NYC still surging

More than four years ago I wrote about the prosperity of Manhattan (and more broadly all of New York City) this way:

Here the dominant narrative about the economy is that everything that makes Manhattan a powerful engine of economic growth is what has or will ruin the Michigan economy. How we can continue to believe that narrative when it so obviously fails to explain what is occurring in the real world is beyond me. If that narrative were right Manhattan would be Detroit. Characterized by widespread abandonment by both non-poor households and businesses.

Manhattan is probably the highest cost place to do business in America. Not only high state and local taxes, but also high labor costs and, maybe most important, sky high real estate prices. In many ways it is the poster child for big government: big police and fire departments; big park system; public support for the arts; transit, transit, and more transit; one of the few cities with safety net programs over and above the state and federal safety net and on and on and on. Add to that lots of regulation, powerful public employee unions, lots of renters; sky high density; lots of immigrants, gays and folks of different races, religions and ethnicity and you have a recipe for what we are constantly told leads to economic disaster. Wrong!

Instead it is a place where knowledge-based businesses from across the planet are increasingly concentrating. It is one of America’s great centers of innovation and entrepreneurship. A place where the affluent (the 1%) and talent concentrate. It all adds up to one of the most successful economies in the country. So strong that it is the main engine of a metropolitan area of more than 22 million people (more than twice Michigan) in four states. A metropolitan area that is the third most prosperous big metro in the country, with a per capita income of more than $52,000. ($18,000 higher than Michigan’s.)

Turns out in the real world all those so-called liabilities are assets that lead to prosperity. A big city that works, a government that provides quality basic services and amenities, terrific alternatives to driving, density and welcoming to all. Combine those features with an entrepreneurial culture and you have a place where talent – from across the planet – wants to live and work. And where talent concentrates you get growth and prosperity, not decline and falling income and employment. To get back on the path to prosperity Michigan needs far more – not less – of what Manhattan has.

Over the past four years New York City has continued to do well economically. We  have done updates in both 2014 and 2015.

As the New York Times noted in a recent article the election in 2014 of liberal mayor Bill de Blasio became the latest reason to predict the demise of the NYC economic engine by the business-friendly ideologues. Wrong again! The Times writes:

When Bill de Blasio was running for mayor on a starkly liberal platform in 2013, some of New York’s business leaders feared the city’s economic well-being was doomed.

“There was definitely something in the ether,” said Alicia Glen, a deputy mayor whom Mr. de Blasio recruited from Wall Street. “‘The lefties are taking over.’ ‘This is not a pro-business mayor.’ ‘They’re going to ruin the economy.’ I heard a lot of that myself.”

But as Mr. de Blasio settles into the second half of his four-year term, the opposite has happened. Even amid national and global concerns about teetering economies, New York City has rarely been in better financial shape. Indeed, the city added more jobs in Mr. de Blasio’s first two years in office — 248,000 — than in any two-year period in the last half-century, according to data released last week by the State Labor Department.

Along with the steady increases in employment, the wages of workers in the city have risen at a fast pace over the last two years, helping them cope with the dizzying cost of living. Residential and office construction are booming. Tourism is at a high.

Of course, a roaring real estate market has left many New Yorkers struggling to pay for housing and has fed a homelessness problem that has bedeviled Mr. de Blasio.

Still, by virtually any measure, the city continues to do better than the rest of the country in rebounding from the financial crisis, economists said.

… In fact, the city has a record number of jobs (4.2 million) and a record number of employed residents (four million), and attracted a record number of tourists last year (58.3 million). The share of the city’s population that is employed is at its highest level — 58 percent – in at least four decades.

In the early years of the recovery, the bulk of the hiring was in lower-paying fields like retail and health care. But it has broadened to all sectors, including Wall Street, construction and even manufacturing.

Wages, too, have begun to surge, and not just for white-collar workers at the upper end of the pay spectrum, said James Parrott, chief economist with the Fiscal Policy Institute, a union-backed research group. Mr. Parrott said that average wages for workers at all levels of pay had risen faster than inflation in the last two years, after being flat for the previous three years.

“This last five or six years has been the most sustained period of job growth in the city,” he said. “You’d have to go back to the ’50s or early ’60s to see anything like that.”

As I wrote in 2011 if we want the more and better jobs Governor Snyder has set as the goal for Michigan: “To get back on the path to prosperity Michigan needs far more – not less – of what Manhattan has.”

 

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has One Comment

  1. I have been to New York City on business several times during my business career. Of course there are many highly educated and talented people there working in knowledge based jobs. I think New York is best known for its many financial jobs, but there are plenty of opportunities in other knowledge based careers too. When I was a much younger man I was close to becoming one of the people moving there. One thing I noticed is that all of talented knowledge workers there create a lot of opportunities for people in service jobs that are not knowledge based. The number of restaurant workers and sales people required to service all of those knowledge workers is enormous. I know that many such workers make pretty good wages, often higher than similar workers in other parts of the country. On the other hand, I have known people worked a few years in New York, and then moved away mostly because of the high rent. Sometimes they can use their experience in New York to get a good job in another, lower cost area of the country.

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