De Blasio at a business ribbon-cutting (photo: Ed Reed/Mayor's Office)
In the four years since Mayor Bill de Blasio took office with the mantra of fighting the unequal “tale of two cities,” New Yorkers have seen wages rise and unemployment fall. De Blasio is currently presiding over a continuation of the longest economic expansion in the city’s history, and has used the strength of that growth to implement policies aimed at reducing inequality, largely by increasing the size and scope of city government.
But, for many, affordable housing and other aspects of a good quality of life remain beyond the reach of their means, homelessness is hovering near record highs, and the haves and have-nots remain nearly as far apart as they were under the previous administration, at least in terms of income. As the Democratic mayor seeks another term, with a recently-unveiled middle-class jobs plans, he is touting his record on the economy and promising to use city policy to spur over ten years the creation of 100,000 jobs that pay at least $50,000 annually.
There are questions, however, about the degree to which the progressive mayor deserves credit for the city’s continued overall economic boom and to what extent de Blasio has really shrunk economic inequality beyond simply income. And, to some, de Blasio is seen as a mayor who has been more focused on new mandates on businesses than he has been on helping businesses grow, though most experts agree that de Blasio has not stifled business growth or repelled businesses.
Meanwhile, unlike his predecessor, billionaire business executive Michael Bloomberg, de Blasio has not had to confront a major economic crisis (Bloomberg shepherded the city through two economic catastrophes, post-September 11, 2001 and the Great Recession that began in 2008). The de Blasio administration has been fortunate to avoid economic stressors that would truncate its ability to spend lavishly on its progressive priorities and force the mayor who likes big government to slash from the budget and workforce, though that could change in a potential second term as a widely-expected slowdown begins to take effect and federal policies threaten to wreak havoc on the local economy.
As of now, though, de Blasio appears to be taking a few more cautious steps, instituting a partial hiring freeze for city agencies, for example. He’s also been able to build reserves while quickly increasing city spending, and he’s now more focused on spurring private-sector job growth using the levers of city government.
At his January 1, 2014 inauguration, de Blasio took “dead aim at the tale of two cities” and announced a slew of policy priorities that would help create “one city,” including the expansion of paid sick leave, curtailing stop-and-frisk policing, creating more affordable housing, and taxing the rich to fund universal pre-kindergarten.
Just over three years later, at his fourth State of the City address, on February 13, 2017, the mayor’s aim was more pointed, and his rhetoric more humble. Acknowledging that the city’s prosperity was not felt by all its residents, he said, “Everything we've been doing so far is necessary. I believe it's right. But it's not sufficient.” Having touted his administration’s affordable housing efforts, he said, “We have to now focus on the other half of the equation. We have to drive up incomes.” And he announced a goal of creating the 100,000 new “good-paying” jobs in rapidly growing sectors of the economy by using the levers of city government.
But there’s only so much control de Blasio employs over macro economic factors. He’s said so candidly in addressing the issues that he can control, which he nonetheless believes can have a powerful impact. At a February 18 event hosted by the CUNY Graduate Center, de Blasio discussed his administration’s progress on tackling inequality with Nobel-prize winning economist Paul Krugman. Responding to the moderator, CUNY Professor Janet Gornick, who asked why the mayor had made such a commitment with a “limited set of policy levers” at his disposal, de Blasio said, “Now I contest, respectfully, that the limits on our tools - not to say that we can do what a state or a federal government can do, but to say that we have powerful tools. In fact, every government has powerful tools.”
De Blasio boasted of the savings that universal pre-kindergarten and free after-school programs provide to families and his affordable housing plan. “I mean all of these are ways of addressing inequality and lightening the burden...These are the things we can do. But it does not for a moment replace what the federal government could and should do.”
The mayor has also recognized that a key component in ensuring the city’s continued economic strength is consistent reductions in crime. “Obviously, everything we do has to be undergirded by keeping the city safe and making it safer,” he said at the annual State Financial Control Board meeting in August. “We can't have an effective economy, we can't have good schools, we can't do any of the things we seek to do if we don't have a safe city. And we're investing to make sure that America's safest big city is, in fact, safer than ever going forward.”
Indeed, part of the large public-sector job growth under de Blasio has been the addition of 1,300 NYPD officers, which serve the dual purpose of creating more middle-class jobs and, more significantly, helping to implement a neighborhood policing program and other measures that de Blasio and NYPD officials credit with further reductions in most major crime categories.
