PORTRAYED BY THE mainstream media as the epicentre of the global economic crisis, New York City has, over the past three years, had its reputation dented. The smell of success and money that passengers disembarking planes at JFK would claim to experience is a little less acute these days.
And the 1,000 plus protesters occupying Zuccotti Park near Wall Street calling for domestic political and economic change have brought a sense of conflict in a city that usually demonstrates solidarity.
However, New York City has continued to attract talent, business and investment, and global corporations and financial institutions canvassed in Euromoney’s inaugural cities survey rank New York as the best city in the world to do business.
When it comes to availability of employees, New York is voted as the best among the big global financial centres. Unlike in other recessions, when people left New York to move to more affordable states, in this downturn New York’s workforce grew, says James Brown, a labour analyst at the New York State Department of Labor.
"As a US resident you look around the country at where the opportunities are, and they are in New York," he says. "Other states that would traditionally benefit from a recession in attracting people out of New York have, in this cycle, too many issues of their own with foreclosures and unemployment. New York, by comparison, has fared reasonably well."
Ross de Vol, chief research officer at the Milken Institute, agrees. "The great recession hit many places that had been experiencing strong growth, such as Florida, Arizona, southern California and Nevada," he says. "They had been attracting migration from the Northeast but no longer have the pull because of the lack of job growth. Also, mobility in general in the US and globally has been hampered in regions where people are upside down on mortgages and therefore cannot move."
Unemployment in New York City is around 8% from a peak of 10% in September 2009, with a workforce of almost 4 million. The national unemployment rate is 9% (although those figures do not include residents who have not looked for work in over four weeks). Analysts say the rate is likely to be higher as some people have become discouraged and have given up looking for employment, but on a relative basis New York City joblessness is still lower than in many cities in the US.
Productivity per worker in the state is also higher than in any other US state. In 2009, the average worker in New York State added $90,484 to GDP compared with a national average of $74,559. This relatively high productivity, says James Parrot, deputy director and chief economist at the Fiscal Policy Institute in New York, is partly attributable to the dense concentration of the population and the synergies among industries. The city and its region’s infrastructure and mass transit system also increase productivity. New York City was voted as second to Shanghai globally for hard infrastructure.
New York also benefits from being a magnet for young people. "Young college graduates are flocking to New York," says Parrott. "In an economy that is moribund nationally they want to go where the opportunities and excitement are."
De Vol says that on a global stage New York tops London for attracting younger people. "New York is a 24/7 city. There is a lot to do there, and when it comes to work the best and the brightest of the younger generation are prepared to go there and work there very hard for 15 years."
Bob Steel, the deputy mayor for economic development for New York City, says the ability of the city to attract young entrepreneurial energy is one of its selling points. "New York has a history of being successful, and so has a strong underlying engine of mature long-standing business, but it also has an energy similar to developing economies in terms of drive, innovation and entrepreneurship."
Indeed, this year New York overtook Boston to be second only to Silicon Valley in the US for attracting venture capital money. Steel says: "Bank lending is still sluggish, but venture capital is here and we have thought about how to be supportive to that. When people consider starting companies they tend to think of Boulder, Austin or Seattle but now parts of New York City are hotbeds of start-ups. The Flatiron district has a lot of hi-tech firms, and Dumbo in Brooklyn is home to a lot of start-up companies."
Indeed, Manhattan is usually considered the place for businesses in New York, while an increasing number of smaller firms are setting up in Brooklyn. An incubator building was established this year in Dumbo providing space to start-up businesses and entrepreneurs in financial services, media, the environment, bioscience and fashion. It is the ninth such incubator project in the city.
Survey respondents ranked New York City as top for technology and innovation, with Singapore and Hong Kong ranking second and third respectively. Steel says the economy is more diverse in New York than people think, and the city is trying to diversify further. It is working on a project to attract a new or expanded applied science campus to boost the hi-tech sector in New York.
Financial capital of the world
The main industries in New York remain finance-related. The City’s four main industries are financial services (including real estate and insurance), healthcare, professional services and retail. The city ranks top globally in Euromoney’s survey for financial competitiveness and breadth of financial services.
"New York has a very large infrastructure supporting the financial services industry, it has global connections, and it is close to Washington, DC, both in terms of geography and relationships," says de Vol. It is hard to argue against the idea that for any global or domestic financial services firm, a New York presence is essential.
