New York City may lay off tens of thousands of municipal workers. Even with this massive downsizing, it won’t be enough to stem the financial hemorrhaging plaguing the city.
The Wall Street Journal reported that roughly 22,000 government workers need to be let go to close a $9 billion deficit that continues to grow.
New York City Mayor Bill de Blasio said about the dire situation, “Here is a way to think about it—for every hundred million dollars in city budget—that’s about 2,200 city employees, on average.” He added, “To close a $1 billion dollar gap would mean laying off 22,000 city employees, which is a staggering number.” New York has about 330,000 municipal workers.
For several months, New York City held the unwanted title of America’s epicenter of the Covid-19 pandemic. Similar to other large cities, businesses were ordered to close and residents told to stay indoors.
New York heavily relies upon its bustling commerce, entertainment and social activities to draw in and keep people. Without restaurants, concerts, museums, sporting events and people commuting into Manhattan from the other boroughs (New York City comprises of five boroughs), the city has quickly changed. Residents have fled the city.
As people ceased commuting into New York, worked remotely, businesses shut their doors and social activities have halted, revenues to companies have plummeted. As businesses of all sizes saw their profits evaporate, the city government received significantly less in tax collection.
With considerably less money rolling into the city’s coffers, it pushed de Blasio into a precarious position. He’s left with no good choices and has to select from the least-worst options. The mayor will have to cut thousands of municipal jobs to save money. This means that there will be far fewer police officers, firefighters, garbage collectors and teachers.
Growing up as a kid in Canarsie, Brooklyn, I vaguely remember, but distinctly recall the stories from my parents about how bad New York City was in the 1970s and early ‘80s. A trip to Manhattan was referred to in an ominous, dark and menacing way—as going into “the City.” The streets were dirty and grimy, crime ran rampant and morale was at an all-time low. It was common for me to see burned-out shells of cars sitting on the shoulders of the Belt Parkway. Nearby Bedford-Stuyvesant, Brownsville, Williamsburg and Crown Heights were at varying degrees of dystopia and nowhere near the cool, hip places they were pre-Covid-19.
With less tax revenue coming in, the city government has to make drastic cuts. The results will cause a rapid degradation of everyday life. In response to the changes in the city, residents have already started fleeing in droves to Long Island, the Hamptons and Connecticut and New Jersey suburbs. This causes a further downward financial spiral. As more people leave, the city will lose more tax revenue and will have to make more cuts, which will start a new cycle of pushing people to leave. The folks who depart are primarily the ones with wealth, as they can afford to just pick up and go. They represent a large source of tax revenue heading out the door.
This is what New York City is now heading toward. New York was seen as one of the country’s top meccas for ambitious people eager to accelerate their careers and cultivate an active social life. The City offered an abundance of employment opportunities and vibrant nightlife. People were willing to pay exorbitant prices for homes and apartments. They viewed this as the cost of entry into having a better life and job.
In light of the lockdowns, business closures and the remote-work trend, New York City has changed drastically. Many people found themselves stuck in small and crowded apartments, as they were ordered to stay home. The restaurants, clubs, gyms, hair salons, museums, concerts and sporting events abruptly closed down. There are reports of increases in crime, shootings, homeless people and drug addicts taking over the streets.
Residents started questioning why they are paying so much money for rent when they can’t avail themselves to all of the offerings of Manhattan and are afraid of going outside. As they lost their jobs, city dwellers had to wrestle with paying a large amount of their salaries in housing costs and taxes, while either not having a job or holding onto their positions for dear life.
Prominent business leaders at companies, including Google, Twitter and Square, offered their employees the option of working from home for the foreseeable future. A large number of CEOs followed suit and offered this opportunity as well. The work-from-home movement untethered people who’ve been confined to a place that only offers a reasonable commute to work. As employees are able to work remotely, they can now live wherever they’d like and don’t have to remain in New York.
In addition to the layoffs, taxes will be raised significantly on its already-overburdened residents to raise money. With higher personal taxes, expensive apartments, the lack of safety and the fear of a resurgence of Covid-19, people will continue leaving and head toward locations deemed more secure with a better quality of life. Then, de Blasio will be forced to enact even more job cuts. Over time, he’ll have to consider cutting health and pension benefits of municipal workers to have sufficient funds to keep the city running. Those who are left behind risk living in filthy, crime-infested places, plagued with the threat of virus outbreaks.
James Altucher, a widely followed podcast host and best-selling author, wrote a provocative piece, entitled, “NYC IS DEAD FOREVER… HERE’S WHY.” In the post, Altucher said, “I love NYC. When I first moved to NYC, it was a dream come true. Every corner was like a theater production happening right in front of me. So much personality, so many stories.” He continued, “Now it’s completely dead.” Altucher claims the City is in a “death spiral” and won’t bounce back.
Comedian Jerry Seinfeld answered Altucher back in a New York Times op-ed piece. Seinfeld wrote, “I will never abandon New York City. Ever.” He proclaimed, “Energy, attitude and personality cannot be ‘remoted’ through even the best fiber optic lines. That’s the whole reason many of us moved to New York in the first place.” Seinfeld goes on to say, “Real, live, inspiring human energy exists when we coagulate together in crazy places like New York City. Feeling sorry for yourself because you can’t go to the theater for a while is not the essential element of character that made New York the brilliant diamond of activity it will one day be again.”
To be fair, Seinfeld is worth over $600 million and that makes living in New York much easier than the average person, but his sentiment does represent the history of the City. New York has endured Sept. 11, the financial crisis, strikes by municipal workers, blackouts, teetering on the verge of bankruptcy and many other challenges, but always seemed to find a way to rebound and reinvent itself.