New York: Economy
Major Industries and Commercial Activity
Despite the loss of the World Trade Center buildings, New York has remained at the core of national and international financial dealings and has continued as the global center of corporate headquarters in finance and services, media, entertainment and telecommunications, manufacturing, and trade. Profits on Wall Street, however, are not expected to equal the heights achieved in 2003, and financial services jobs are on the decline at present. Hundreds of nationwide corporations make their home in New York, from finance to insurance to advertising. New York City leads the country in the number of Fortune 500 and 1000 companies headquartered there, including 8 of the world's top 10 securities firms, and about two-fifths of the country's 50 leading law firms, as well as 219 banks representing every major country. The city's biggest industry is publishing, with more printing plants than anywhere else in the United States and approximately 13,000 employees. New York's clothing industry is headquartered in the Garment District near Times Square, where hundreds of factories employ more than 100,000 people.
In recent years, the high-tech and "new media" industries have taken a $9.2 billion toehold in the city, particularly in what is being termed Silicon Alley—Upper Manhattan, Brooklyn, Queens, and Staten Island. New York City has supported growth in this arena through its Digital NYC: Wired to the World program that assists with construction and remodeling efforts that result in affordable spaces with ready access to the Internet. New York City offers hundreds of thousands of miles of installed fiber-optic cable, enabling businesses to communicate with clients around the globe. Life science research and development is seeing a similar surge in activity, as the headquarters of at least three of the world's primary pharmaceutical companies have located within midtown Manhattan. Pfizer has announced ambitious expansion plans that will reportedly result in 2,000 new jobs by 2009, along with new office space and an extensive makeover for its current headquarters. Alongside cutting-edge research, professional services firms related to financial consultation or legal issues of intellectual property also flourish.
New York tourism contributes greatly to the local economy, fueled by huge advertising campaigns and interest in the site of the 9/11 tragedy. Hotel room occupancy rates are steadily increasing to more than 85 percent, and traffic through the area's airports broke the 8,000,000 mark in early 2005. Many tourists visit the city in order to experience its art and culture, resulting in a leisure and hospitality industry with more than 600,000 workers.
Television and film production in New York City constitutes another growth industry, demonstrating a significant increase in the number of overall shooting days for movies, videos, advertisements, and television programs. Almost 150 studios and stages support the industry, and film production costs in the city are now so reasonable that they rival those of Los Angeles. Three of the "Big Five" music recording businesses have headquarters in New York City.
Items and goods produced: published goods, apparel, chemicals, food products, furniture, machinery, paper products, textiles
Incentive Programs—New and Existing Companies
Mayor Bloomberg took office in January of 2002, mere months after the decimation of the World Trade Center buildings. Facing not just a public relations nightmare but also the nationwide economic downturn at that time, the mayor and his administration have expanded the city's industrial interests beyond Wall Street and into biotechnology, film production, and the recreation and tourism business. Unemployment is at its lowest point in 25 years, with 62,000 new jobs created in the city since the middle of 2003. The City of New York appears to acknowledge the value of small businesses, as reflected in its Business Improvement Districts.
New York City has many programs available to assist eligible businesses with locating real estate, accessing capital for expansion, lowering energy costs, finding skilled employees and lowering taxes. Businesses that locate in the lower Manhattan area and who complete renovations in excess of 20 percent of the property's assessed value may qualify for the Lower Manhattan Energy Program, which can reduce energy costs up to 45 percent. Manufacturers may receive a tax credit for 3.4 percent of the money spent on utility costs, plus an additional sales tax exemption on purchases of electricity, fuel oil, steam, and natural gas.
Empire State Development (ESD), the state agency responsible for promoting economic development in New York, has programs available to assist businesses that are expanding and creating jobs. Qualified businesses that locate in an Empire enterprise zone can be exempted from sales tax, benefit from tax reductions, or receive credits on real property and business taxes. Enterprise zone businesses may additionally save money on utilities, receive technical assistance, or receive tax credits on wages for newly-created jobs. Even outside of these zones, businesses that create new jobs can capitalize on Investment Tax Credits. Companies specializing in research and development are eligible for tax credits on 9 percent of their corporate facility tax and may receive a capital credit for their investment in emerging technologies. Machinery and equipment, facilities, property, fuels, and utilities dedicated to research and development activities may also qualify for sales tax exemptions, and the state operates more than 50 high-tech business incubators to further develop the industry. New York State has additionally partnered with electric and gas utility companies to create the "Power for Jobs" program in which companies that fulfill the requirement of retaining or generating a specified number of jobs then receive a break on their utility costs that can be as much as a 25 percent savings.
