A decade-long celebration of what was being hailed as a “new economy” diverted public attention from the serious social and economic vulnerabilities accumulating in New York.
The Fiscal Policy Institute critically examined this heralded “decade of boom,” issuing a report on “The State of Working New York.”
The FPI found that, for workers and their families, the past 10 years were a “bust.” The Institute’s chief finding was that during the ‘90s New York experienced “more extreme polarization than the rest of the nation.”
During the “boom” years the median wage of New York workers actually declined from their 1989 level by 5.1 percent (compared to a rise of 2.2 percent in the nation as a whole). The decline in the median wage of workers of color was significantly greater: 10.7 percent for African-American males and 14.1 percent for Hispanic males. Fully 37 percent of New York families now have incomes below the level for a “basic needs family.”
The manufacturing sector shrank during the ‘90s by 26.1 percent. This decline was fueled, in part, by the effects of NAFTA, which not only cost New York 46,000 jobs, but depressed wages and lowered living standards.
Under the influence of “globalization,” New York’s economy became increasingly dependent on Wall Street. The securities industry accounted for 47.6 percent of the total increase in Gross State Product (GSP) from 1992 to 1999. This compares with its 9.8 percent share of growth in GSP during the ’80s.
While Wall Street provides 5 percent of the city’s jobs, it generates 15 percent of the city’s tax revenue. As the recession took hold, jobs and bonuses in lower Manhattan began to decline and upstate job growth plummeted. Wall Street bonuses are now expected to fall at least 30 percent, or $4.3 billion, this year. Wall Street employment, which peaked in August 2000 at 190,100, dropped to 165,000 in October 2001, with the expectation of losses of thousands more.
Since the financial sector is the engine of growth, its problems have a disproportionate effect on the state’s economic and fiscal well-being.
Its ripple effects extend well beyond the trading floors to golf pros, auto dealers, travel agents, real estate brokers, and antique dealers, thus adding to the sharp declines in tax revenues.
New York City already projects a $3.5 billion to $4 billion budget gap for the next fiscal year, while the New York State’s Division of the Budget anticipates a $6 billion decline in revenues.
The effects of Sept. 11 (on top of recession) have taken a “heavy toll” on low-wage workers. According to a study by the FPI on the impact of the World Trade Center attack, an estimated 105,200 jobs were lost since Sept. 11, either through layoffs (79,700) or moving out of New York City (25,500).
The five occupations affected most by Sept. 11 were: waiter staff, janitors and cleaners, retail salespersons, food preparation workers and cashiers. In addition, apparel manufacturing was virtually shut down in Chinatown.
The attack also extracted a heavy toll on the tourism industry. The NYC Partnership expects a 14 percent decline in visitors, or about 5.4 million people. A sharp drop is anticipated in international tourists, who spend on average three times more than domestic visitors.
With funding streams drying up, The Center for an Urban Future expects large-scale layoffs in the arts and cultural spheres in New York City. Not only do these sectors contribute $13 billion to the local economy, they also give NYC its “identity and allure.”
One in five New Yorkers were getting emergency food aid before Sept. 11 – 1.5 million residents, including 510,000 children, were already relying on soup kitchens, food pantries and shelters. After Sept. 11, the number rose sharply.
According to a survey by Food for Survival of New York, in the days following Sept. 11, 74 percent of the people getting free food from soup kitchens were doing so for the first time.
Lucy Cabrera, president of Food for Survival, told The New York Times that “most of these first-time clients were single mothers who needed emergency food because they had lost their jobs in the attack.”
The immediate response to economic crisis has to be help for its victims. This cannot be achieved through tax cuts for the rich. Rather, immediate steps need to be taken to provide health care coverage and unemployment compensation for everyone without a job.
In addition there needs to be a moratorium on evictions and foreclosures, and significant federal revenue sharing is needed to eliminate the effects of states experiencing budget deficits. This will buy time until a more comprehensive program emerges.