The city’s economic health has also allowed de Blasio to successfully defend his approach to governance and his progressive policies. The doom-and-gloom forecasts of his detractors have not come to pass, and he has continued to argue triumphantly that building a more equitable city does not come at a cost to its wealthier residents. While de Blasio continues to call for higher taxes on the biggest earners, he does not control those policies, and though they may not care for his rhetoric, CEOs and top earners on Wall Street, in law firms, and elsewhere, appear fairly at ease given how safe the city is, the record tourism the city has seen, and the continued diversification of the economy.
On most major economic indicators, the city is performing well, and better than national averages. As of September 27, according to data from the federal Bureau of Labor Statistics, there were about 4.4 million jobs in the city as of August, the highest number ever and up from 4.05 million in December 2013, just before de Blasio took office. In September, the unemployment rate in the city was about 5.1 percent and has hovered close to that for months.
The number of private sector jobs has grown about 9 percent in the last four years. The median family income rose about 5.2 percent from 2015 to 2016, to a high of $65,440 -- an overall increase of 9.5 percent from 2013 -- according to calculations of census data by James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs. Poverty also fell to 18.9 percent in 2016, from 20 percent the previous year, per Parrott’s analysis (That is one metric where the city was far worse than the national average, which was 14 percent in 2016).
With the economy thriving, economic experts, on the right and left, and independent fiscal watchdogs are in broad agreement that de Blasio’s policies have encouraged, or at least not hampered, the conditions for growth, both in directly measurable actions and through overarching policies with indirect, less quantifiable effects. But, there is also consensus that the administration must meticulously guide the next phase of the city’s economic development and keep a vigilant eye on variables that could threaten the city’s economic health.
The next tests for de Blasio will come as he moves his jobs plan ahead, how the city’s investments in certain places, like the Brooklyn Navy Yard, pan out, and whatever larger economic forces and policies out of Washington, D.C. may portend.
Where credit is due
It’s hard to attribute the sustained growth of the city’s economy to local factors. Macroeconomic cycles and variables, including federal policy, and national and global developments, play a broad role, and New York City has benefited from a variety of factors, while remaining a top city for the financial services sector, arts and culture, and tourism. The city has outperformed the state and the country in most aspects of economic development, showing a resiliency that other places have not.
“The underlying organic growth is not any more a function of current policies or past policies of administrations,” Parrott said in a phone interview. “It’s what goes on in the economy generally...Whatever economic dynamics work in the broader economy, any mayor can only affect those on the margin.”
Maria Doulis, vice president of the nonprofit Citizens Budget Commission, echoed that view. “Economic growth at the local level is a tricky thing, because much of it has to do with national and state forces and its really on the margins that local governments can have impact. Nevertheless, the mayor, whoever the mayor is, gets credit when things go well, and gets the blame when things don’t. That’s the way things work.”
Steadily growing tax revenues allowed the de Blasio administration to focus right from the start on economic inequality, rather having to worry about broader economic development or recovery, although the mayor insists that fighting inequality and growing the economy go hand-in-hand. Giving New Yorkers more resources, whether through higher wages or greater savings or more paid sick days, for instance, are better for productivity, he has often said.
“While I certainly wouldn’t claim that the continued economic growth we’ve seen in the city is solely the product of policy decisions made by this administration, I think there are a lot of things that we have done over the last four years and that we have in the works that I think have promoted not just a continued strong economy but more inclusive growth,” said Anthony Hogrebe, a spokesperson for the New York City Economic Development Corporation, in a phone interview.
The mayor has had such strong revenue at his disposal that he has been able to build the city’s reserves while rapidly growing the budget to implement policies to drive up wages and increase fairness and opportunity, especially for low-income families.
The city’s annual expense budget has grown about 18 percent during de Blasio’s term, to $85 billion this fiscal year. He pushed for funding for universal pre-kindergarten, which the state largely provided in lieu of the mayor’s proposed tax on wealthy New Yorkers. The policy has saved families about $1.4 billion, according to city estimates. De Blasio also signed into law in 2014 an expansion of paid sick leave to 500,000 workers across the private and nonprofit sectors. Last year, de Blasio announced a $15 minimum wage by the end of 2018 for all city employees and workers at human services nonprofits contracted by the city. His efforts helped push the state toward increasing the minimum wage for virtually all employees in all sectors, to $15 in New York City by 2019.
