Incumbents running for re-election often send two very different messagesone on the campaign trail, another on their job. Witness Mayor Bloombergs recent pronouncements about the World Trade Center site, which seem at odds with the message that his campaign has been sending about the citys economy for months.
Looking to boost his involvement in the redevelopment of Lower Manhattan, which he long neglected in favor of touting a Jets football stadium for the Far West Side, the mayor has said in recent days that the local economy cant support all the office space proposed for the site and that instead he would like more housing and hotel construction there. Suggesting that the redevelopment of Ground Zero now shift course, after four years of planning, the mayor said: The markets changed and theres no reason for us to feel obligated to build exactly what we talked about before.
Whats strange about the mayors position, though, is that for months his campaign has bombarded us with commercials celebrating how vibrant the citys economy is supposed to be, thanks of course to the mayors policies. The ads have declared that the city has revived from the effects of 9/11, supposedly creating tens of thousand of jobs in the process. In announcing his new economic development package recently, the mayor boldly predicted that he would create 250,000 more jobs.
But how can we possibly square these messages with the mayors sudden admission that New York may not be able to support 10 million square feet of new office space in Lower Manhattan, which would house only about 40,000 jobs? Can it mean that candidate Bloomberg is guilty of a bit of hyperbole about the citys economy?
Alas, yes. True, housing prices have soared in the city, the product of a nationwide (actually a worldwide) boom in residential real estate driven by low interest ratesa boom that now seems to be ending. And tourists thankfully have come back to the city, though tourism is an industry that generates mostly low-wage jobs in the hospitality and retailing industries. (While economists estimate that every new Wall Street job produces two new jobs somewhere else in the New York economy, every new tourism job generates just 0.6 jobs somewhere else.)
But the rest of the news has been lackluster, especially in the crucial area of new job creation. After losing about 180,000 jobs (80,000 immediately after 9/11 and the rest over the next few years), the city only started regaining employment last year, and it ended 2004 with a paltry gain of 0.3 percent, or 10,000 jobsa mere third of the national job growth rate. This year, the city is on track to add between 35,000 and 40,000 jobscertainly better than last year but still a growth rate of only about one percent, again well behind the national rate. By the close of this year, the city will have added back only about 50,000 of the 180,000 jobs it has lost since mid-2001.
Moreover, most of the job gains will have come in low-wage areas or in sectors heavily subsidized by government (that is, by tax dollars), like social services. By contrast, crucial industries like financial services and business servicesindustries that fill the citys office space, produce most of the middle and upper income jobs, and generate most of the wealth that pays the citys taxeshave essentially just been peddling in place.
The mayors campaign likes to point out that the citys unemployment rate is the lowest it has been in years. Truebut thats because New Yorkers have been finding jobs at a much faster rate than the citys economy is producing them. Where have they been finding them then? Its too early to tell from the data, but perhaps city residents are turning to the faster-growing suburbs to find new work. Whatever the reason, the declining unemployment rate is not the same thing as robust job growth here in the cityand job growth is key to the future of New York as a continuing center of opportunity.
What, then, should we think of the mayors pronouncements about Ground Zero? Is he correct that the city should dramatically shift its efforts there? Not if the city is to have a bright future.
Its worth remembering that during the boom of the late 1990s, when the city reached its all-time jobs peak, developers began running out of suitable space in Manhattan to build new offices, and companies seeking to expand had to go outside the city. While Mayor Bloombergs economic stewardship hasnt been exemplary, given the billions of dollars in new taxes, fines, and fees hes heaped on the business community, unless one thinks that New York will never again hit the heights it achieved in the late 1990s, the World Trade Center should not be turned over to other uses that would make it forever unavailable as a commercial site. To understand how important the site is, just consider that the 10 million square feet of office space planned there would accommodate only about one-third of the jobs that the city still needs to recover just to get back to its pre-9/11 employment levels.
In his more candid moments, the mayor may not believe his own hype about creating 250,000 jobs. But the optimists among us think that some time again, perhaps on another mayors watch, the engines of economic growth that roared in New York in the 1990s will re-ignite. At that point the city will be grateful for the foresight that reserved the World Trade Center site to accommodate some of that growth.