Why NYC’s Recession Was Shorter Than USA’s

By Cathy Rainone

While the United States lost 8.4 million jobs — about 6 percent — during the 27-month Great Recession that started in December 2007, employment in New York City declined by 3.5 percent, and the downturn lasted only 17 months here. Why did New York outperform the rest of the nation? The obvious answer, says Greg David, director of the Business and Economics reporting program at the CUNY Graduate School of Journalism, is the Wall Street bailout. But, says David, there were other, less apparent reasons too.

For one thing, the city’s economy was more diversified than most realized and tourism was strong.

“New York City’s economy has changed a lot, manufacturing is no longer important,” he says. “Manufacturing is cyclical, and the biggest sectors by jobs now in New York City are education and health and they are not cyclical. They’re mostly government funded and they don’t decline as the rest of the economy contracts.”

David traces New York City’s economy through the last 50 years, from the election of Mayor John Lindsay in 1965 through the most recent Great Recession, in his first book, Modern New York: The Life and Economics of a City. He also writes a blog and a column for Crain’s New York Business, where he has worked as an editor, as well.

Journalist Greg David's book traces the city's economy over 50 years and also looks ahead.

David explores the rise of Wall Street in the late ’80s and how, despite its ups and downs, it has made the city richer than ever. But in recent years, he says, the New York economy has diversified enough to better offset future woes of Wall Street and the decline in manufacturing.

With the city losing 400,000 factory jobs between 1969 and 1977, tourism emerged as the next big job creator, he says. Five years after the Marriot Marquis opened its doors in Times Square in 1985, writes David, the Convention and Visitors Bureau estimated that the tourism industry created 143,600 jobs. Currently, tourism accounts for more than 300,000 jobs, a 160,000 increase that almost makes up for the 184,000 manufacturing jobs lost in the same period.

No sector of diversification is guaranteed, however. “We don’t know if tourism can grow, nothing grows to the sky,” says David. And the “tech boom is not for sure, it could collapse like it did in the 90s, higher education needs the city’s help to continue to expand, and the film and TV production industry is dependent on the tax credit.”

Some still hope the city can revive a large-scale manufacturing sector, but David says it’s a thing of the past. “Manufacturing has no significant role in the New York City area.”

David also disagrees with the belief held by some that the city’s middle class is shrinking. The new middle-class jobs, he says, are in film and TV production, higher education and the Internet. Combined they total about 300,000 jobs. “Hairdressers who work in the movie business make more than $100,000 a year; they are not the classic middle class jobs. But people do have classic middle-class lifestyles as a result.”

What the city needs most, he says, is more housing — especially affordable housing.

David shares the mayor’s attitude toward immigrants — they’re the unsung heroes of New York. “Immigrants are one of the major reasons New York is thriving,” he says. “They went to those poor and downtrodden neighborhoods in the 1970s and the 1980s and they rebuilt those neighborhoods. If the population decline in the 1970s had continued, we’d be like a supersized Boston, and we’d look like Detroit with all these neighborhoods where no one lives.”

Ultimately, the future of New York, David says, relies on three factors: Wall Street prosperity, an economy diverse enough that can offset Wall Street during the times when it isn’t prosperous, and the right political climate, with leaders who believe that to keep the city strong, the economy has to be the first priority.