Private Employment By State and Metro Area: NYC Is Still in the Cellar, and It May Be About to Rain

The Bureau of Labor Statistics released re-benchmarked Current Employment Survey data last week, and the data shows that New York City is still trailing the rest of the country in recovering jobs lost during the COVID-19 shutdowns.  Only Hawaii is hurting as much, not surprising given that state’s dependence on the tourism industry.  The annual rebenchmarking process corrects the past employment data that was reported each month, based on the actual unemployment tax records of businesses.  Large-scale revisions are released each March.  Last year I found that New York City had lost more private jobs during 2020, the year of the COVID-19 shutdowns, than any other metro of significant size and (for those states without them) any state other than Hawaii.

https://larrylittlefield.wordpress.com/2021/03/21/rebenchmarked-current-employment-survey-data-for-2020-new-york-city-was-clobbered-last-year-but-the-long-term-data-is-still-very-positive/

And this year I find that NYC lags in recovering those lost jobs, with only Hawaii faring worse.  But NYC still has more private sector jobs than it had in any year prior to 2015, and there is a new positive trend in the Downstate Suburbs.

Sold Out Futures by State: Debt and Infrastructure for FY 1972 to FY 2019

The federal government just passed a $ 1 trillion “infrastructure bill” that, for a while, will increase the amount of federal funding for infrastructure.  Most of the actual spending, however, will be continue to be done by state and local governments, just as has been the case in the past.  The modest increase in spending, adjusted for inflation, is intended to address a backlog of needed projects.  But federal funding is only one source of money for state and local infrastructure.  State and local taxes are another, and bonds, usually paid off over 30 years, are a third. 

The extent of infrastructure varies from place to place.  In rural areas the only public infrastructure might be a county or town road, supplemented by power supplied by a rural electrification co-op, and telephone and postal service cross-subsidized by those in cities.  Instead of paying for public water, sewer, and solid waste collection, people provide these for themselves.  In cities, on the other hand, there may be mass transit, public sidewalks, airports, seaports, public water, sewer, solid waste collection, and in some places public electric utilities.  So do low-density rural states spend less on, and receive less in federal funds for, infrastructure?  Do states with low past infrastructure spending also have low debts?  How are the estimated $1.4 trillion infrastructure spending shortage and the $3.2 trillion in state and local government debt distributed around the country?  Read on and find out.

Sold Out Futures: A State-By-State Comparison of State and Local Government Debts, Past Infrastructure Investment, and Unfunded Pension Liabilities Through FY 2019

In two years of the COVID-19 pandemic, with society under stress, we have seen increasingly strident political fights over whose cultural attitudes and preferences should be imposed on others, who should get to contribute less to the community, and who should get to take out more.  In the shadows, however, is a bipartisan consensus as to who should be made worse off and be sacrificed the rest of their lives to pay for it all.  Ordinary people in later born generations, those who will be living in the United States in the future.   The pandemic has given politicians of all alleged views, and the interest groups that back them, an excuse to do, to an even greater extent, what they have done for 40 years.  Cash in the common future to address the perpetual “emergency” of the present.

So it was in Washington in 2020 when The Donald and the Republicans, having already sent the federal debt soaring to cut taxes for the rich and then ran a federal deficit equal to one-quarter of the U.S. economy.

https://larrylittlefield.wordpress.com/2021/03/15/federal-reserve-z1-data-for-2020-the-king-of-debt-went-out-with-a-bang-and-our-children-and-grandchildren-will-be-poorer-for-the-rest-of-their-lives-to-pay-for-it/

And so it is in Washington today, where Biden in the Democrats claim their plans will be “paid for” – meaning the burden shifted to the future would only be as great as it was under Trump and the Republicans.

It is in this context that for the fifth time, I have reprised an analysis of state and local government finance data from the U.S. Census Bureau, for all states and for New York City and the Rest of New York State separately, with data over 49 years, to determine the extent to which each state’s future had been sold out due to state and local government debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.   You’d think that the extent of disadvantage for the later-born, and who benefitted from creating it, would be the number one issue in every state election, and the number one topic of debate in the media.  Instead, it remains under Omerta, especially here in New York.  Shouted down under the comforting culture war issues that Generation Greed prefers.  So, although standing up for the later born and common future may amount to nothing more than standing on the beach shouting into a hurricane as a social tsunami heads for shore, over the past month I have updated the “Sold Out Future” analysis with data through FY 2019.  This post, a national summary and explanation of where the data comes from and how it was used, and the next three, will show what I found.

