Not even a week after and not even two after , Mayor Eric Adams announced the city’s deficits over the next 3 ½ years are $1.5 billion worse than he projected in July, for a t🍌otal budget gap.
Welcome to the city’s tech recession.
For three decades, going back to early-’90s Mayor David Dinkins, to make us less dependent on Wall Street jobs.
And this effort worked. Last year, tech e✅mployed 172,570 people in the city, per an Oct🧜ober , up from fewer than 60,000 in 1995.
New York captured an outsized share of nationwide tech growth, propelling the state as a whole to the nation’s third-largest tech employer, with 321,00෴0 jobs, behind California (1 million) and Texas (half a mill💃ion).
The🐈re’s no denying tech’s boom powered New York City’s economy and budget. Tech workers are the perfect taxpayᩚᩚᩚᩚᩚᩚᩚᩚᩚ𒀱ᩚᩚᩚers. Young (38, three years younger than the city’s average private-sector worker) and male (71%), they’re big earners without requiring public services like schools.
The tech sector accounts for just 4.9% of city jobs, says the comptroller, but 10% of wages. With the city and state’s progressive🐽 tax structure, that means they pay an even higher share of income taxes. And techies pay state and local taxes when they cash out stock options.
This oversized contribution to the city budget is bested only by Wall Street, whose similar number of employees — also about 5% of🌄 the city’s private-sector workforce — .
Tech has been about all that’s kept New York going since 2020. Tech jobs increased by 34% from 2016 to 2021, DiNapoli notes, while the total private sector lost 3.3% of its jobs. “Job losses,” he says, “would have been worse by a thi🅺rd” during the pandemic “if not for the tech sector.”
All industries suffer regular downturns, but it’s about the worst time for New York City to see its newish golden goose suffer one. We’re still missing 2.4% of our pre-pandemic private-sector jobs, or more than 100,000 positions, pretty much the worst performance in the country.
Then there’s real estate. Tech was the only industry actually adding to its commercial real-estate base during 2020 and 2021, when everyone else was shedding floors. But now , twice the , and still 💧rising as tech, too, tries to sublease its office space to other tenan🅘ts.
And tech may be facing not just a short-term economic blip but a longer-term employment decline. For two decades, since the recovery from the 2000 tech-bubble burst, companies like Facebook and Google have minted money. Even companies without consistent profits — like Twitter and Uber — had n🦹o problem attracting investor cash.
So there was 🥃no cost discipline in the tech༒ sector. Facebook’s employee roster was up nearly 30% just in the past year, to more than 87,000 worldwide.
Facebook is still a profitable company — but with the Nasdaq index of tech stocks down 31% off its high🐓 of a year ago, investors are far less likely to pump money into unprofitable companies, like food-delivery firms, me๊aning the gravy train of high-paying jobs may have halted indefinitely.
So what is Adams doing to prevent even higher budget deficits? Despite gestures toward cutbacks, city-funded spending for this fiscal year, at $78.8 billion, is 5.9% above Mayor Bill de Blasio’s spending last year. (The remainder of the city’s $104 billion budget comes from federal and sta🌼te sources.)
And that’s even though the city’s public-sector 🀅workforce has since the pandemic, as people have quit or retire💎d rather than return to work.
If we’re spending more to pay few🎉er people, what is the extra money going to?
Partly, it’s costs for pensions and health care — but also for unaccountable, opaque, “emergency” contracts, like erecting a t🔯enꦑt city for migrants on Randall’s Island only , and other temporary resources for the border cဣrisis, totaling at least $16 million.
And that’s also before we’ve even begun to address a key question: With the🅺 city’s labor contracts expired, raises to k𒁃eep up with inflation would cost an additional $3 billion a year.
Adam🉐s has a lot of🙈 work to do — work that our tech bros can’t magically solve.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.