by Chris Jones, Director of Economic Programs, RPA
As the tri-state region struggles to emerge from recession and revenue shortfalls, both the public and political leaders are focused on immediate challenges--finding a job, paying the bills, balancing the budget. We have been here before. In the early 1970s, the region lost nearly 400,000 jobs, nearly 6% of the total, and New York City suffered through eight long years of job losses and fiscal crisis. In the early 1990s, the region lost nearly 800,000 jobs, or about 8%, and all parts of the region, city and suburbs alike, suffered losses of similar magnitude.
The jury is still out on how much damage the current recession will inflict. Although there are some signs that the economy is stabilizing, the region has already lost 325,000 jobs, about 3% from its 2000 peak, and it is not clear when growth will resume. New York City has fared far worse than other parts of the region, due in part to September 11 and in part to the effects of the bear market on a Wall Street-dependent economy. Even if the economy is turning a corner, however, all three states, New York City and other local governments are likely to battle with wide budget gaps for several years.
What has yet to emerge is a discussion of the long-term trends that will shape the metropolitan economy in the next expansion and beyond. The previous two recessions each cast a glaring light on fundamental changes that were well underway.
In the seventies, the cumulative effects of deindustrialization, white flight and rapid suburban growth led to a deep decline in the region's cities while cushioning recession in the suburbs. They also set the stage for three decades of widening income disparities and increased sprawl, even during periods of economic growth. In the early nineties, globalization and technological change led to corporate downsizing that affected managers and professionals as well as blue-collar and service workers, suburban as well as urban firms. These forces also contributed to the productivity increases and new industries that helped drive the subsequent expansion, a period that also saw similar rates of growth in New York City and other parts of the region.
Public policy, both national and local, also played an important role. Suburban expansion would not have been possible without major investments in new highway capacity. The expansions of both the eighties and nineties would have been far less robust if the region had not invested in returning the mass transit system to a state of good repair. The near- miraculous revival of urban neighborhoods in the eighties and nineties resulted from many factors, not the least of which was an unprecedented investment by New York City in its housing stock.
The current recession is also providing some insights into the dynamics of the next expansion and the issues that the region will confront. One is the long-term impact of technology-induced productivity enhancements. On the national level, this is currently taking the form of the "jobless recovery" in which technology has allowed firms to increase output without increased hiring. At the local level, there is considerable anxiety about where the next growth industry will come from. Many financial and corporate service firms appear a long way from adding new staff, and it is hard to envision a dot.com revival anytime soon.
Paradoxically, this trend may actually help the region's economic growth, even if it exacerbates our income disparities. Over the long run, productivity improvement not only creates more income growth and demand for goods and services of all types, it also favors places with a highly skilled workforce. As long as the region can maintain its attractiveness to a talented population, it will have an advantage in an economy that places a premium on knowledge and creativity. We may not be able to predict the next growth industry, but we can create the environment for the kinds of growth sectors that are likely to emerge. More troubling is the tendency of this economy to create even wider wage disparities by levels of education and skill.
Another set of dynamics is based on the maturation of several of the region's dominant growth patterns, a maturation that indicates that we could well be entering a different era. These have been well-articulated recently by James W. Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers. In Professor Hughes' words, "we are approaching the endgame of a 50-year sustained suburban development wave."
Among other factors, this wave has been driven by the "baby boom" generation that has been driving demand for successive waves of housing from the 1950s to the end of the 20th century, and facilitated by the availability of land for development and the expansion of the interstate highway network. All of these factors are nearly spent. The demographics are shifting toward immigrants and the elderly, groups that may favor more urban locations. However, we have not committed to a new set of transportation investments that could support a new pattern of growth.
The full scope and meaning of these trends deserve considerable study and discussion. However, a few broad implications are notable. There is still potential for strong economic growth, but growth is likely to be more concentrated in cities and town centers if we make the transportation, housing and schools to support it. A more "centered" growth pattern, however, may not lead to any narrowing of income disparities. The region is likely to become even more oriented toward industries that support high-paying, high-skill occupations and leave fewer career ladders for low-skill workers. The fight against suburban sprawl may not be over, but it may take on a different character with more intense battles over a shrinking amount of developable open space. These issues are no less important than our short-term challenges, and call for an equal measure of our attention.
