It’s ironic that in the heyday of welfare reform, New York City has no strategy for creating private sector jobs for welfare recipients and the working poor. The city not only shrugs its shoulders over the survival of the city’s destitute; it has also neglected to secure a sound economic future for the bulk of working New Yorkers.
Despite a lack of municipal leadership, local non-profit and for-profit entrepreneurs are finding creative new ways to generate jobs that pay enough to raise a family. These enterprises are deepening their roots in the five boroughs, identifying niche markets and customizing their products and services. They are cooperating with community institutions, forming industry alliances and hiring locally.
Until now, the city has contributed only intermittently to private-sector efforts, and has failed to absorb the lessons from these successes into any systematic jobs agenda.
The Center for an Urban Future is crafting a blueprint for a jobs agenda that distills the lessons learned from these entrepreneurs. The Center urges city economic development officials to look beyond their traditional Midtown and Wall Street constituencies and instead support the small- and medium-sized neighborhood-based businesses that are the city’s true engine of growth–and its most promising source of new working-class jobs. New York should identify market sectors that could benefit from minimal public investments and form partnerships with industry intermediaries.
Government has an important role to play. It can and should be a catalyst for job creation and diversified economic development. A little money, wisely spent, can help employers build the capacity needed to hire more workers–workers who pay taxes, shop locally and keep the city alive.
The Center seeks to promote policies that create jobs both for people coming off welfare and for other New Yorkers just trying to make ends meet. Many jobs will undoubtedly be beyond the capabilities of some public assistance recipients. But the job market is a ladder. Workers who step up into new positions create vacancies for those with fewer years in the labor market.
The Center for an Urban Future is calling for nothing less than a cultural shift: The city should make living-wage job creation its top priority. The Center is proposing that city officials help ignite the entrepreneurial spirit latent in New York’s neighborhoods. It’s not charity–it’s common sense.
As far as New York City officials are concerned, welfare reform has nothing to do with economic development. Jason Turner, the new chief of the Human Resources Administration, and the Economic Development Corporation’s Charles Millard don’t do lunch. And social service bureaucrats charged with helping public assistance recipients get off welfare might as well be on a different planet from the economic development staff assigned to stoke the employment rate.
The lack of cooperation is perplexing and illogical. City government ought to tear down the firewall between welfare reform and economic development. If both welfare reformers and economic developers keep their eyes on job creation, they will inevitably find new ways to work together.
Mayor Rudolph Giuliani’s workfare strategy consists of encouraging people to leave the welfare rolls by demanding that they toil in dead-end, menial public works assignments. City government seems to have abandoned all hope of helping public assistance recipients find real jobs.
The administration refuses to keep track of the 350,000 welfare recipients it has bounced into oblivion. But recent data from the state reveals that about 20 percent of workfare participants left the rolls because they had found work, and the Human Resources Administration itself estimated that only 4 percent of participants claim permanent employment as a result of the city’s workfare program.
For decades, the city’s idea of economic development has been grounded in a strategy of charming multi-million dollar corporations to stay in Manhattan with offers of prodigious real estate subsidies and tax abatements. In 1995 and 1996, such deals cost the city an average $600,000 each per year–and many deals surpassed the million-dollar mark. And at least nine corporations that benefited from the nearly $800 million in city tax breaks since 1994 went ahead and laid off staff anyway. As critics have long pointed out, if these sweetheart deals preserve any jobs at all, they keep as many wealthy suburbanites as city residents employed.
These wasteful handouts look especially unfair when compared to the pittance that real job-creating businesses get from city government.
Hundreds of thousands of small and mid-sized firms have no chance of getting a city subsidy. Remarkably, these businesses account for 99.7 percent of New York City’s companies and provide many of its jobs. Between 1993 and 1996, firms with fewer than 500 employees hired 99,000 new workers while those with more than 500 created only 22,300 new jobs. And between 1990 and 1997, 29 big companies went broke, while 6,000 companies with less than 50 employees opened up.
A good example of where government could get a better bang for its buck is in the light-manufacturing sector. Though it may come as a surprise to some, the city is currently home to 12,000 manufacturing firms employing 286,000 workers, making products from merchandise display cases to New York cheesecake. That’s nowhere near the one million manufacturing jobs the city had in the 1950s, and it is unlikely New York will ever again be a center for large industry. But the city’s structure and location do allow specialized manufacturing to thrive.
Neglected but talented, manufacturing pioneers continue to break new ground. Twelve businesses started squatting in an abandoned city-owned factory in 1988, producing high-end wood products like furniture and architectural details, and making a decent living. It took eight years, but eventually they won city permission to buy the dilapidated factory for $1 and the Greenpoint Manufacturing and Design Center was born. Since then, GMDC has spent $4.5 million on renovations, including a $800,000 city grant for environmental clean-up. The site is now filled to capacity with 68 businesses employing 400 people who share training costs and high-tech machinery.
The city seems unwilling to expand this winning strategy. Manufacturers need a lot of low-cost industrial space. But the city’s policies favor residential and commercial tenants–people who generate few jobs and, in their willingness to pay higher rents, put even more financial pressure on manufacturing firms.
The city is taking a step backward on one program that helped mitigate this situation: the Business Relocation Assistance Corporation. The city’s primary program to keep manufacturers in town, BRAC gave hundreds of displaced manufacturers grants of up to $60,000 to help them relocate within the five boroughs. The city made its disdain for manufacturing clear last year when it began phasing BRAC out.
Creating living-wage private sector jobs for people without a lot of education and skills is feasible, as several enterprises right here in New York City have shown.
These enterprises are all:
- Set up to capitalize on the strengths of the local labor force
- Tailored to New York City’s economy
- Organically attached to specific industries
- Benefiting from public/private partnerships
The Center for an Urban Future encourages New York City to expand on these core elements, keeping in mind that the best job creation solutions come from the private sector. This is not a big-government proposal. On the contrary, the Center’s research shows that a minimal amount of investment–applied strategically–can yield a windfall of solid middle-income jobs.