Parrott said the mayor has effectively controlled “policy levers” such as managing the city budget to invest in human services, infrastructure, and affordable housing, while also reducing crime to historic levels, all of which have been conducive to economic growth. “I think that overall responsible fiscal management approach has helped communicate confidence to the business sector in New York City,” he said, adding particular praise for how the mayor has built up the city’s reserves.
One of the mayor’s most significant early achievements, for which Parrott believes he deserves most credit, was settling the labor contracts for virtually the entire city’s municipal workforce, which had been expired for years under former Mayor Michael Bloomberg. “If you think back four years ago, people were saying this was the biggest challenge the new mayor is going to face…A lot of people concluded that it was going to be impossible to do that in a fiscally responsible way,” Parrott said. “[De Blasio] basically took that on and resolved that in his first six months in office.”
The move reaffirmed the importance of collective bargaining, Parrott said, and provided thousands of city workers with wage increases while creating significant healthcare savings for the first time. While some say it did not do enough to reform health care obligations or anything to reduce pension obligations, the settling of labor contracts eliminated a major point of uncertainty for the city and the workers involved, and the salary boosts help to lift or maintain middle-class lifestyles for many civil servants.
“I think overall he’s done a very good job,” Parrott said.
Jonathan Bowles, executive director of the Center for an Urban Future, a think tank, pointed out that de Blasio inherited a robust economy that has only gotten stronger. “This economic resurgence started before the mayor took over,” he said, with a reference to the city’s recovery from the collapse of 2008-2009. “I don’t think economic development has been one of the mayor’s priority areas in his first term but clearly it probably didn’t need to be. It’s important that he didn’t do anything to extinguish the economic progress that we had.”
Leaders of the city’s corporate business community have said that while they don’t necessarily appreciate the ways in which de Blasio talks about the wealthy not paying their fair share and his calls for higher taxes -- some see him as vilifying success and fostering class warfare -- he has not done much to get in the way of their priorities and he has even accomplished a few things they like, including parts of his education agenda and his choices in police commissioners.
Nicole Gelinas of the Manhattan Institute, also said that the city’s achievements in bringing crime to historic lows have fostered a positive business environment. “Although he’s not fully in control of that, but crime has certainly continued to go down on his watch,” said Gelinas. “So businesses still feel safe in coming to the city, students still feel safe coming here for school, and that creates jobs.”
Generating good-paying jobs in the middle
After the global recession that began in 2008, New York City saw a far quicker overall recovery than most of the country. The economy also increasingly diversified, with expanded growth outside of the financial sector, in retail, tourism, and tech, for instance. But job growth was mostly either in high-income jobs or low-income ones, with the lower end accounting for a majority. Middle-income jobs failed to materialize at the same rate.
De Blasio took stock of this as his term wore on, and announced earlier this year “New York Works,” his plan to create over ten years 100,000 jobs that pay at least $50,000 a year. The goal has been panned as lacking in ambition -- the city’s economy has been creating on average 90,000 jobs each year (of any wage level) and extends well beyond a potential second term for de Blasio -- but it aims to leverage the city’s investments and regulatory authority to directly benefit sectors that are expected to grow or have good potential for growth with a boost from targeted city help. De Blasio and his team stress that the number indicates only jobs that will result from direct city action, not that would have been generated anyway, though it may not always be easy to differentiate.
The mayor has already inaugurated initiatives and announced investments that dovetail with the jobs plan, including $442 million in infrastructure spending for city-owned industrial spaces such as the Brooklyn Navy Yard, the Brooklyn Army Terminal, and Hunts Point; a $5-million grant to [email protected] to create a life sciences incubator by the end of 2017; an $81-million Computer Science For All public-private initiative that is meant to build tech talent through public schools; and a $20 million program, announced on Monday, to double by 2022 the number of CUNY students graduating each year with a tech-related bachelor’s degree.
“I think certainly early on in the administration the focus with respect to economic growth was not so much creating jobs and spurring the economy but rather focusing on economic inequality and doing more to support low-income earners,” said CBC’s Doulis. “I think in time that has shifted now with the development of their jobs plan.”
At a recent discussion hosted at The New School by the Center for an Urban Future, Deputy Mayor for Housing and Economic Development Alicia Glen emphasized the all-encompassing nature of the jobs plan and the creation of an ecosystem that will support new job creation. “It’s really important to remember there’s a short game here and a long game and we have to play both of them,” she said.
