New York City: A "New Economic Reality''
New York City: A "New Economic Reality''
The city needs to face the challenges of losing daily commuting office workers; not bully companies.
In 2016, the Connecticut budget director said the state faced a “new economic reality” of slow growth and continued austerity after years of downplaying projected deficits. New York City may be on a similar path if it waits to recognize its new reality.
Last week New York City’s recently sworn-in Mayor, Eric Adams, was quoted as saying:
And if we say that, ‘Well I don’t have to go in. I’m still getting my salary,’ then you are not helping those New Yorkers who need us to come in … I don’t know if my businesses are sharing with their employees, ‘You are part of the ecosystem of this city’ … My low-skill workers, my cooks, my dishwashers, my messengers, my shoe shine people, those that work in Dunkin’ Donuts, they don’t have the academic skills to sit in the corner office. They need this.
When it comes to the “economic ecosystem” of NYC office workers have played a large part for decades, but things change. That’s not to say NYC isn’t going to revive or recover: it will and in some areas it has.
But there’s a new economic reality.
Cities will need to prepare for a future where their central business districts are no longer occupied as they once were. The Mayor doubled down on his comments later in the week, asking for a return to a five-day on-site work week:
I say, let's start out with a three-day week to let people see how safe it is to come back to work … Then we cycle back into a five-day week. We can do this within a three-week period and be up and operating in our city.
Why move to fill office towers in three weeks (in the middle of a major surge in COVID-19 cases)? Perhaps it’s the city’s budget outlook.
It’s easy to increase budgets when the economy is growing. Mayor De Blasio “increased the city’s budget 38% to $101 billion in the fiscal year that ended in June from $72.9 billion in fiscal year 2014” according to one report. To maintain that level of spending growth the city needed to stay on its pre-COVID economic trajectory.
The reality the city may have to deal with: an economic recovery that’s not as fast as originally expected. Not an easy place for a new city leader to start.
So where do the budget gaps stand? It depends who you ask:
Former Mayor DeBlasio’s administration estimated an average annual budget deficit of $2.6 billion (FY 23-25) built on some, perhaps, optimistic assumptions in its November Plan;
The Independent Budget Office (IBO) released an estimate last week putting the average annual deficit deficit closer to $3.1 billion; and
Analysis by the Office of the State Comptroller estimated an average annual deficit of $5.5 billion over the same period.
Time will tell who is right.
IN FOCUS
New York City’s Problem: Affordability
In 2021, New York’s Housing Market Made a Stunning Comeback NY Times
Low-income New Yorkers want higher wages and affordable housing, according to new survey NYN Media
Jobs Grow — Along With the Pandemic Gap Between Rich and Poor New Yorkers The City
We ditched pricey New York City for Savannah, where we spend $51,000 less per year. MarketWatch
New York City’s “New Reality”
NYC’s Incoming Mayor Inherits Finances Soured by the Pandemic Bloomberg
De Blasio’s Costly Legacy: The Biggest City Work Force Ever NY Times
NYC Economic Recovery to Lag Until 2025 Despite Revenue Growth Bloomberg
Transit Recovery a Work in Progress
New York’s transit agency is its lifeblood. The Pandemic puts its future at a crossroads MarketWatch
NYC Commuting Delays Pile Up With 20% of Subway Drivers Out Sick Bloomberg
Rethinking Worker Protections
How the social safety net has — and hasn’t — changed in 2021 in 5 charts WBHM NPR News
Safety Nets That Sustain Community NY Times
State-Run Paid Leave Evolves to Emphasize Low-Income Workers Bloomberg Tax
City Employees Press Adams For Work-From-Home Option After De Blasio Refused Gothamist
CHART OF THE WEEK
A recent report by the Office of the State Comptroller found that “restaurant, retail and recreation (RRR) sectors continued to struggle during the COVID-19 pandemic, even before the latest surge in cases, with 169,700 fewer jobs in November than from two years ago.”
When it comes to large urban areas, BLS reported the metropolitan statistical area (MSA) unemployment rate for NYC was 6.0% in November — among the highest in the country. Even with an increase in international tourism starting in November, the city’s RRR job gains didn’t receive a significant boost.
Key Findings:
The restaurant subsector still employs 30% fewer workers than in 2019.
The arts, entertainment and recreation sector has contracted by 24%, while retail trade has 14% fewer jobs.
Nationally, the sectors overall are just 3.4% smaller.
On the employment front, the IBO’s updated projections were revised to the negative:
Although parts of the city’s economy are doing well, New York City’s economy has genereally [sic] lagged the nation’s, particularly on employment, with only about 35 percent of the jobs lost in calendar year 2020 recovered by the end of 2021. IBO expects employment growth to diminish each year from 2022 through 2025; the city is projected not to recover all of the jobs lost in 2020 until late in 2025.
INTERESTING READ
Pandemic Schooling Mode and Student Test Scores: Evidence from US States NBER Working Paper
The Issue: What is the impact of district-level schooling mode (in-person versus hybrid or distance learning) on test scores?
Key Statement:
Taken together, the data here suggest that there were considerable declines in test scores overall during the 2020-21 school year, and these declines were larger in school districts with less in-person instruction. There are consequences for inequality in outcomes in these results. Students in districts with larger populations of Black and Hispanic students, for example, were less likely to have access to in-person learning.
Any opinions expressed herein are those of the author and the author alone.