tale of two economies in 6 charts:
1) A strong job market: Brooklyn's job market barely suffered in the recession, and since 2010, it has been growing nearly 3% a year. (That's three times faster than the national job market!)
Hiring at retailers, restaurants and bars has been particularly strong. (About 1 in 5 jobs in Brooklyn were in one of these industries as of 2012), but jobs in health care play an even larger role, making up about 33% of all jobs in the borough.
2) Real estate is hot: Home prices are up, and for businesses, it's now harder to find vacant office space in downtown Brooklyn than it is in Manhattan. (Downtown Brooklyn has a 4% vacancy rate for office space, whereas it's 12% in Manhattan, according to commercial real estate firm Newmark Grubb Knight Frank).
But that's where the good story ends. Like the broader U.S. economy, Brooklyn is also afflicted with a growing inequality story -- especially as rising home prices and rents make it harder for existing residents to afford living there.
3) Poverty remains high: About 23% of Brooklyn residents are living in poverty (as opposed to about 15% in New York state.)
4) Wages are flat and far below Manhattan: (Dudley didn't reference this stat, but we thought it was a key one.) Whereas the average person who works in Brooklyn makes about $40,000 a year, nearby Manhattan workers average more than twice that -- at $102,000 a year.
Manhattan's average wages are skewed in part by high Wall Street salaries, and some of those workers may take that money home to Brooklyn. But the immense gap between the two boroughs is still telling. Whereas wealthy Manhattan workers are moving to Brooklyn, driving up home prices and frequenting hip bars and restaurants, existing residents who work in those Brooklyn bars, restaurants and other businesses, earn far more modest wages.
Plus, salaries in both places have been relatively flat since 2007, once factoring in mild inflation.
5) Unemployment remains high: Whereas hiring for jobs in Brooklyn has picked up, unemployment for its residents is still high, at about 9% as opposed to 7% in New York state.
6) Brooklynites are behind on paying their debt: Debt per person has barely changed in recent years, with each Brooklyn resident holding an average $42,000 in debt. While that's slightly lower than the state and national averages, Brooklynites also have a far higher delinquency rate. They're more than 90 days late in paying off 12% of that debt.