WERE job creation to continue at its present rate, it would take two decades to put America’s almost 15m unemployed back to work. But the picture is rosier in New York City. Michael Bloomberg, the mayor, has bragged that the Big Apple created 10% of all the new private-sector jobs since the beginning of the year. This has since dipped a little to 7.5%, but is still impressive since the city has less than 3% of America’s population.
Unlike in past downturns, when New York’s recovery lagged well behind that of the nation, this time round the city is doing relatively well. Average weekly wages in Manhattan, for instance, jumped by 11.9% over the year in the first quarter of 2010, while wages nationally rose by only 0.8%. Part of the reason is that the finance sector, which accounted for 40% of wages in 2008, has recovered smartly from the crisis of 2008—thanks in large part to government bail-outs.
Bob Steel, New York’s deputy mayor for economic development (and a former vice-chairman of Goldman Sachs), said the groundwork for weathering the crisis was laid down long before the difficulties began. He points to the city’s Economic Development Corporation (EDC) crucially creating incubators for entrepreneurs. He says the city’s economy is more diversified than many think, with the health and education industries doing particularly well. New York has over 600,000 students, more than Los Angeles, Chicago and Washington, DC, combined.
The EDC leverages the city’s assets to help create jobs. It has the authority to offer tax exemptions and loans and can issue tax-exempt bonds. According to its head, Seth Pinsky, New York is second behind Silicon Valley in venture-capital investment. It is also a big draw for immigrants—35.7% of the city’s residents are foreign-born.
New York remains popular with tourists, which means hotels are full and restaurants are holding up well. In Times Square rents asked for retail space have doubled in the past year. Office vacancy rates have declined.
Even so, many are struggling: a lot of people, particularly those with limited skills, have been unemployed for a long time. Services will have to be cut, as in other cities, to close a budget deficit, and that will probably mean lay-offs. Payments from the cash-strapped state of New York will be cut even more. Thank heavens for the private sector.