Will New York City Ever Recover?

Is this the big one? Is coronavirus the one calamity that will finally break New York City?

In all of the soul-wrenching predictions about the end of New York City, not one is pointing to the gross ineptitude of New York’s radical leftist mayor. And no one seems to have recognized that electing incompetent imbeciles like Alexandria Ocasio-Cortez is going to tell big business to look elsewhere for workers.

New York City has become the epicenter of the coronavirus and no one has thought to give responsibility to New York City’s mayor… and certainly not to New York State’s governor.

Of course, if either were Republicans we would be hearing calls for their immediate impeachment for dereliction of duty.

New Yorkers are a hardy bunch. They overcame a terrorist attack that destroyed the World Trade Center. They overcame the financial crisis of 2008 and the city’s bankruptcy in the 1970s. So, some people are predicting that New York will rise from the ashes. And yet, this time might just be the one time that prophecy fails.

As I have often noted on this blog, the income disparities in New York City are unsustainable. This is a city that has hollowed out its middle class, leaving only the very rich and the poor. When 40% of the taxes are being paid by 1% of the residents, it does not take very much for the tax base to disappear.

And that was before the coronavirus. David Goodman has the story for the New York Times:

It took just a matter of days to shut down New York City, once the coronavirus took hold. Restarting it will take much, much longer.

The economic impact in the city from the global pandemic has been striking: Hundreds of thousands are already out of work; at least $7.4 billion in tax revenue is projected to be lost by the middle of next year.

And the changes will be felt long after New York begins to reopen its economy.

How New York City, the epicenter of the country’s outbreak, begins to recapture its vibrancy is a question consuming political, business and cultural leaders.

The very features that make New York attractive to businesses, workers and tourists — Broadway, the subway system, world-class restaurants and innumerable cultural institutions — were among the hardest-hit in the pandemic. And they will take the longest to come back.

Half of the hotels in the city are not operating, and with no reliable forecast for when tourists might return, many may stay shut. Nearly the same portion of the city’s smallest businesses — some 186,000 shops employing fewer than 10 people — could fail, city officials fear. Replacing them could take years.

The city’s real estate and construction industries, major drivers of the local economy, have all but stopped. Millions of renters are struggling to make monthly payments, fueling concern over a cascading crisis in the housing market if rent goes unpaid.

White-collar business and financial services companies, whose workers were mostly spared immediate layoffs in the shutdown, are forecast to see declining profits next year, and even losses. Some law firms have already pared down pay.

And with social distancing guidelines likely to be necessary for the foreseeable future, all facets of New York’s work life will take on new rules, routines and costs.

“I don’t think the New York that we left will be back for some years,” said Gregg Bishop, the commissioner of the city’s small businesses agency. “I don’t know if we’ll ever get it back.”

No restaurants, no theatre, no movies, no concerts or sports events. A subway system that is a major health threat. No tourists. Rents unpaid. Lower pay for lawyers. And let's not forget, the de Blasio administration has been working to empty the jails. Just what New York needs: more criminals roaming the streets. And with fewer police officers.

It takes the most wide-eyed optimist to think that the city is going to come roaring back. 

The city’s Independent Budget Office forecast that 475,000 people would lose their jobs over the next year; other economists have put the job loss far higher: 1.2 million by the end of April, mostly in low-wage jobs in restaurants, retail or transportation.

And whole industries, gone overnight, do not as quickly return.

In the late 1970s, “It took four or five years for a lot of the city to empty out,” said Kathryn Wylde, the president of the Partnership for New York City, a nonprofit business group. “It took three or four decades to bring them back.”

New York City has been the center of calamity before — the Sept. 11 terror attacks, the 2008 banking crisis, the 1970s fiscal crisis — and each time, economic life bounced back, stronger but also scarred.

The Times adds that this time is different, an order of magnitude different:

But no other crisis saw the city shut down as profoundly, or for as long. Nothing before has caused public life to simply halt, everywhere, at once, nor called into question the very thing that distinguishes New York City: its concentration of people and its street life.

Large and midsize companies are beginning to plan for a return to the workplace, in phases. Some are thinking about how to use their existing office space when workers cannot be packed together as tightly, and questioning how much they should be expected to pay for it.

Swiftly shutting down the city’s more than 25,000 restaurants and bars was one thing. 

But getting customers back may not be a matter of simply allowing them to reopen, even with servers in masks and gloves and diners ordering from an app on their phones.

“When are companies going to start hosting events at restaurants and bars again?” said Andrew Rigie, executive director of the New York City Hospitality Alliance, a nonprofit association for the restaurant and nightlife industry. “When are the tourists going to start coming back?”

That is a question that has been haunting Broadway and the rest of the city’s entertainment sector as well.

As recently as February, New York City’s tourism promotion arm, NYC & Company, had been predicting a record number of annual visitors in 2020. That forecast has since been scrapped, and no new projections offered.

“How are we going to come back? There’s no playbook,” said Vijay Dandapani, the president of the Hotel Association of New York City, an industry group.

Tourists account for nearly 300,000 direct jobs in New York City, according to the Center for an Urban Future, eclipsing the number of jobs in finance and nearly twice as many as in the city’s tech sector.

But tourists are not likely to come back to a closed city, and the sorts of activities that draw crowd and visitors — parades, performing arts, museums, sports, festivals — are likely to be among the last parts of the local economy to reopen.

And public transportation, a challenge in normal circumstances, is not just failing. It is a health hazard:

Another major factor in the city’s ability to return is the city’s subways and buses — and so far the Metropolitan Transportation Authority has not articulated a safe service plan.

Riders and transit workers have recently been required to wear a face mask on a crowded subway car or bus. But the system is operating with less than 10 percent of its ridership: On Thursday, the city’s subway system had 470,000 passengers. The same day last year, it had 5.9 million.

Worse yet, many of those who work in financial services have discovered that they do not need to get on the subway and go to the office to do their jobs. So, they are evacuating the city and heading for greener, more suburban pastures. And they are discovering that they like it. We recall that, even before the virus came to town, JP Morgan Chase built a major financial center in Plano, Texas. That giant sucking sound was the job opportunities moving out of the city.

The Wall Street Journal reports this aspect of the story:

By the end of March, Kristen Euretig was fed up with quarantine life in her Brooklyn rental apartment. She’s now enjoying a three-bedroom Airbnb rental outside Rochester, N.Y. with her husband, 18-month-old son and dog. And she’s surprised to discover how much her family enjoys country living.

When they want fresh air, there’s no need to don gloves, face masks and dodge neighbors crowding the apartment building lobby. They tumble out to the yard with its 16 acres of marshland that hosts ducks, geese and deer. “I’m not in a rush to head back,” said Ms. Euretig, who founded the financial advisory Brooklyn Plans, and is now working from home.

Indeed, the experience has the family rethinking its commitment to the city. Until the pandemic, the suburbs didn’t seem practical. But now that her husband, a lawyer, has proven his ability to work from home, they’re hoping his employer will be open to the idea. Last week, Ms. Euretig made her first call to a Hudson Valley real-estate agent.

Of course, we could all be wrong about this, but, for once it looks like the bell is tolling for New York City.