THE MIX AND GROWTH OF NYC BORO JOBS

SUMMARY: Reviewing borough job changes can help guide policy. In 1992-1997, all boroughs except Staten Island lost manufacturing jobs; Brooklyn and Queens specialize in manufacturing and were hurt more than other boroughs by these job losses. All boroughs gained service jobs; the Bronx, Brooklyn, and Staten Island specialize in, and gained more by the growth of, services.

• Job mix in each borough is measured by a new indicator, the Comptroller’s Industrial Specialization Boro-Meter (ISB). The ISB shows the borough’s dependence on each industry for jobs. An ISB above zero means the borough specializes in that industry.
• Manhattan is specialized in two industries—FIRE (finance, insurance, real estate) and government—that both lost jobs in 1992-1997. But Manhattan has the lowest 1998 unemployment rate, by far the highest average 1997 wage, and the second-highest wage growth (after Staten Island). Its incomes are also the least equal. (See Summary Table.)

Summary Table. Job Mix and Unemployment, Wage, and Job Growth, by Borough, 1992-1998

Borough	Unemploy- ment Rate 98	Average Wage 97	Growth/ Yr Wage 92-97	Inc. Equ- ality 95	Job Mix: Industry Specialization Boro-Meter (ISB), 1997	Growth/ Yr Jobs 92-97
Bronx	10.3%	$30,115	2.6%	55.5%	1. Construction: 0.62 2. Services: 0.28 3. Trade: 0.17	+1.0% +2.1% +0.9%
Brooklyn	9.7%	$27,870	2.7%	49.8%	1. Construction: 0.63 2. Manufacturing: 0.48 3. Trade: 0.28 4. Services: 0.12	+1.8% -3.3% +1.1% +2.0%
Manhattan	7.1%	$59,168	5.5%	32.8%	1. FIRE (finance, ins., real estate): 0.31 2. Government: (Fed., state, NYC) 0.25	-0.2% -2.2%
Queens	7.4%	$31,416	2.9%	51.3%	1. Construction: 1.54 2. Transport & Public Utilities: 1.47 3. Manufacturing: 0.43 4. Trade: 0.29	+1.6% +0.4% -0.6% +0.9%
Staten Island	7.5%	$28,356	6.0%	49.9%	1. Construction: 1.23 2. Trade: 0.45 3. Services: 0.23 4. Transport & Public Utilities: 0.21	+1.5% +1.9% +4.5% +6.2%

Note: The Unemployment Rate for borough residents is the January-June 1998 average. Average Wage and Wage Growth are for payroll jobs in each borough; growth is the 1992-1997 average annual increase. Income Equality for residents of each borough in 1995 is the Gini Index (100% would mean everyone earned the same). An ISB above zero means the borough more than average depends on that industry for jobs; see Footnote 2. Job Growth is the average annual increase in payroll jobs, 1992-1997. Source: See Tables 1-4.

 

 

 

• The Bronx has the highest unemployment, the slowest wage growth, and the greatest equality of income. Brooklyn is the most diversified of the five boroughs, and has the lowest average wage and second-lowest income equality. Queens has the second-highest wage and second-lowest unemployment, after Manhattan. Staten Island has the second-lowest average wage and the highest wage growth.

• Job growth Citywide since 1989 has been concentrated in services, which grew 9.5 percent. The sectors with the biggest job losses were manufacturing and construction, each of which lost an average of one out of every four jobs.

- One reason for the negligible or negative employment growth in four of the boroughs (the notable exception being Staten Island) is that their specializations correspond to sectors, such as manufacturing, that have been declining. Another reason for job losses is labor-saving technology, such as computerization in the FIRE sector.

- Job growth in Staten Island has been robust because sectors in which it specializes have also grown the fastest. Manhattan has fared the worst on job growth, but the growing income inequality of its residents may reflect its high wage growth, especially in the FIRE sector, and the fact that higher-income jobholders are more likely to be residents of Manhattan than of the other four boroughs.

• Income inequality in the City in 1995 (the latest year for which relevant information is available) is greater than that of the nation. In the City and all the boroughs from 1989 to 1995, incomes became more unequal. In every borough except Staten Island, the average wage in the past five years has grown faster than total jobs, which suggests that income inequality has continued to increase for NYC overall and within four of NYC’s five boroughs.

 

Recommendations

This issue of Economic Notes provides information that can be used to assist in achieving economic-development goals for the City and its individual boroughs. These goals are not necessarily City priorities, nor are they necessarily mutually consistent:

• For NYC or borough industrial diversification, private-sector industries deserving attention are non-specialty "sleeper" industries where jobs are already growing: in Manhattan, services; in Queens, FIRE and services; in the Bronx, FIRE and transportation/public utilities; in Brooklyn, FIRE and transportation/public utilities.
• To bolster export industries or maximize wages, the FIRE sector and the business-services and professional-services components of the services sector have the strongest claim on City attention. In Brooklyn, the FIRE sector has been a significant source of new jobs.
• For a steady growth of jobs, since the services sector shows such growth, the high-value-added subsectors of the services industry are worthy of economic-development support. Small firms are the most reliable job creators and therefore should be the focus of economic-development incentives (see the analysis and recommendations in Economic Notes V:6, November 1997).
• To reverse the increasing inequality of incomes, the skill levels of New Yorkers at the bottom of the income distribution must be raised.

