Victoria Pennacchio
Credit: Christine Leonhardt
When a city relies on only one sector for its economic success, it is left vulnerable. A place might rely on an industry that is becoming obsolete or is too cyclical to provide stability for its workers and residents.1 For example, New York City over-relies on the finance sector—this sector’s “booms and busts…can make or break the City’s finances.” Different factors, like natural disasters and terrorist attacks, can impact some industries more than others. To withstand these changes and to spread potential risk, it is imperative to diversify the city’s economic base.2 There should be growth in industries with low correlations to each other3 and that provides employment opportunities for New Yorkers with varied skills and experiences.4
Figure 1: This graph demonstrates how much tax revenue the securities industry generates for NYC, credit: https://www.osc.state.ny.us/files/reports/osdc/2021/pdf/report-12-2022.pdf
The finance and insurance sector plays a major role in New York City’s economy. It accounts for around 8% of the city’s employment5 and generates about 20% of the gross city product.6 It has a significant multiplier effect ranging from 2.0-4.0, and around 700,000 nonfinancial jobs depend on it.7 This sector produces more than 60% of the city’s total private sector wages and contributes around $8 billion annually.8 It is especially important to monitor the securities industry as it accounts for the highest salaries in the finance sector;9 thus, its losses and gains in employment and revenue greatly impact other industries. In 2020, that industry was responsible for 15.7% of all economic activity in the city10 and 7% ($4.7 billion) of City tax collections in fiscal year 2021,11 as shown in Figure 1.12
New York City must diversify its economic base because it relies too heavily on the finance sector, which can pose a great risk. For example, when the financial crisis of 2008 struck, the sector’s employment declined by 9.3%13 and there was a loss of billions of dollars in tax revenue.14 Between 2008 and 2009, NYC lost over 100,000 jobs and Wall Street directly and indirectly accounted for three-quarters of all the jobs lost in the city.15
Interestingly though, the total share of jobs in the securities industry has been declining the last couple of decades—it was at 33% in 1990 and just 18% in 2021.16 This downward trend could be attributed to improved efficiencies, like technology adoption, and physical relocation. The COVID-19 pandemic demonstrated people’s willingness to leave NYC, so as securities employment grows in other states, the city could lose jobs to different parts of the country and, therefore, needs to invest in more sectors to support the economy.17
The argument that New York City has been overly dependent on the financial sector for too long is not new. In 2011, then-Mayor Michael Bloomberg said, “We love finance; when it’s good, it is great. But finance is a cyclical business. And when it turns south, one of the things in government is we cannot reduce our expenses the way you would in the private sector.”18 One of his solutions to mitigate the down cycles in the City’s revenue was to diversify the economy by attracting the tech industry to New York City, particularly venture capital-backed startups like MongoDB and Etsy. Bloomberg wanted to grow the city’s competitive advantage and, in many ways, he succeeded. For instance, tech jobs increased by 60% in the five boroughs between February 2003 and 2012, and these types of companies now relocate to the city.19 His team worked on making NYC an attractive place for young, educated people, and within 10 years there was a 15% jump in the population of 25-34 year-olds with at least a Bachelor’s degree.20 These efforts led to growth in professional roles, such as engineers and computer system designers, that require advanced degrees.
While Mayor Bloomberg’s administration achieved its goal of diversifying the economy, it led to greater inequality in New York City. As well-educated, young adults moved in, higher property values and rents followed, leading to the displacement of native New Yorkers.21 These locals had an even tougher time relocating in the city as Bloomberg downzoned areas, limiting the growth of new housing and businesses. As advanced degrees became more of a requirement, people without such qualifications were forced to take low-wage service jobs with little economic mobility,22 resulting in the shrinking of the middle class.23 The city needs to reverse this trend and find a way to create quality jobs—ones that offer a living wage and benefits. There must be a way to do this while diversifying the economy.
While former Mayor Bloomberg took an approach that seemed to disproportionately favor the highly educated, current Mayor Eric Adams could diversify New York City’s economy in a way that would benefit people of varying education levels: by bringing manufacturing back to the city through its growing fashion industry.
Revitalizing the manufacturing sector is a fairer approach to diversifying the city’s economy as it provides well-paying jobs without tough educational barriers. Once crucial to the economy, the manufacturing sector started to decline drastically in the 1970s in New York City and the rest of the country. Between 1974 and 1994, such jobs decreased by more than 50%.24 Despite this, “the compensation premium [for manufacturing jobs] has risen…across all levels of educational attainment.”25 The phrase “compensation premium” is referring to the greater wages and benefits (i.e., insurance, retirement) that manufacturing workers earn relative to comparably skilled workers in other sectors and is one of the reasons these jobs are considered high quality. It is estimated that workers without college degrees can earn average hourly wages that are 7.8% higher in manufacturing than elsewhere in the private sector. While it has declined since the 1980s, the manufacturing wage premium certainly exists and provides opportunities to a greater range of New Yorkers than Bloomberg’s tech startups.26 The manufacturing sector is inclusive and offers high-quality jobs that could help reduce income inequality and start to bring back the middle class;27 thus, Mayor Adams ought to support the sector’s growth in the city.
Urban manufacturing in the 21st century provides not only economic benefits but also societal ones. Local manufacturing is more sustainable as products can be created in small volumes or on a made-to-order basis, which helps reduce waste. Additionally, making items domestically generate less pollution than imported goods and offers the manufacturer opportunities for local consumer feedback.28 When a person envisions manufacturing districts of the past, they might think of smokestacks, but with advances in cleaner production, people of today are now able to safely live and work nearby.29 For example, the Brooklyn Navy Yard was built with green infrastructure30 and houses a variety of sectors, including manufacturing and design in the same complex as restaurants and public spaces. Today’s manufacturing can not only help New Yorkers grow economically but also help them live more sustainably by providing them with more locally produced options.
