New York City can take pride in having replaced all the private jobs it lost in the ’08 crash — but pride may goeth before the fall. Too many of Gotham’s pols (including would-be mayors) take economic success as an entitlement to be abused — not the fleeting product of on-the-ground work and luck.
Earlier this month, Mayor Bloomberg had much to brag about. “New York City’s private-sector job gains are the best in 60 years,” he said. The city gained 12,000 private jobs in April, or 61,000 in 2012. Gotham is at an all-time high.
Because of the city, New York is now one of just five states to have officially recovered, job-wise, from the recession. The city’s creating jobs faster than the nation overall — and much faster than the rest of the state.
But even as the city’s economy defies doomsayers’ predictions of a post-Wall Street apocalypse, the city’s budget picture is worsening. A few weeks ago, Bloomberg reduced this year’s tax-revenue estimates by $352 million; next year’s deficit is now $3 billion. The city Independent Budget Office warned last week that the fiscal outlook has “darkened” since winter.
Why the divergence between a good economy and a bad budget?
New York is creating jobs — but they’re not Wall Street jobs. In the first two months of the year, for which the most specific data are available, the city had gained 4,800 securities-industry jobs over last year — but 23,800 more professional, scientific and technical jobs, plus 14,400 more tourism jobs.
Wall Street is still 13,900 jobs short of its 2007 peak; the big employment growth is in other sectors. These are good jobs — but they don’t pay the “luxury city” bonuses needed to feed the city’s budget.
Because of lower bonuses, the average wage earned in the city is 4.7 percent below the 2008 peak (adjusted for inflation). Meanwhile, City Hall spending is up 7.9 percent. We’re like the Wall Streeter whose bonus has plummeted but who can’t rein in his big-wheel spending.
Things on Wall Street — and among the global 1 percent — are likely to get worse, not better, in the near future. It’s not just JPMorgan’s huge trading loss and the nuts-and-bolts stock-selling incompetence that the Facebook IPO revealed.
Last Thursday, Tiffany announced that its Fifth Avenue business fell 4 percent this quarter compared to last year — because wealthy tourists from Europe and Asia have been cutting back as their economies falter. That’s bad for tourism — and our tourism jobs.
These new jobs also depend on continued city services, from police to sanitation. If the pols cut core services to fill the budget hole, all the gains are at risk.
That’s especially true since the city is encouraging start-ups now, rather than favoring big corporations. That’s better for long-term jobs growth — but start-ups are more nimble and can leave at the first sign of trouble.
The biggest risk to the city, though, isn’t in the numbers but in the headlines.
What are our would-be future Democratic mayors — with City Speaker Christine Quinn in the lead — saying lately?
They all support a minimum-wage hike. Researchers at Cornell and American universities determined that a hike could cost the state 29,000 low-wage jobs. Remember: The city’s unemployment rate is at 9.5 percent despite healthy job creation partly because we’ve got more than our fair share of unskilled laborers — and a minimum-wage hike would hit them hardest.
They’ve all been silent on retroactive raises for public-sector workers. And retroactive raises as a quid pro quo for union support could double the next mayor’s deficit — and leave the city with no way out but job-killing tax hikes.
Worst, they all support “reforms” to the NYPD’s stop-and-frisk policy. Quinn, almost unbelievably, said she even thought a class-action suit against the NYPD was an “important step” — meaning, since she represents the city, that she’s in favor of suing herself.
The fiscal cost here of a settlement could be enormous — a good $6 billion, judging by the going rate for plaintiffs in other cities and in smaller New York cases.
But the fiscal cost isn’t the biggest problem.
Higher crime in New York would do more than anything else to drive away our new jobs. If the NYPD had to operate under court decree, it couldn’t work quickly enough to stem that higher crime.
Long-term New York City bondholders should worry more about candidates’ stances on this issue than anything else: It’s a bigger fiscal risk than even $8-billion-a-year pension costs.
New York is doing OK for now. Let’s hope it’s not a case of enjoying it while it lasts.
Nicole Gelinas is a contributing editor to
the Manhattan Institute’s City Journal.
Twitter: @nicolegelinas