|11 September 2001>News Stories>Loss of 79,000 Jobs Adds to City's Economic Woes
Loss of 79,000 Jobs Adds to City's Economic Woes
Leslie Eaton . NYTimes . 16 November
A staggering 79,000 jobs disappeared from New York City in October, government officials announced yesterday, signaling that all the dire forecasts of economic fallout from the Sept. 11 terrorist attacks may have been understated.
Public and private forecasters have been predicting that 80,000 to 115,000 jobs would evaporate in the wake of the World Trade Center disaster — but not all in one month.
The number of jobs usually rises in October, and a big loss in that month is unprecedented for the city, said James P. Brown, an analyst with the New York State Department of Labor, which has been keeping such figures since 1958.
While a fraction of the lost jobs were Wall Street positions that simply moved to New Jersey, most of the decline came from businesses laying off workers or simply closing for good.
The enormous job losses were announced as a pile of other new reports outlined the economic damage the city has suffered since terrorists destroyed the trade center.
A study of major industries in the city, sponsored by the New York City Partnership and Chamber of Commerce, forecast at least $83 billion in losses from the trade center attack. Roughly $16 billion of that loss will not be covered by federal aid or insurance payments, the study warned.
And the Independent Budget Office, the city's fiscal watchdog agency, reported that the city's economic picture worsened to an extent not seen since the recession of 1990 and 1991. Because of the twin towers disaster and the national economic downturn, tax revenues will fall short by $925 million this year and as much as $1.8 billion next year, the office announced.
The unemployment rate in New York City actually fell slightly, from 6.3 percent to 6.2 percent when adjusted for seasonal factors. But that probably reflected the fact that many people who had lost their jobs were too discouraged or traumatized to look for new ones.
"A lot of bad news tends to make people pause; they don't run out and do job searches," said Mr. Brown of the state Labor Department.
Many economists consider the job market to be the key measure of an economy's health, and by that measure, New York City's economy is suddenly very sick indeed. Stores and shops shed 18,300 jobs, according to the New York City comptroller's office, which adjusts state data to reflect seasonal factors. Employment at restaurants and bars dropped by 13,400, and the transportation and utilities industries lost 6,900.
Wall Street, a crucial driver of employment and tax revenues in the city, shed 15,000 of its roughly 181,000 jobs in October. Some of this decline came from layoffs announced at securities firms before Sept. 11.
Other losses may be temporary, because the havoc and destruction in Lower Manhattan has forced some big Wall Street firms to move to New Jersey or Connecticut.
But those dislocated jobs should be a big concern for city officials, said Alastair Cairn, an associate principal of McKinsey and Company, one of the seven management consulting firms that, along with the Federal Reserve Bank of New York, prepared the report for the New York City Partnership. That's because of the 19,000 Wall Street jobs that left the city, as many as 7,000 may never come back, he said.
And more of the 129,000 securities industry jobs that remain downtown may leave, he said, in part because companies now want to spread operations over different locations.
"There are also secondary concerns," Mr. Cairn said, adding that people say things like, "My commute is too long, I don't feel safe, the air smells bad."
And if the big Wall Street firms go — or at least remove many employees — so will some small businesses. Especially in Lower Manhattan, small businesses includes more than shops and restaurants, said Ian E. Novos, a senior director of KPMG, which studied small businesses for the partnership.
His data showed that Lower Manhattan is also rife with small financial firms, professionals like accountants and lawyers, employment agencies, research firms, architects, engineers and computer consultants. Many of these small firms, he said, "service big firms, and if the big firms don't come back, you have a problem."
The purpose of the partnership's study was to separate the effects of the terrorist attack from the overall economic malaise being felt nationwide, said Kathryn Wylde, president of the partnership, which represents major employers and business leaders in the city. Especially in Washington, she said, people were asking, "How is what has happened in New York different from the suffering of the rest of the country?"
The consultants found that there were $30 billion in physical losses, and projects $19 billion in economic losses between Sept. 11 and Dec. 31. What happens next year and is 2003 are wild cards, but the losses there are likely to total at least $34 billion, according to the report. And that is if the city's economy tracks the national economy, which is seldom does. If, as usual, the city is slower to recover than the nation as a whole, the total $83 billion loss could grow by about 20 percent, said Arnon A. Mishkin, a partner at the Boston Consulting Group.