On Friday, Alicia Velasquez and Julieta Rodriguez stood in line with hundreds of other parents at Fordham Plaza in the Bronx for an event sponsored by Fordham University and borough elected leaders so local children could pick up free backpacks and school supplies. Like so many in New York, these two mothers are caught in a financial vise, between rising prices and inadequate pay increases that have made getting by harder and harder.

“I have three kids and the food I buy every month doesn’t even last me the whole month,” said Velasquez, a 50-year-old mother of three whose husband works in building services.

Rodriguez agreed as she picked up supplies for her two sons. “This helps a lot,” she said.

The financial squeeze on low-income New Yorkers post-pandemic has become so severe that they are turning to credit card debt to pay for necessities. And they are so stretched that the number of households not able to make even the minimum monthly payments on their credit card debt is rising rapidly, especially in The Bronx.

Alicia Velasquez at Fordham Plaza for annual backpack giveaway. Credit: Alex Krales/THE CITY

“We have a clear picture that low-income households are relying on credit to be able to survive in New York,” said Lauren Melodia, an economist who is tracking the city’s economy at the Center for New York City Affairs.

New data released in the last two months has fleshed out this troubling picture.

Overall on a per capita basis, credit card debt has been increasing faster in New York City than the rest of the nation since early 2021 and jumped 11% so far this year compared with 2023, according to an analysis by City Comptroller Brad Lander, who earlier this summer announced he will run for mayor.

The percentage of credit card debt that has recently become delinquent has more than doubled since early 2021 and is now above 2.5% also increasing at a faster rate than the rest of the country.

 The rate for the Bronx is 4%, four times the rate in that borough in 2021.

If these trends continue, more New Yorkers will fall into severe financial distress, more will be forced to turn to safety net help like SNAP food benefits, and the economy will suffer as consumer spending declines.

The key reason for the squeeze on working families is that, unlike the rest of the country, wage increases in New York City have failed to keep pace with inflation, especially for lower-income workers.

A separate analysis from the city comptroller found that average hourly wages for New Yorkers adjusted for inflation have fallen from $46 in early 2021 to just over $42 in the first three months of the year.

Looking at a longer period of time, the Center for New York City Affairs found that wage growth adjusted for inflation for lower income New Yorkers has been a minuscule 0.2%. Middle income residents did slightly better at 0.6%. High income New Yorkers did the best with a 4% increase.

“Since coming out of the pandemic, wages have not kept pace with inflation,” said Lander. “With rising housing costs and inflation constrained wage growth, it’s no surprise debt and delinquencies are rising significantly.”

Compounding the broader economic trend, even as pandemic-era benefits that helped boost low-income New Yorkers came to an end, Albany hasn’t taken action on raising the minimum wage. 

The changing composition of the city’s jobs is a major problem as well. While Mayor Eric Adams constantly trumpets that the city is at a record number of jobs, all the gains in the last year have been in relatively low-paying health care jobs, especially for home health care, where usually part-time workers make an average of only $35,000. 

The city’s unemployment rate at 5.0% remains much higher than the national rate of 4.3%, primarily because retail and hospitality jobs have not rebounded to pre-pandemic levels. 

In addition, while low-income workers elsewhere in the country benefited from increases in the minimum wage, New York City’s required pay remained at $15 from 2018 until it was increased to $16 last Jan. 1. The stagnant minimum wage appears to be a major reason for the decline in inflation-adjusted wages.

Now while inflation has subsided here, it has fallen to only 4% compared with less than 3% elsewhere.

“I think housing prices play a disproportionate role,” suggested Lander.

The end of pandemic era benefits and the recent failure in the Senate to pass an expanded child tax credit have hit lower-income residents especially hard.

Most New Yorkers received a $1,400 stimulus payment plus an additional $500 per child in the middle of the pandemic. For those who lost their jobs, unemployment benefits were increased by $600 per week.

And most significantly the federal child tax credit soared to $3,600 a year from $2,000 for children under the age of 6 and to $3,000 for children from 6 under 18. The rules were also changed to make the credit available to those with the lowest incomes rather than restrict it to working parents. 

Child poverty in the city declined by 40% as a result.

The enormous help those benefits gave low-income New Yorkers is clear from the credit card data. Per capital credit card debt fell from $4,000 in early 2020 to $3,000 a year later.

But the expanded child tax credit expired in 2022, and poverty soared in New York last year. Two million city children were in poverty last year.

Also in line at Fordham Plaza Friday was 65-year-old Giselle Fernandez, who brought her sister, her daughter-in-law, her cousin and 10 children to pick up the backpacks and school supplies.

“In this zip code the parents can’t really afford to buy them anything because they have lots of kids and no resources,” she said.

Giselle Fernandez holding a pink bag she got at the school supply giveaway at Fordham Plaza Credit: Alex Krales/THE CITY

She sees the problem close up in her work at the nearby Mitchell Community Center.

“By this time of the month, the 20th and the 21st, people can’t afford to buy food,” she said. “So the children get their lunch at school and then they use the food pantry.”

Debt is the only alternative when many New Yorkers run out of cash because they have nothing else to fall back on.

“We know the two areas where households struggle the most are rent and child care,” said Chloe Sarnoff, director of policy research and initiatives at the nonprofit Robin Hood Foundation. “On average households in poverty are spending 70% of their cash income on rent and that leaves nothing for everything else.”

Research by Robin Hood shows that households need to have $2,000 in liquid assets to be able to deal with unexpected expenses such as the loss of a job or car repairs. But 2 million New Yorkers don’t have any form of liquid assets, including more than half of Latino and 40% of Black households.

If the Federal Reserve Board begins cutting interest rates, the rates on credit cards could fall, slightly reducing the pressure. The presidential election could make more of a difference.

Democratic presidential nominee Kamala Harris has made restoring the pandemic-era child tax credit a priority, which promises to reduce poverty among children and financial stress on parents. 

Donald Trump’s running mate J.D. Vance has also advanced an increased credit, though he would provide it to all families and is silent on whether it would apply to families with very low incomes. The controversial Project 2025 blueprint that was designed as a blueprint for a second Trump term suggested eliminating the credit.

At the state level, a Child Poverty Reduction Advisory Commission is expected to make recommendations this fall or early next year. Robin Hood and other advocates are pushing for a major expansion of the child tax credit and changes to make it available to the lowest income households, not just those who are working.

At the city level, “confronting the affordability crisis is already job one,” said Lander. Building more housing is crucial but will take a long time, he notes. In the meantime, the city should emphasize steps to reduce childcare expenses like expanding the 3K preschool program.

For some people at the Fordham event, the supplies were a necessity.

Cynthia Rivera and Jose Marro came with their two children, one in pre-K and one in first grade.

“We’re actually in a family shelter right now and we don’t have the right income right now to support the kids for school supplies,” said Marro. “This actually is helping us a lot.”



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