Even before Covid-19 led to catastrophic damage throughout New York, the state was struggling with a declining population and a growing budget deficit. Businesses were being hit with rising rents, taxes, and compliance burdens that are now magnified by the impact of the pandemic.
In effect, New York has put itself in a bind where returning to a pre-Covid dynamic simply won’t suffice for making New York’s economy as strong as possible. Without serious consideration of how to uplift the entire business community, NY may be headed for further economic disaster.
Consider the state of business in New York:
- The jobs recovery will require a decade-long rebuild. The Independent Budget Office is forecasting that the city will lose 564,000 jobs by year’s end and that only 150,000 will be recovered in the next three years. In 2020 alone, the Gross City Product may decline by up to $115 billion in just the past year.
- Women and minority owned businesses (M/WBEs) are suffering the most. In a NYC July survey of more than 500 city-certified M/WBEs, 85% said they will have to shutter their company within six months. 30% stated they think they’ll have to close within a month.
- Traffic in NYC will be worse than ever before, which will cost the region billions in economic output. In a 2018 report, traffic was shown to cost the regional economy $20 billion. Now, as New Yorkers buy cars at record levels, congestion is likely to be orders of magnitude worse than it was before Covid. Even worse, the MTA is expecting a $16 billion deficit over the next four years, which will require further service cuts.
- The NYC tourism industry generates $70 billion. It has been completely wiped out. Tourism in the city was at an all-time high with 65 million visitors flocking to the five boroughs. Now, tourists are either being told not to come or unable to travel. It will take several years for that number to return. Even the head of NYC tourism said they are not yet encouraging tourists to visit the city.
- Over 15,000 workers have been fired or furloughed from cultural organizations. Arts in NYC – what separates the city from any other metropolis – may never be the same. The full negative financial impact of revenue losses and unanticipated expenses totals $550,000,000.
- Broadway shows will be shuttered until at least January, and perhaps beyond. The theater industry in New York supports 87,000 jobs, does $2 billion a year in ticket sales, and contributes $575 million yearly in tax revenue. Already, the industry has shed over 3,000 jobs and lost hundreds of millions of dollars in ticket sales.
- More than 80% of NYC bars and restaurants were unable to pay rent in June and in the first three weeks of the lockdown, New York state restaurants lost nearly $2 billion in revenue alone. While outdoor dining is mitigating some of the financial distress during the summer months, this situation will likely repeat itself this winter when outdoor eating is no longer an option. Once again, potentially hundreds of thousands of workers will again be unemployed.
- NYC growing tech industry is overexposed to travel, real estate, fashion, and events. According to a recent Center for Urban Future/Tech:NYC review, over 4,000 startups in the City are focused on industries that will take the longest to recover. This means a reduction in valuations, fund raising, and economic output for most of those start-ups.
- The city’s nonprofit sector – a core part of the NY’s social infrastructure – was hit with up to a $2.5 billion Covid-related decline in charitable giving. The industry was already struggling before the outbreak. Recent estimates show that 42% of the region’s nonprofit groups (about 31,000 organizations) were “at-risk” last year.
- 61% of bank executives said they don’t expect to call all employees back to the office. And more than 40% said they were planning on reducing their office leases, according to an Accenture survey. In turn, Manhattan offices that hundreds of thousands of workers once commuted to everyday are likely to be empty for years to come.
- Only 12% of NYC businesses received aid from the Paycheck Protection Program (PPP), leaving thousands of businesses at increased risk during the projected economic recovery. A NYC survey found that only 12% of businesses received federal stimulus funds compared to 20% of businesses in North Dakota and Nebraska.