Low interest loans can be accessed through Empire State Development by small manufacturing enterprises, small service operations that are independently owned and operated, businesses operating within an Empire Zone, businesses located in "highly distressed" areas, businesses owned by women or minorities, defense industry manufacturers, and small businesses seeking to increase their export activities. Other loan programs range from direct financing through the ESD to interest subsidies and loan guarantees. Depending on the financing source, funds can be used for building construction, equipment acquisition, building purchases, and working capital. New York State's progressive tax structure combines tax credits, deductions, exemptions, and write-offs to help reduce the tax burden on businesses.
Businesses that start up in or relocate to designated Commercial Expansion Areas may be eligible for a 3-5 year rent credit of up to $2.50 per square foot, dependent on lease length and company size. New York City's Commercial Expansion Areas include certain Commercial Zones and Manufacturing Zones in Bronx, Upper Manhattan, Queens, Brooklyn, and Staten Island. To qualify, businesses must occupy a building of at least 24,000 square feet and constructed prior to 1999. Businesses in these same zones may be eligible for participation in the Relocation and Employment Assistance, or REAP, program. A tax credit of $3,000 per job is allowed for up to 12 years for jobs relocated from Manhattan below 96th Street or from outside the city to Manhattan below Houston Street. Businesses that have renovated a facility at a cost of more than 50 percent of its assessed value may also be eligible, as may businesses that sign a lease of no less than three years and that spend no less than $25 per square foot improving the space.
The Printers' Relocation Fund allows for partial reimbursement of relocation expenditures to commercial printing businesses and graphic arts companies that move within New York City. Grants may be 50 percent of the qualifying moving costs or $200,000, whichever is the lesser amount.
The New York City Industrial Development Agency offers straight lease transactions and issues low-cost double and triple tax-exempt and taxable bonds on behalf of a wide range of commercial, industrial, and nonprofit companies and organizations. Many financing programs are aimed at eligible small and medium-size businesses to help them obtain financing often not available elsewhere. Various programs provide tax-exempt financing for the purchase of production equipment and machinery; tax exemptions on newly acquired property or renovations for industrial companies; venture capital funds to make capital available for companies specializing in advanced technology; funds for the expansion of nonprofit organizations; loans to small start-up city-based service, retail contracting and manufacturing businesses; and funds to assist community-based banks in making loans for which businesses may not have qualified previously.
Job training programs
In 2003, the New York City Department of Small Business Services was merged with the Department of Employment to create a single point of entry called the Division of Workforce Development. The Division staffs Workforce1 Centers throughout the boroughs of New York City, where job seekers can find extensive databases of open positions, career counseling, skills workshops, and placement programs. The centers also provide GED preparatory courses and instruction in English as a Second Language. Employers can find assistance through the Division's NYC Business Solutions Centers, where customized recruitment and training allows industries to hire workers who are already trained. The Business Solutions Centers offer advice for entrepreneurs, resources for negotiating governmental regulations, and onsite skill development for employees.
The New York City Employment and Training Coalition has combined the resources of local community colleges, community-based organizations, and training programs associated with labor unions to create a comprehensive approach to training and retraining of the workforce. The Coalition offers employer roundtable discussions, training for management staff to facilitate recruitment and retention of quality employees, workshops and conferences, research, and technical assistance.
In 2005, the New York City Council partnered with the United Way of New York City to publicize a request for proposals for grant funding that will support programs as part of NYCWorks. The $10 million initiative will increase access to education, job readiness training, and specific job skill development for unemployed or underemployed workers in the metropolitan area.