As the tri-state region struggles to emerge from recession and revenue shortfalls, both the public and political leaders are focused on immediate challenges--finding a job, paying the bills, balancing the budget. We have been here before. In the early 1970s, the region lost nearly 400,000 jobs, nearly 6% of the total, and New York City suffered through eight long years of job losses and fiscal crisis. In the early 1990s, the region lost nearly 800,000 jobs, or about 8%, and all parts of the region, city and suburbs alike, suffered losses of similar magnitude.
The jury is still out on how much damage the current recession will inflict. Although there are some signs that the economy is stabilizing, the region has already lost 325,000 jobs, about 3% from its 2000 peak, and it is not clear when growth will resume. New York City has fared far worse than other parts of the region, due in part to September 11 and in part to the effects of the bear market on a Wall Street-dependent economy. Even if the economy is turning a corner, however, all three states, New York City and other local governments are likely to battle with wide budget gaps for several years.
What has yet to emerge is a discussion of the long-term trends that will shape the metropolitan economy in the next expansion and beyond. The previous two recessions each cast a glaring light on fundamental changes that were well underway.
In the seventies, the cumulative effects of deindustrialization, white flight and rapid suburban growth led to a deep decline in the region's cities while cushioning recession in the suburbs. They also set the stage for three decades of widening income disparities and increased sprawl, even during periods of economic growth. In the early nineties, globalization and technological change led to corporate downsizing that affected managers and professionals as well as blue-collar and service workers, suburban as well as urban firms. These forces also contributed to the productivity increases and new industries that helped drive the subsequent expansion, a period that also saw similar rates of growth in New York City and other parts of the region.
Public policy, both national and local, also played an important role. Suburban expansion would not have been possible without major investments in new highway capacity. The expansions of both the eighties and nineties would have been far less robust if the region had not invested in returning the mass transit system to a state of good repair. The near- miraculous revival of urban neighborhoods in the eighties and nineties resulted from many factors, not the least of which was an unprecedented investment by New York City in its housing stock.
The current recession is also providing some insights into the dynamics of the next expansion and the issues that the region will confront. One is the long-term impact of technology-induced productivity enhancements. On the national level, this is currently taking the form of the "jobless recovery" in which technology has allowed firms to increase output without increased hiring. At the local level, there is considerable anxiety about where the next growth industry will come from. Many financial and corporate service firms appear a long way from adding new staff, and it is hard to envision a dot.com revival anytime soon.
Paradoxically, this trend may actually help the region's economic growth, even if it exacerbates our income disparities. Over the long run, productivity improvement not only creates more income growth and demand for goods and services of all types, it also favors places with a highly skilled workforce. As long as the region can maintain its attractiveness to a talented population, it will have an advantage in an economy that places a premium on knowledge and creativity. We may not be able to predict the next growth industry, but we can create the environment for the kinds of growth sectors that are likely to emerge. More troubling is the tendency of this economy to create even wider wage disparities by levels of education and skill.
Another set of dynamics is based on the maturation of several of the region's dominant growth patterns, a maturation that indicates that we could well be entering a different era. These have been well-articulated recently by James W. Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers. In Professor Hughes' words, "we are approaching the endgame of a 50-year sustained suburban development wave."
Among other factors, this wave has been driven by the "baby boom" generation that has been driving demand for successive waves of housing from the 1950s to the end of the 20th century, and facilitated by the availability of land for development and the expansion of the interstate highway network. All of these factors are nearly spent. The demographics are shifting toward immigrants and the elderly, groups that may favor more urban locations. However, we have not committed to a new set of transportation investments that could support a new pattern of growth.
The full scope and meaning of these trends deserve considerable study and discussion. However, a few broad implications are notable. There is still potential for strong economic growth, but growth is likely to be more concentrated in cities and town centers if we make the transportation, housing and schools to support it. A more "centered" growth pattern, however, may not lead to any narrowing of income disparities. The region is likely to become even more oriented toward industries that support high-paying, high-skill occupations and leave fewer career ladders for low-skill workers. The fight against suburban sprawl may not be over, but it may take on a different character with more intense battles over a shrinking amount of developable open space. These issues are no less important than our short-term challenges, and call for an equal measure of our attention.
@RegionalPlan