The Economist Notices the NYC Department of Corrections

Word of the meltdown of New York City’s jail system has crossed the Atlantic, and apparently somebody has given The Economist magazine the kind of information that, in general, no one is allowed to talk about here in “progressive” New York.

https://www.economist.com/united-states/2021/10/02/the-jail-on-rikers-island-is-both-appalling-and-generously-funded

The title?  

Aggravated robbery

The jail on Rikers Island is both appalling and generously funded

It costs $438,000 to jail one person for one year there

Gee, I thought everyone was obliged to say the people of New York deserve nothing because they don’t pay enough money in taxes, and cheat public employees and contractors out of $billions?  And because New York doesn’t tax the rich.  Didn’t the city just agree to increase the Department of Correction budget and staffing levels in response to a crisis that department and its union created?

The misery at Rikers is not for lack of resources. The jail’s population fell by half between 2012 and 2020, yet its budget grew by 24%. It costs $438,000 to jail one person there for one year. Of this $379,216 goes to personnel costs; less than 5% goes to services like substance-abuse treatment. The average salary for guards, after five and half years on the job, is $92,073. In 2012, the ratio of inmates to officers in the city was 7:5. In 2020 it was 1.6 officers per inmate.

And yet, the island’s chief medical officer said he is seeing “a collapse in basic jail operations.”  On September 29th a federal judge issued an emergency order to safeguard inmates’ wellbeing.

To hear local politicians talk about it, the problem is the buildings located on Rikers Island are attacking people, and it’s the buildings that must be replaced.  At a cost of $8 billion, more 10 times as much per square foot at the cost of luxury condominiums, to benefit the construction unions and contractors.  The problem couldn’t be the inmates, or the guards and its union, or other parts of the public sector, could it? 

So why was someone willing to make a comparison between New York’s local corrections spending today and the past, and with other places?  Did the corrections officers’ union not give enough money to the right politicians?  Because here is what The Economist didn’t say:  the same excess of funding and staffing compared with other places, even adjusted for the cost of living here, may be found in just about every state and local government service in New York City.  Even those that are merely, intentionally, inadequate, or getting worse, not “appalling,” so the inadequacy could serve as the basis for a demand for more money.   Nowhere else in the U.S. is close:  not New Jersey, not Connecticut, not California, not Illinois, nowhere.  And unlike the Department of Corrections, at least for the moment, no politician or media source will talk about it.

The MTA (and New York State and the New Federal Infrastructure Plan): Five-Plus Decades of Investing in the Suburbs and Disinvesting in the City

The era of large-scale federal infrastructure investment, from the 1950s through the 1970s, coincided with the era of suburban development and urban decline.  I don’t think that was a coincidence.  Cities had paid for their own infrastructure with local money, were still paying bonds for that infrastructure, and it was aging. The federal government then paid for brand new, up to date infrastructure for suburbs, and for rural areas that became suburbs, with taxes collected in part in cities, even as urban infrastructure declined.  Federal investment was limited to new infrastructure only at the time.  Most older central cities never recovered, and those that did only began to do so in the early 1980s, after the Reagan Administration cut federal investment and added local flexibility to how it was used.  More of it was then used to fix existing infrastructure, not just subsidize new suburban and exurban development.

Now it is 50 to 70 years later and the infrastructure of the suburbs is aging.  And because of lower densities, and thus more liner feet of road, water pipe, and sewer pipe per taxpayer, it will be more costly to replace with local taxes.  Some in the Strong Towns movement believe the suburbs are facing the sort of infrastructure decline the cities faced 50 years ago as a result. 

https://granolashotgun.wordpress.com/2016/01/12/teachers-pipes-and-pavement/

An issue that will be most acute in private communities responsible for their own local infrastructure, where people live so they can control who walks on their streets and not share a tax base with pre-1960 neighborhoods. Who will pay up when private sewage treatment plants fail and have to be replaced?  Did you hear about what happened at that collapsed Florida condo, where residents had argued for years about paying for fixes before disaster struck?

The older generations who live in these suburbs are used to getting things, but not fully paying for them.  The “I’ve got mine jack,” tax cut generations.  And here we have another federal infrastructure bill, enacted by suburban and Sunbelt Baby Boomers according to their preferred lifestyle, a lifestyle that poorer Millennials cannot afford and the global environment cannot sustain, to be paid for by those Millennials in the future, because most of it going to funded by soaring federal debts. With higher levels of governments (federal and state) making the choices as to how even the future money of city residents will be spent, how will New York and other older cities fare this time?

