Citing figures that put 2008 on pace to be "one of the worst years ever" for Wall Street, DiNapoli says in a statement, "These numbers are translating into job losses. The securities industry in New York City has lost more than 16,000 jobs and the industry could lose a total of 38,000 jobs by next October, with another 10,000 jobs lost in banking, insurance and real estate. And those job losses translate into more job losses in other industries."
The report points to the "multiplier effect" that financial sector job losses have on employment in other industries. DiNapoli estimates that for each financial sector job lost, two more jobs will be lost in other industries in New York City and 1.3 jobs will be lost elsewhere in the state.
Tax collections, including personal income and business taxes, from Wall Street-related activities could drop by $4.5 billion for New York State and $2 billion for New York City by 2010, the report states. Before the current crisis, the securities industry accounted for 5% of the city's employment but nearly 25% of the wages, according to the report, which points out that the average Wall Street salary of nearly $400,000 per year is 6.8 times that of non-financial jobs in the city.
The report notes that commercial vacancy rates are on the rise both nationally and locally. "CB Richard Ellis reports that in some cities, such as Detroit and Dallas/Fort Worth, commercial vacancy rates are close to or exceed 20%," the report states. In New York City, Manhattan's commercial real estate market has begun to weaken as job losses in the finance industry increase and spread throughout the economy. Several major commercial real estate deals and construction projects have been cancelled or put on hold due to tight credit conditions and weakening demand. Colliers ABR reports that Manhattan's overall commercial vacancy rate rose to 9.1% in September 2008, from 6.8% one year earlier."
In a statement, Kathryn Wylde, president and CEO of the Partnership for New York City, says the report "captures the substantial damage inflicted on New York by the collapse of global financial markets and underlines the importance of stabilizing the banking system in order to maintain our position as the world's financial capital." Deborah Jackson, executive managing director of New York City-based Weiser Realty Advisors, tells GlobeSt.com she is unable to comment "beyond what has already been said" in DiNapoli's report.
However, in line with other recent forecasts, including Thompson's, the DiNapoli report projects smaller job losses than what occurred following the dot-com bust and 9/11. "During the 2001-2003 recession, New York State lost 329,600 private sector jobs, of which Wall Street directly and indirectly contributed a loss of 173,500, or more than half of the decline," according to a release. "New York City lost a total of 232,100 private sector jobs during this period."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