New York City's Economic Development Corporation has continued its efforts to restore and reenergize the Lower Manhattan region through tax incentives that encourage retail, commercial, and residential development. Minimum amounts of investment in property improvements, minimum lease lengths, and other criteria for participation in the Lower Manhattan Revitalization Program ensure stability and commitment on the part of businesses and citizens alike.
A division of L'Oreal beauty products has decided to locate its stylist training facility in the TriBeCa neighborhood. Approximately 120 employees of the Matrix salon beauty products company will work in the 31,000 square foot space, where hairstylists will learn how to effectively use the company's products on clients.
Coney Island has meant summer fun for generations of New Yorkers; the stretch of Brooklyn beach, with its amusement park, circus sideshows, and hotdog-eating contests, has sometimes seemed to be on shaky ground, but new development in the area has bolstered the landmark yet again. In 2001, construction was completed on KeySpan Park, home of the new minor league Brooklyn Cyclones baseball team (an affiliate of the New York Mets). In 2005, the Coney Island Development Corporation chose a designer to revitalize the historic Parachute Pavilion at Coney Island, with the ultimate goal of creating a year-round attraction that will preserve the essence of the amusement park and its surroundings.
In 2004, Mayor Bloomberg announced plans for a commercial biotech research and development campus on the grounds of the city-owned Bellevue Hospital. The East River Science Park is expected to attract major players in the pharmaceutical, medical device production, and biotechnology fields. Approximately 4.5 acres have been set aside for the facility that, when completed, will encompass 870,000 square feet of research, retail, and office space. The Economic Development Corporation has committed $10 million to the project, with an expected return of 6,000 construction jobs during realization of the science park and 2,000 new permanent jobs upon completion. One of Manhattan's current pharmaceutical residents, Pfizer, also has plans in the works to renovate its existing headquarters, expand into several new buildings, and relocate thousands of employees to the downtown headquarters, at the cost of $1 billion over the next 15 years.
In the 1970s, Hunts Point (Bronx) was a crime-infested area notorious for frequent arsons in its abandoned buildings and warehouses. After being designated an In-Place Industrial Park in 1980, followed by Empire and Empowerment Zone designations in 1994, Hunts Point emerged as an industrial powerhouse, with an emphasis on food production. The City of New York and the Bronx Borough plan to capitalize on that momentum through the Hunts Point Vision Plan announced in 2005, in which the existing Produce Market on the site will be upgraded, vacant parcels in the Food Distribution Center will be developed, a buffer zone of food-related businesses will be created between the industrial park and the nearby residential neighborhood, bike paths will be constructed, rail and highway access will be enhanced, new parks will be planted, the visual appeal of the area will be heightened with new sidewalks and streetscapes, the appearance of the waterfront will be improved, and a Hunts Point Works employment and training center will be generated.
In 2005, the city of New York and the borough of Queens put a plan in motion to redevelop the former Municipal Parking Lot 1. Approximately $500 million has been set aside to turn the five-acre site into a new town square with residential spaces, a community center, retail slots, recreational facilities, and a business-class hotel. The project is called Flushing Commons and it is anticipated to generate 2,000 construction jobs during the building phase and an eventual 2,000 permanent jobs. An ancillary project in Flushing involves the construction of more than 100 affordable housing units complemented by retail spaces. The city of Flushing is also undertaking an $11 million downtown redevelopment project that will make the area more friendly for pedestrians, and a former industrial property in western Flushing will eventually be transformed into a 3.2 million square foot retail and residential area called Flushing Town Center, at a cost of about $600 million.
Economic Development Information: New York City Economic Development Corporation, 110 William Street, New York, NY 10038; telephone (212)312-3600; toll-free (800)NYC-0100
In 2003, the Port Authority of New York and New Jersey area handled about 4 million cargo containers and 55 million tons of bulk cargo, at a record value of $100 billion. The world's leading airport system includes LaGuardia, which transported 14,096 tons of cargo and 15,219 tons of air mail in 2004 in addition to 24,435,619 passengers. John F. Kennedy International Airport (JFK) opened two new cargo facilities in 2003, encompassing 435,000 square feet of warehouse and office space. Japan Airlines operates a sophisticated cargo structure at JFK, with 260,000 square feet of space, and the JFK Air Cargo Center is equipped to handle live animal shipments. In 2003, JFK moved 1,709,457 tons of cargo, 84,243 tons of air mail, and 31,732,446 passengers.