As an analogy this post will compare the suburban and city projects that the MTA promised in the Program for Action, released in early 1968 when it as formed, with the system expansions and maintenance of existing infrastructure that actually took place in the five-plus decades since.  And go from there.

DeBlasio’s Last New York City Budget: He Predicts Even More Inequality and Gentrification, or Else NYC is Toast, Because Those Cashing in And Moving Out Will Take More Off the Top No Matter What

Mayor Bill DeBlasio released his last budget recently, and it assumes that pre-pandemic trends will continue.  The rich will continue to get richer and the stock market bubble will continue to inflate, thanks to the federal government doing whatever it takes, regardless of the long-term cost, to prevent asset prices from going down.  Despite higher and higher taxes, the rich will stay in New York City and just keep paying.  So will hundreds of thousands of young adults, who will continue to live in less and less space for higher and higher rents and accept higher taxes, fees and fares and diminished public services, including crowding and unreliable service on the subways no elected official is in charge of.  More and more economic activity and educated workers will be concentrated in New York City compared with the suburbs, and in metro New York compared with the rest of the country.

All this will offset the extent to which DeBlasio’s (and all the other NY politicians) public union and contractor supporters will continue to get richer and richer, compared with other workers.   Other workers whose lower pay will keep the cost of living down for public workers and retirees, as the overall inflation rate remains below the long-term trend.  Based on these assumptions, the total city budget will grow more slowly than the total personal income of NYC residents over the long term.  Even if the average New Yorker continues to become worse off, because there will be more and more working adults.

But if that is what has happened, and will continue to happen, then why have NY’s state and local taxes been increased, over and over, and risen as a percent of personal income?  Instead of falling.  Why are debts continually increasing, and with interest payments rising as a share of city residents’ personal income despite rock bottom interest rates (also assumed to be permanent)?   Instead of debts being paid down.  Why does the Mayor plan to hand early retirement deals to city workers age 55 and over yet again, to “prevent layoffs,” after having already agreed to no-layoff guarantees? And why, in this Mayoral campaign, is no one asking questions about any of this – in the place with the highest state and local tax burden in the country, where the media is full of claims that we deserve even less in return because we aren’t paying enough – notably by the police and teachers?

Homeless Hypocrisy Always Has A Home in New York – and Elsewhere

Governor Andrew Cuomo just announced the NYC subway would return to 24/7 service, following a shutdown that was supposedly about cleaning to prevent the spread of COVID-19, but coincidently followed an act of arson, allegedly by a homeless person who has been charged with murder, that left a subway train car destroyed and a train operator dead.

https://www.thecity.nyc/2020/3/27/21210390/motorman-s-death-in-subway-fire-adds-to-transit-worker-fears

Multiple sources told The City that authorities discovered a charred shopping cart with a possible accelerant inside the second car of a northbound No. 2 train that filled with smoke and flames as it pulled into the Central Park North-110th Street station at 3:14 a.m — around the same time as three other fires in and around the subway system.

More recently, another train operator has been suspended for photographing homeless people in the subway, and putting out the photos on Twitter.

https://www.thecity.nyc/2020/11/1/21544690/nyc-subway-motorman-mta-first-amendment-homeless

Recently there has been an article calling for the very limited number of public restrooms in the subway to be re-opened.

https://www.thecity.nyc/life/2021/5/2/22411841/nyc-subway-bathrooms-closed-pandemic-reopening

The article is exclusively about having the subway be the place that homeless people use the bathroom. Not about having subway restrooms for use by anyone else.  And not about having restroom facilities available anywhere else for homeless people to use the bathroom.

If not for past debts and pension increases, along with the need for more and more city workers to do the same (or less) work during the DeBlasio Administration (cops, teachers), the city might have the $ required to rent storefronts with restrooms and other services specifically for the homeless throughout the city.  Then it would just be a matter of deciding in whose neighborhood to site them.  The City apparently believes the subway is that neighborhood. The subway and jail — that’s the de facto homeless policy, except for now not jail.  Elsewhere the policy is exclude and ship away to somewhere else.

But then trying, and failing, to figure out what to do with troubled and troubling people like this has a very, very long history in New York – and elsewhere.  One filled with failure and folly.  Yet you have people today saying the same things, proposing the same things, that were tried and failed years ago.  If you are under 50, don’t know this history, and are prepared to face some tough realities, read on and follow the links below.

