Beyond Wall Street: How the fiscal crisis yields new opportunities
The citys worst economic downturn since the days of Fiorello La Guardia could claim up to 70,000 financial-services jobs and a breathtaking total of 300,000 positions, easily transforming how Wall Street works, but more significantly, how many New Yorkers make their livings, observers said.
And that isnt necessarily a bad thing.
New York is poised to grab a historic opportunity to remake itself, experts said. The city is working to develop a more diverse economic base beyond the canyons of the Financial District by teaming up laid-off financial wizards with creative academics to create unheard-of products and start-ups. Officials also are renewing a focus on jobs for the middle class and fostering a culture of entrepreneurship.
The result could be an economy whose fate is not so tied to the staccato of the stock ticker.
Weve been way too dependent upon Wall Street and the finance sector for a generation now, said Jonathan Bowles, director of the Center for an Urban Future.Â Wall Street has always come back. When it does come back, the urgency of diversifying [the economy] often goes out the door. This might be different.
Biotech advances at the AIDS Vaccine and Design Development Lab in Sunset Park, Brooklyn, and similar facilities could propel New York toward better times. (Katya Pronin)
The citys initiatives
The Bloomberg administration has been working for years to diversify the economy, and amid the financial crisis, is taking steps to retrain Wall Street workers and foster a range of initiatives, from new media and fashion to entrepreneurship, said Robert Lieber, deputy mayor for economic development.
In fact, the city today will hold the first day of classes for the FastTrac program, which will train entrepreneurs, including former financial workers.
Some 250,000 jobs have been created during Bloombergs two terms, most outside of finance. But that doesnt make other numbers any less real: Financial services two years ago employed less than 10 percent of the people who generate payroll tax, but they paid 35 percent of that tax.
That challenges the city, which wants to replace or create 400,000 jobs by 2015.
We dont know what the revenues associated with that job creation will be, but we feel that we are so well positioned competitively that we will be able to meet that target, Lieber said.
To get there, the city is embracing public-private initiatives; retooling small businesses to adapt; pushing initiatives in biotech and life sciences; renewing its focus on the green sector; and pressing old standbys such as the fashion industry and the ports.
What to do
Many experts agree that the city should embrace:
1. The creativity business: There are specific opportunities for growth. Maybe its in design-related sectors, maybe its in video games or digital media, Bowles said.
2. Higher education: The extensive research universities produce has enormous potential to lead to entrepreneurship.
3. Immigrant communities: Thirty-seven percent of New York City residents are foreign-born, and many are entrepreneurial, but too few of the immigrant businesses end up growing to the next level, Bowles said.
The road ahead
As the city tries to recalibrate, theres one thing experts advise: Do not panic.
Every time weve had a recession since 1929, theres a batch of books that comes out with titles or subtitles that include The End of New York ... The fact is, its still there, and the city in terms of population and economic activities has never been greater, said Robert Yaro, president of the Regional Plan Association.
Indeed, what may ultimately get New York out of this crisis is the strength of its people, which Lieber calls New Yorks single greatest asset.
According to the Mayors Office of Management and Budget:
Without action, tax revenues are forecast to fall by $3.3 billion between FY 2008 and FY 2009, and fall an additional $1.7 billion between FY 2009 and FY 2010 for a total decline of $5 billion, a 13 percent decline.
Economically sensitive tax revenues, which include personal income, sales, business and real estate taxes, are projected to fall by 28 percent, or nearly $7 billion, in FY 2010 when compared with FY 2008.
New York City is expected to lose approximately 294,000 jobs from mid-2008 into 2010 and New York City wage earnings are expected to decline by $39 billion.
Wall Street firms were expected to lose a total of $47.2 billion in 2008 and further losses are expected in 2009.