This report reviews industry-sector job specialization as a possible key to the puzzle of relatively high unemployment in New York City and as a guide for future economic development policy. It considers measures of job mix (industrial specialization) applied to the five NYC boroughs, and relates these measures to the growth of jobs, the wage level, growth in wages, the level of income equality, and the change in income equality.

 

1. Job Growth and Unemployment, NYC and U.S.

NYC’s last recession was significantly longer and steeper than the U.S. recession. While U.S. job losses occurred in only one year (1991) of the 1989-1997 period, NYC job growth was zero or negative from 1989 to 1992. Since 1993, NYC job growth has been positive every year, although in 1995 growth was weak. (See Chart 1.)

Chart 1. Payroll Jobs Growth, U.S. vs. NYC, Percent, Annual, 1985-1998

Source: Bureau of Labor Statistics (BLS, U.S. series) and NY State Department of Labor (NYC series).

The heavy impact of the recession on NYC is also reflected in comparative unemployment rates. NYC’s unemployment soared above the 11 percent level in 1992, while the nation’s unemployment rate peaked in 1992 at under 8 percent. While its unemployment rate has been falling in 1998, NYC still lags the rest of the country; the NYC unemployment rate in the second quarter of 1998 was 7.8 percent, substantially above the 4.4 percent U.S. average for the United States. It is worrisome that during the current economic recovery, the City’s unemployment rate has remained close to 8 percent; it suggests that in the next downturn the City could again suffer from double-digit unemployment rates. (See Chart 2.)

Chart 2. Unemployment Rate, U.S. vs. NYC, Percent, 1987-1998

Source: NYC Comptroller’s Office based on data from BLS and NY State Department of Labor.

Business-cycle theory would lead one to expect that job growth and income growth would be accompanied by lower unemployment. This is the case for the United States, but not NYC. However, while NYC’s average wage fluctuates more widely (as one would expect) than U.S. wages, it grew throughout 1985-1997, except for 1991, and grew faster than U.S. wages in 1996-1997. (See Chart 3.)

Chart 3. Growth in Wages, NYC and the U.S., Percent, 1981-1997

Source: NY State Department of Labor and U.S. Department of Commerce.

The total-job numbers hide some underlying trends taking place in NYC boroughs that affect wages and income distribution. To look at job trends, this issue of Economic Notes develops a measure of job specialization for each borough and industry sector. This measure is compared with job-growth trends and other measures of economic prosperity to arrive at conclusions and recommendations for City policy.

 

2. Job Mix by Borough

The mix of jobs by industry varies significantly among the boroughs. Citywide, the largest industry is services, with 36.7 percent of all jobs in 1997. This sector share varies within a narrower range than most other industries, from a low of 32.5 percent in Queens to a high of 46.9 percent in the Bronx; a reason for this narrow range is that many service industries are (such as shoe repair, laundry and dry cleaning establishments, or fast-food restaurants) are neighborhood-based and survive with small population bases.

The high-wage FIRE (finance, insurance, and real estate) sector accounts for a low of 5.1 percent of jobs in Staten Island and a high of 18.4 percent in Manhattan; this sector, which serves a national and international clientele, is dependent on a specialized population, namely those with substantial concentrations of assets. The other two sectors with double-digit job shares Citywide are trade and government. The share of trade (retail stores and wholesale distributors) ranges from a low of 14.3 percent of jobs in Manhattan to a high of 24.3 percent in Staten Island. The share of government jobs ranges from a low of 6.6 percent in Queens to a high of 19.3 percent in Manhattan. (See Table 1.)

Table 1. Job Mix: Share of Jobs by Industry, NYC and Boroughs, 1997

	NYC	Manhattan	Brooklyn	Bronx	Queens	Staten Island
Manufacturing	7.9%	6.8%	11.7%	6.2%	11.2%	3.0%
Construction	2.7%	1.2%	4.4%	4.4%	6.9%	6.1%
Transport & Pub. Utilities	6.0%	4.3%	6.0%	4.3%	14.9%	7.3%
Trade	16.8%	14.3%	21.5%	19.7%	21.6%	24.3%
FIRE (Finance, Insur.,RE)	14.1%	18.4%	6.2%	6.0%	5.5%	5.1%
Services	36.7%	35.5%	41.2%	46.9%	32.5%	45.2%
All Other	0.6%	0.2%	1.1%	0.5%	0.8%	1.0%
Government	15.2%	19.3%	7.9%	12.0%	6.6%	8.0%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Source: NYC Comptroller’s Office, based on data from NY State Department of Labor.