Remember This Day

For 40 years, the trends have been as follows:

1) The generations born in 1957 and earlier get richer and richer, and freer and freer of obligations to others (including family obligations and taxes), while those born later get progressively poorer and more burdened by responsibilities to those older.

2) The executive/financial class and political/union class cut deals with themselves, and use control of the federal, state and local governments, and private sector organizations, to get richer and richer.  And the serfs get poorer and poorer, and go deeper and deeper into debt, to pay for it.

3) The connection between those who are taking more and putting in less, and those who are forced to put in more and accept less, is disguised by separating them in time via debt.  The media refuses to allow a discussion of the link between the two.

When this crisis is over, how do you think these various groups will have turned out? What will each lose? Will some actually gain?

In five or ten years…

1) Will the rich be richer?

2) Will executive pay be this high or higher?
3) Will the former middle class be poorer?
4) Will taxes be higher?
5) Will public services be worse?
6) Will old age benefits for later-born generations be reduced?
7) Will the life expectancy of those born after 1957 be lower, and/or the death rate higher?

8)  In NYC, will mass transit service and other public services degrade even more, and will state and local taxes, having been repeatedly increased, increase yet again?

Will all this happen yet again?  These are the questions. Remember this day, years after the virus is in the rear view mirror.

How Did New York City Government Recover from the 1970s Fiscal Crisis?

The legend has it that New York City avoided bankruptcy, and recovered to become the thriving city it was until recently, because all of its interest groups got together and agreed to “shared sacrifice.”  The public employee unions agreed to contract givebacks, and having their pension funds invested in the city’s bonds.  The banks agreed to roll over the city’s debts.  The rest of New York State, under the leadership of Governor Hugh Carey, agreed to shift resources to NYC.  And the federal government, after initially telling New York City to “Go to Hell,” finally decided it had sacrificed enough and agreed to a bailout.  These powerful players made the sacrifices, and ordinary New Yorkers reaped the benefits.

I’m here to tell you that the legend is a lie, a politically convenient lie.  The people negotiating in the room deferred and lent a little, but gave back nothing.  The ordinary New Yorkers outside the room then made all the sacrifices required to pay back every dime, and then some, in higher taxes and collapsing public services.  The poor were left to suffer and die unaided, with the Bag Ladies dying in the street, the schools collapsed, the infrastructure deteriorated, the police allowed city residents to be victimized by crime on a large scale, and the streets and parks filled with garbage. Property in large areas of the city was abandoned, and life expectancy fell.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1470515/

Decades later, some city services hadn’t fully recovered. The beneficiaries, relocating to the suburbs, a few enclaves within the city, or retired to Florida, and the better off, were mostly unaffected.

In reality New York City recovered because things happened that those negotiating over its corpse could not have expected.  This post will explain, and use data to show, that high inflation was real reason New York City recovered from the 1970s fiscal crisis.

The Coronavirus and Commercial Real Estate: Will Previously Booming Central Cities Be Abandoned?

The 2010s were the decade of the booming superstar cities – Manhattan and Brooklyn, San Francisco and Silicon Valley, Los Angeles, San Diego, Boston, Washington DC, Austin, Denver, Seattle, Portland, central Los Angeles, and even Miami.  With spillovers to, and rapid gentrification of, places such as Queens, Jersey City and Hoboken, and Oakland.  Even the downtowns of otherwise economically struggling older cities and metro areas, such as Chicago, Detroit, and St. Louis had a revival.

These were the places the most ambitious and creative Millennials and booming TAMI (technology, advertising, media and information) firms just had to be.  They poured in even as real estate prices soared and crowding increased.  Young working adults were forced to share apartments, and even bedrooms, with roommates, were squeezed into less and less space at work, and saw their wages fall behind the price of necessities, wiping out their discretionary income and ability to save.  Rail transit lines became crowded and started to break down, and in less transit-oriented cities such as Austin, highway traffic increased and commutes got longer.  I called this the New Urban Crisis, a while before Richard Florida published a book of the same name about the same problems.

https://larrylittlefield.wordpress.com/2014/11/23/the-new-urban-crisis/

Meanwhile, suburban corporate office campuses were abandoned, and the value of suburban housing plunged, something that was partially disguised by the fact that highly indebted aging suburbanites would not, or could not, sell at market value.

Now the coronavirus pandemic has hit, businesses have shut down, the shared amenities that make city life so appealing – the restaurants, museums, concerts and other gathering places – are also shut down.  Well off people and young workers have fled the city in droves.

Everyone is buying houses and cars and looking to move away, those who sell houses and cars are saying.   Will the cities now be abandoned?