Someone from Hong Kong tells us their city feels much more unequal than New York City.We ran the numbers to back up this claim.
Both cities are dangerously unequal according to the Gini coefficient, which measures inequality from 0 (totally equal) to 1 (totally unequal) based on the distribution of income.
But Hong Kong is worse.
New York City, at 0.5, is well above the recommended level of 0.3 to 0.4. Hong Kong, at 0.535, is the most unequal city in the developed world.
This gap is enough that you would notice. There’s a similar gap, for instance, between New York and the rest of the US.
(Note: Singapore has the second highest Gini coefficient in the developed world.)
Hong Kong’s Gini coefficient should probably be even higher. The income of rich families is understated in China, economist Wang Xiaolu told Bloomberg Businessweek, since it does not include up to $1.4 trillion annually in undisclosed kickbacks and perks.
Gini, which measures relative disparity, also doesn’t account for absolute disparity.
“In Hong Kong, we not only see the gini coefficient is high but the actual level of income is low as well,” Hong Kong University’s Paul Yip tells us over email.
Another difference that doesn’t show up in the numbers is geographic mobility.
“In New York poor people might be able to move, but in Hong Kong there is not much choice,” Yip says.
Hong Kong is also worse in terms of social mobility. Social mobility was measured in a recent paper by comparing the income of brothers, where a high correlation shows that family background is important and social mobility is limited. The correlation was high in the US (0.43) indicating limited social mobility, but it was much higher still in China (0.57), according to the Economist.
Now let’s talk about the servants.
Around 4 per cent of Hong Kong residents are foreign domestic helpers. Filipinos and Indonesians enter the country on two-year contracts and are glad to work for HK$3,740 (US$482) per month.
This unlimited supply of cheap foreigners means that many families can afford a full-time helper. In fact the government says you can afford one servant for every HK$180,000 (US$23,000) in annual household income.
New York has no equivalent servant population. Only 0.01 per cent of New Yorkers are full-time maids, and most of them work at hotels or serve multiple homes. New York’s maids are US citizens, which makes them a lot more expensive than migrant Fillipinos. New York families earning US$23,000 definitely don’t have any servants.
Finally we assume that as the capital of global finance and the favourite shopping destination for China’s new money, Hong Kong is filled with rich travellers.
Outgoing leader Donald Tsang has called the wealth gap one of the issues of “greatest public concern,” according to Bankkok Post.
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