In 2002, New York State government and the Port Authority partnered in a rail freight service improvement project that was expected to cost about $40.195 million. Movement of goods within and outside the New York City area should be enhanced as track and yard capacity are increased in Brooklyn and Queens, vertical clearances are heightened along the Oak Point Link, cargo facilities are expanded, a new engine house is constructed for NY&A rail line, and other enhancements are instituted that will benefit rail freight service providers such as CSX and CP.
Two Foreign Trade Zones in New York City cover three major import-export sites: the Brooklyn Navy Yard, John F. Kennedy International Airport, and Howland Hook Marine Terminal (along with Port Ivory). Foreign Trade Zones are legally outside U.S. Customs territory and permit importers to store or assemble goods with minimal U.S. Customs scrutiny and no duty charges until goods enter U.S. commerce streams.
The city is bisected and surrounded by a web of interstate highways, including I-95, I-80, I-78, I-295, and I-280. More than 60 trucking companies offer local and national ground transportation of freight, and both FedEx and United Parcel Service operate air freight and package delivery services that are sited in Jamaica, NY.
Labor Force and Employment Outlook
The 2000 U.S. Census reported that 72.3 percent of New Yorkers possess a high school diploma or its equivalent; 27.4 percent of the city's population goes on to earn at least a bachelor's degree, and 11.6 percent achieve a graduate degree of some variety. Overall, this makes for a well-educated workforce. For the State of New York, labor market analysts predict that there will be marked growth in the education and training industry, with a 15.4 percent increase in available positions by the year 2012. Healthcare and healthcare support professions are expected to pick up 147,930 jobs, and community social service work is anticipated to increase by almost 20 percent. Manufacturing and administrative support positions will more than likely decrease in availability, while transportation-related and agricultural work are projected to remain essentially static. Financial services employment will continue its gradual rebound, with an 11.5 percent gain in jobs by 2012.
The following is a summary of data regarding the New York consolidated metropolitan area labor force, 2004 annual averages.
Size of nonagricultural labor force: 8,278,500
Number of workers employed in . . .
construction and mining: 329,700
trade, transportation and utilities: 1,582,400
financial activities: 769,700
professional and business services: 1,223,500
educational and health services: 1,358,000
leisure and hospitality: 606,700
other services: 346,000
Average hourly earnings of production workers employed in manufacturing: $15.35 (April 2005)
Unemployment rate: 4.5% (April 2005)
Cost of Living
New York is by far the nation's most expensive city in which to live, and it ranks as the thirteenth most expensive worldwide. The city's unique rent control policies provide cheap rent to long-ensconced residents—who tend to be middle class or affluent—while leaving newcomers to fend for themselves on the open market. Areas that have been undergoing gentrification in the last decade, such as the Park Slope (Brooklyn) and Parkchester (Bronx) neighborhoods, have seen a more than 50 percent increase in rents. To deter rent inflation that may chase older residents or lower-income owners out of their properties, New York City is now offering a property tax abatement to owners of buildings comprised of less than six units and who rent to senior citizens. The city has also proposed that renters in New York City be able to benefit from the School Tax Relief program that at present only applies to property owners, and that property owners who trim the City of New York trees near their homes may qualify for a property tax credit.
The following is a summary of data regarding several key cost of living factors in the New York area.
2004 (3rd Quarter) ACCRA Average House Price: $990,800 (Manhattan only)
2004 (3rd Quarter) ACCRA Cost of Living Index: 216 (Manhattan only, U.S. average = 100.0)
State income tax rate: Ranges from 4% to 7.7%
State sales tax rate: 4%
Local income tax rate: Graduated, from 1.5% to approximately 4.45%
Local sales tax rate: 4.375%
Property tax rate: Class 1 (single-family dwelling) in Manhattan, 15.094% of assessed value; Class 4 in Manhattan, 11.558% of assessed value (2004-2005)
Economic Information: Manhattan Chamber of Commerce, 1375 Broadway, Third Floor, New York, New York, 10018; telephone (212)479-7772; fax (212)831-4244
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