Urban Matters: Lauren, for New York City’s economy, change has always been a constant. Maritime trade and manufacturing each had their day here. In the late 20th century, we became a media and finance capital. Is there a dominant economic theme now?

Lauren Melodia: I don’t think there’s a dominant theme, but some industries are really central, and they all have unique strengths and weaknesses. 

For example, this is still the finance capital of the world. The finance sector employs predominately white, male workers who earn very high salaries. This is important for the tax base, but the multiplier effect – the snowballing of that money into more economic activity – is muted if people in this field work hybrid schedules, or remotely, or live outside the region, because they won’t spend their income locally. And without a major shift to diversify hiring, this sector embeds structural inequality into the city’s economy.

Then there’s tourism, which has certainly been a growing sector in the past 20 years. It supports a lot of jobs, but at a price. What happens when you basically live inside Disneyland and have to pay the higher prices businesses charge tourists? Cultural institutions have designed discounts for locals, but private companies with high commercial rent and slim margins are less able to do that. And Covid was a reminder how vulnerable tourism can be to outside shocks. 

From a job-producing perspective, the industry growing the most is the health and social assistance sector. It employs and serves New Yorkers. It is also pretty diverse, employing a lot of women and workers of color, and includes some really well-paying, high-quality jobs. But some of the lowest-paying jobs (child care workers, home health aides) are also in this sector. 

It’s dominated by public-private partnerships, where government contracts and highly regulated federal programs (Medicaid, Child Care Development Block Grant, etc.) influence what the sector’s services are, who they are available to, and what jobs are in demand. Because of government involvement, there’s a lot of opportunity to shape the industry to best serve New Yorkers as consumers and workers. At the same time, its future depends on the City and State working together to develop creative solutions needed to guarantee good-quality jobs in this sector. 

UM: It’s hard to exaggerate the economic impact Covid-19 had on New York. Now that we’ve got a little distance on the pandemic, do you see lingering or lasting economic effects? If so, what are they?

Melodia: Absolutely. I think we have all tried to get back to “life as normal” after Covid-19, and as a result choose to regularly forget what happened. But as a reminder: New York City had an extremely tough experience with Covid-19, with so many early, lethal cases and an appropriate public health response that resulted in a dramatic social and economic shutdown. It also took New York City longer to reopen and recover economically compared to the rest of the country, because of those reasons.

There are two lingering effects we are paying particular attention to. One is that there’s been a shift in the industries where jobs are located in New York City.  For example, e-commerce really gained momentum because of Covid and the city has lost a significant number of retail jobs as a result. Such industrial re-composition has disproportionately impacted some demographic groups more than others. It also means that people still out of a job due to the pandemic likely need to acquire different skills and networks to access jobs in industries they hadn’t previously worked in. 

Also, we now live in a city with more income inequality and more poverty than before Covid. Our research shows that workers of color and those with lower levels of educational attainment suffered longer unemployment during Covid, and low-wage workers experienced less real wage growth than high-wage earners during the slow post-Covid recovery. Even more than the 2008-09 Great Recession, Covid really disproportionately impacted historically marginalized and disadvantaged workers and households.  

UM: For four-plus years, grasping and explaining the pandemic’s impact dominated the work of the unit you head. What direction should that work take now? What questions will you be trying to answer?

Melodia: During the pandemic our team really needed to make sense of rapidly changing data on where jobs were coming in and out of the economy and how people were accessing opportunities and support. Economic change is less frantic now, which allows us to take more time to investigate the evidence and think about targeted policy solutions. 

There are some extremely pressing issues that the city faces today. The economic and fiscal policy team has diverse skills and expertise we hope to use to answer questions that include:

• What is driving the rise in economic inequality and poverty and its disproportionate impact by race and gender? What are the appropriate tools to reverse those trends?

• What active labor market policies can best serve New Yorkers still unable to find good-quality jobs since Covid, given the industrial composition of the city?

• How will global and national political and economic change (a Presidential election, a possible recession, the climate crisis) uniquely impact the city’s economy and New Yorkers’ livelihoods?  

• Solve the puzzle: What policy design can deliver a universal child care infrastructure, where educators are paid family-sustaining wages and families can find affordable care that meets their needs? 

• What are the socio-economic benefits of improving working conditions and protections, labor standards, and housing affordability for workers, and also for the city’s long-term economic growth and sustainability?

UM: What are New York’s City’s economic strengths now? What are its flaws, and how should they be addressed? What should local government be focused on?

Melodia: New York City has proven resilient in moments of crisis – think 9/11, Hurricane Sandy, and Covid-19. During those shocks, the city’s strengths include its incredible demographic diversity, density, and also the public infrastructure we require. That infrastructure requires critical investment, and I think the city’s main flaw – the inequality embedded in the city’s economy as a financial and real estate capital – is also the source of great wealth to make those investments.

I’d like to see the city and state governments develop a joint plan to invest in the public infrastructure needed to weather current crises and future uncertainties – infrastructure for climate resiliency, public transportation, universal childcare, affordable housing, disability insurance to name a few (okay that’s a lot). 

These must be bold, long-term plans that aren’t constrained by revenue forecasts based on existing tax structures. The City and State need to figure out and implement some creative revenue generating proposals – ones that must be progressive, so they can mitigate structural economic inequality. We have an impressive public infrastructure, and need to build off this strength and the tremendous wealth generated in this city and continue to make New York a model of the great things that can happen when people come together.

In July, economist Lauren Melodia became director of the economic and fiscal policy unit of the Center for New York City Affairs.

Photo by: Steven Pisano