Glen touted the administration’s focus on affordability, the use of commercial neighborhood rezonings to encourage job growth, and spoke of the “incentive structures” necessary for specific industries to meet their potential. “This is a ten-year plan,” she said. “I can’t say in year eight or nine where every single job is going to be. That would be an unrealistic expectation. So we have to be nimble, we have to be thoughtful. We have to adapt in real-time to changes in technology, to changes in capital markets, to changes in political and regional realities.”
There was near unanimous agreement by an expert panel that followed Glen’s speech that the mayor’s plan to incentivize jobs would be incomplete unless accompanied by workforce development programs and with the requisite educational achievement that will qualify New York City residents for those jobs. The experts who spoke with Gotham Gazette concurred.
“If Amazon doesn’t come here, that’s gonna be a big reason,” said Bowles, warning of the dearth of necessary skills and education for those jobs in New York as well as the dangers that increasing automation will bring to the same industries the city is targeting in its plan. “I don’t think we can go another four years without also doing some very specific things to curate the city’s economic growth,” he said, mentioning the need to help small businesses.
Bowles praised the mayor’s focus on middle class jobs, as well as the city’s increased focus on promoting minority- and women-owned businesses.
In 2014, the mayor convened the Jobs for New Yorkers Task Force to create a blueprint for workforce development and fill the skills gap that kept many New Yorkers from getting adequate paying jobs. But, in the three years since that blueprint, called NYC Career Pathways, was created, there has been little progress, said Jesse Laymon, director of policy and advocacy at the New York City Employment and Training Coalition, an umbrella group of more than 150 workforce providers in the city. “There has been some organizational shifting in terms of new offices created and new people appointed,” Laymon said, “but there really has not been a lot of actual policy or funding change.”
Laymon pointed out that a key budgetary recommendation of Career Pathways was to fund $60 million in annual “bridge programs” by 2020 to help people with limited educational attainment to receive additional skills training. Three years into the plan, the Fiscal Year 2018 budget includes a little over $6 million for those programs. “There has been some starting but it’s not moving fast enough to make some real substantial differences in the lives of New Yorkers,” Laymon said.
“New York is a great place to live right now if you have a college degree or in-demand skills in a particular field or trade,” he added. But the struggle, he said, is for people who lack those skills and are dealing with an economy that is expensive and does not provide opportunities much better than four years ago, or before that.
Angelina Garneva, communications director at NYCETC, added, “What we’ve been arguing for is that whenever there are conversations about economic development, workforce development should inherently be part of that conversation rather than an addendum or an afterthought or a wholly separate conversation.” She said the city needs to create an ecosystem for growth beyond only direct financial incentives, which administration officials have readily acknowledged. For instance, creating a system of collaboration between different workforce development programs and organizations.
“Putting in some oil between the mechanics of how things function so you can get bigger outcomes,” Garneva said. “It doesn’t have to be just direct programming...there’s also certain offices that can be empowered to make decisions to increase these kinds of impacts.”
EDC’s Hogrebe said the 100,000 jobs plan accounts for workforce development. “Built into that I think is a very strong recognition of the need to create a pipeline to the jobs that we are looking to build and a strong commitment to doing so and looking at innovative models of apprenticeships and other types of programming that can actually create that pipeline,” he said.
As evidenced by the jobs plan, the de Blasio-Glen approach is interventionist, both on housing and jobs, to harness and encourage market forces to benefit more New Yorkers. On both fronts, though, there are questions about whether the administration is reaching those struggling the most -- the lowest-income tenants looking for an affordable apartment, the unskilled young adult seeking a good-paying job.
There are, of course, factors out of the mayor’s control that can limit growth and pose dire challenges for the city’s path ahead, which may include a second term for de Blasio.
There’s broad consensus that federal policies -- on immigration, health care, taxes, and more -- can have devastating effects for the city’s economy through numerous direct and indirect ways. More locally, the city’s infrastructure issues and continued unaffordability for many can also serve to dampen people’s willingness to move, live, or open a business here, experts say. All that combined with an expected slowdown of the economy, after an unprecedented period of growth, could mean a perfect storm of economic uncertainty.
