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New York City may lose 165,000 jobs

(China Daily)
Updated: 2008-10-16 09:34

New York City may lose as many as 165,000 jobs, including 35,000 in the financial industry, as the impact of the credit crisis spreads throughout the economy, Comptroller William Thompson said.

The forecast, contained in a column Thompson publishes on his website, represents an increase of 80,000 from the comptroller's most recent budget report in July, when he also predicted a loss of 25,000 financial services positions.

The higher job-loss estimates "reflect the spreading of the economic troubles to other industry sectors as the nation slips into a general recession", Thompson wrote.

A woman passes by the Tulcingo Cafe in the Queens borough of New York, Thursday, Aug. 14, 2008. The cafe employs young Latin American women to dance with male patrons, starting at $2 a song. These jobs serve as a key source of employment for scores of undocumented women, but they can also carry the same perils of much informal work: exploitative bosses, sexual advances from clientele and even violence. [Agencies]

Wall Street, which accounted for 9 percent of New York's tax revenue in 2007, has been upended by the global financial crisis that led to the downfall of New York-based firms Lehman Brothers Holdings Inc, Merrill Lynch & Co and Bear Stearns Cos, and produced more than $600 billion in losses and writedowns worldwide.

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Economists at the Federal Reserve Bank of New York estimate that high-paying financial industry jobs have a multiplier effect. Each lost securities industry position may eradicate as many as three other jobs in the city and state, according to New York State Comptroller Thomas DiNapoli, who has also predicted lost employment due to the financial crisis on the same order of magnitude as Thompson.

"It's a reflection of the reality that there is a national recession and that there is a restructuring of the financial sector in the city," said Doug Turetsky, a spokesman for New York's Independent Budget Office, a city government fiscal monitor. "The two are combining to cost us a significant number of jobs."

Budget cuts

Losses among Wall Street firms will be so large this year, many of them won't have to pay taxes to the city for years, Mayor Michael Bloomberg has said. Last month, he ordered all city agencies to cut their budgets 2.5 percent this year and 5 percent next year, when he expects a budget deficit of at least $2.3 billion.

State officials anticipate a deficit for next year larger than the $5.4 billion they forecast in August. "We can't wait for all the numbers to be there" before planning spending cuts, Governor David Paterson, a Democrat, said.

The securities industry accounts for about 2.3 percent of all jobs in the state and 13.6 percent of all compensation. In the city, securities jobs are 5 percent of the total, and 23 percent of all wages.

Thompson's projections also track predictions by New York state's budget department, which forecast a loss of 40,000 financial industry jobs.

"The economic health of New York City and the state as a whole is closely tied to the securities industry," said a Sept 29 report by the state comptroller's office.

Fewer Wall Street jobs and smaller bonuses may produce a $950 million drop in state personal income-tax collections this year. Officials expect Wall Street bonuses will fall 43 percent to $27.5 billion, the least since 2004.

Next year "is going to look a lot worse than 2008 for New York City", said Marisa DiNatale, a senior economist at Moody's economy.com in West Chester, Pennsylvania. "We don't know how many will keep their jobs. Bonuses next year will be a fraction of what they were."

Forecasts of economic storms have often been wildly inaccurate, Thompson warned.

Agencies