John Petro
Creating Jobs in New York City
Mayor Bloomberg has begun his mayoral campaign by focusing on job creation. In his first English-language TV commercial of the campaign, the Mayor states that he will "never lose focus on what matters: jobs." Bloomberg has also released The Mike Bloomberg Five Borough Economic Opportunity Plan which, in tandem with the TV commercial, promises to create or retain 400,000 jobs (well, maybe it will be 407,000 jobs now).
Bloomberg offers up some of his job creation strategies. First is capital investment, such as the #7 Line expansion and a new Police Academy in Queens. Second is the creation of green jobs through increasing energy efficiency in city buildings while "investing in renewable wind and solar technologies." Third is the attraction of "cutting-edge industries like biotech." Next is a list of items intended to help small businesses, like cutting small business taxes, changing the way city permits are purchased, and increasing loans to small businesses. Finally, Bloomberg will extend certain services, such as job-training and foreclosure counseling.
Bloomberg has presented us policy analysts a mixed bag of economic development ideas, from the good, to the incomplete, to the bad.
First, the good. As Amy has pointed out, economic downturns are not times for state governments to be cutting back on smart investments. The same is true for city governments. However, city governments are hampered by their relative inflexibility in regards to annual budgets. Capital projects, since they are often paid for through bonds, are a good way to create economic activity during a recession. Bloomberg's focus on energy efficiency is also a good strategy. Much has been said about the possibilities presented by Green Jobs in the new economy, though the term still means more in theory than in practice. By investing in energy efficiency for city buildings, the city will be putting people to work as well as reducing future energy costs. The Mayor could expand on this idea, however, to include policies that would increase energy efficiency in private buildings. One good model is the BerkelyFIRST model of financing solar power projects. The same model could be applied to energy efficiency in New York.
The incomplete policies include "investing in renewable wind and solar technologies" (how?), increasing loans to small businesses, and foreclosure counseling (we should be doing this instead).*
Finally, the bad. Perhaps "bad" is too strong of a word. Let's say "potentially bad." The Partnership for New York City has been pushing biotechnology as the next big thing in New York since at least 2002.
Citing a market demand study... the city's top medical institutions already spawn approximately 30 start-up biotechnology companies every year, but few of these companies grow here in New York.I would stress that the city should concentrate more on retaining start-ups, rather than trying to attract established firms to locate in the city. I wrote about economic development strategies that seek to attract certain types of firms. This often involves subsidies, which are problematic for a number of reasons.
Additionally, Ed Glaeser talks about the benefits of small, independent start-ups as opposed to large corporate behemoths. Subsidies should not be used to lure large biotech companies to New York City.
*A law passed in New York State in August of 2008, the Foreclosure Prevention and Responsible Lending Act, has many of the same measures as Philadelphia's foreclosure prevention program. New York state's law actually goes further in regulating the conditions of high cost loans, criminalizing mortgage fraud, and placing more responsibility on mortgage brokers to act in the borrowers interests.
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Posted at 11:12 AM, Apr 14, 2009 in
Economic Oppertunity | Urban Affairs
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