“The economy goes in cycles and there’s no question it’s not going to keep clicking on all cylinders, without some careful attention and support from City Hall,” said Bowles of Center for an Urban Future. “I think in the next four years, we’re going to need to see more focus on economic development. I think that there’s a good chance the economy will slow down.” He pointed to decreasing retail jobs from the last few years as one warning sign.
But the bigger issues, he said, are the ones that affect people’s quality of life and therefore the city’s ability to attract talent. Mounting subway delays and the increasingly high cost of living, he said, could have an impact. And President Trump’s immigration policies could hurt the city further.
“We’ve probably only begun to see the dampening effect from President Trump’s crackdown on immigration, on refugees,” Bowles said. ”If fewer immigrants come to the city, that’s gonna have a major impact. Immigrants are starting like half the businesses in the city and they make up about 47 percent of the workforce, and they are also a huge source of tech talent.”
Recent studies have shown that international tourism to the United States has already declined, although not definitively linked to the Trump administration. According to the U.S. Department of Commerce, in the first three months of 2017, there were about 700,000 fewer international arrivals compared to 2016. Tourism has been a particular boon for the city’s economy, accounting for billions in spending. A record 60.5 million tourists visited the city in 2016, a statistic de Blasio frequently cites. About 12.7 million of those were international visitors.
“It’s really about the confluence of what happens with the economy and with federal policy and then what is the city’s ability to manage that within the budget,” said CBC’s Doulis. She warned of the direct effects that federal cuts to Medicaid would have on the city, something the state and city governments are already feuding over. She pointed to President Trump’s tax plan, including the proposed elimination of the state and local tax deduction, on which high-tax states like New York rely.
Although Doulis acknowledged that the city has built up strong reserves to deal with a slowdown, or even a downturn, she said there hasn’t been sufficient “belt-tightening” at city agencies. The mayor’s response in such a situation is also hard to predict, she said. Would he propose more taxes or take a more balanced approach? “That’s an open question, and it’s likely to be one the mayor’s gonna face in the second term,” she said.
Gelinas, from the Manhattan Institute, wasn’t very concerned about Trump’s proposals, mostly since she doesn’t expect them to be enacted. She noted, for instance, the numerous failed attempts to repeal and replace the Affordable Care Act.
“I think one of the challenges in a slowdown would be, can the city maintain its quality of life if it loses a few billion dollars in tax revenue in any one year,” Gelinas said. “If people see that public services are slipping, they may not want to commit to being in New York.” She did, however, say that a market adjustment would be good for the city if it meant a decline in office and residential rents and property prices, allowing businesses and people to move here who couldn’t afford it otherwise. “Being too successful all the time is not that good either. We may be pushing out people to cheaper places that want to be in the arts or creative industries and that’s not good for the city in the long term,” Gelinas said.
Parrott of The New School was perhaps the only expert who doesn’t necessarily see an economic slowdown on the horizon. Cumulatively, the city’s absolute growth in terms of gross city product has yet to surpass earlier phases of expansion, he said. “If you gauge maximum level by accumulated GDP growth, this expansion could have another six to eight to nine years to go,” he said. “It depends on what sort of economic policy management we get out of Washington and the Federal Reserve. And what’s happening around the world.”
And Parrott praised the mayor’s management of the budget and reserves, which he believes will sustain the city through a period of weakened tax revenues. “There’s nothing in Bill de Blasio’s management of the budget to suggest that he’d be any less capable in approaching that,” he said, expressing an opinion not especially common among analysts of de Blasio’s leadership. There are also fiscal crises happening simultaneously at the city's public housing authority, NYCHA, and its public hospitals system, Health + Hospitals, where turnaround plans are in place, but need is dire and federal help vanishing.
Parrott also echoed concerns about the MTA and the city’s subway crisis, placing blame on both the city and state for failing commuters. “The city arguably needs to be doing more on the MTA, the MTA is really critical to the economic prosperity of the city and it’s not in good shape right now,” he said. “Partly the city is not doing what it needs to do. But on the other hand, there’s no partner at the state level to really work with on that either. So you can’t fault the mayor entirely on that. But I think that’s an area where he’s gotta do better.”
Laymon was more blunt about the city’s prospects, insisting that the biggest challenge may be continued inequality and lopsided growth. “The question is whether or not we leave behind a growing underclass of people that we have not helped lift out of poverty,” he said. “I think that is, as much as it was when he first ran, the number one risk factor for New York going forward, which is still increasing income inequality.”