If the Adams administration chooses to diversify the economy by reviving the manufacturing sector, it would make sense for New York City to focus on one type of industry in particular: garment manufacturing. Garment manufacturing has played a significant role in New York City’s history. Production in the Garment District laid the foundation for NYC to become one of the fashion capitals of the world. In the mid-1980s, around 5,000 businesses in the apparel industry were found in the Garment Center employed almost 61,000 people, and occupied 20 million square feet of space for manufacturers, suppliers, and showrooms. Manufacturing accounted for 41% of total employment in this area,31 and at its peak in the 1950s, the garment industry employed 323,669 people. With rising rents and outsourcing, garment production declined substantially starting in the 1960s. Between 2008 and 2017, employment in NYC fashion production plummeted by 43%, yet in fashion design, it increased by 27%.32
The Big Button sculpture is located in the Garment District in NYC and it is meant to honor the neighborhood’s history, credit: Christine Leonhardt.
Over time, the focus in New York City moved from fashion production to design. Between 2008 and 2017, self-employed fashion designers in the city increased by almost 70%, and 1 in 5 employees in the sector nationwide was employed in NYC, illustrating the city’s importance as a fashion design hub.33 This hub is supported by infrastructure like post-secondary institutions, such as the Fashion Institute of Technology (FIT), that collectively educate over 20,000 students annually. The Council of Fashion Designers of America, the national fashion design industry trade group, is headquartered in New York. Moreover, NYC contains fashion houses and popular publications and hosts networking opportunities and events, including New York Fashion Week, which generates an economic impact of $600 million.34
There is an advantage to housing fashion production and design in a place as diverse as New York City. Clothes are a universal commodity and people of all backgrounds can flex their entrepreneurial talents and create something specific to their cultures that could appeal within and outside their own communities. NYC is a space for diverse business ownership. For example, a woman named Nonye Anyadiegwu emigrated from Lagos, Nigeria, and opened her own trendy African fashion line called Noni Styles in Brooklyn, NY in 2001. She pursued her dream and now imports fabric from Nigeria to design and make garments in Prospect Lefferts Gardens. While Noni Styles is gaining some traction, her story proves that the fashion industry welcomes people of varying backgrounds who can support themselves despite not being considered “high fashion.” While Prospect Lefferts Gardens is undergoing gentrification, her store’s presence has not been a catalyst for those changes in this largely Black and Caribbean-American neighborhood.
The fashion industry can better integrate into geographic areas than other industries. For example, when a high-tech firm moves into a neighborhood, it often leads to rent increases and people with low-paying service jobs are unable to afford the new prices and are forced to move out.35 The average salary for a software developer in New York state is around $140,280,36 so it is understandable that when such extreme incomes are injected into a neighborhood, current residents are vulnerable to displacement. Conversely, the average yearly wage is around $84,624 for a fashion designer37 and $74,412 for an apparel manufacturer.38 With less extreme incomes, workers in the fashion industry, like Nonye Anyadiegwu, can move into places without disrupting the existing socioeconomic fabric.
The relationship between New York City and its fashion industry is mutually beneficial. By 2017, NYC’s fashion industry employed 4.6% of the total private-sector workforce and generated more than $11.3 billion in wages and $3.2 billion in tax revenue.39 The industry is quite profitable and City government can build on that success to revive the garment manufacturing sector and include people who have been excluded by the Bloomberg-era approach to economic development.
Lily & Taylor is a current example of a manufacturing business in the Garment District, credit: Christine Leonhardt.
By bringing manufacturing back to fashion, Mayor Adams could address multiple issues at once. The manufacturing sector offers a much-needed pathway to the middle-class and City economic development and land use policies can create a space for the sector to grow again. Meanwhile, the fashion industry is thriving, yet its production is largely outsourced, and fast fashion and overproduction are problematic as they are financially wasteful and harmful to the environment. The strategy of fostering local production will increase the number of high-quality jobs and help diversify the city’s economic base,40 while encouraging the purchase of slow fashion.
There are advantages to having design and production in the same place. It allows for easier communication between the designer and manufacturer than if items were being made worldwide in a different time zone with potential language barriers. The fashion industry has a unique opportunity to create an inclusive economy where innovation and production co-locate—where a designer from FIT and a manufacturer can “cross-pollinate” to experiment and develop new ideas.41 Such a setup has been shown to generate economic gains and promote “inclusive innovation.”42 By working together, they can react to the market quickly if something isn’t selling and can test new clothing samples faster, speeding up the whole process.43 Co-location can also allow for customization options for customers.44 This interaction can happen when designers and manufacturers are housed in the same complex or when they are clustered in close proximity to each other.
The City, along with the NYC Economic Development Corporation (EDC), has already begun to recognize the value of bringing manufacturing back. For instance, the Made in NY (MiNY) initiative raises awareness of the economic impact of supporting and buying clothes mostly designed and made in NYC. Further demonstrating the City’s commitment to fostering fashion production, an associated campus is planned in Sunset Park, Brooklyn that will function as an affordable manufacturing facility. According to EDC, the complex is “to create a center of gravity for local manufacturing, sustainable fashion, and textile technology innovation in NYC.” The MiNY Garment Hub is expected to create more than 460 fashion jobs, train 500 people, and provide an economic output of around $57 million. These are the types of initiatives City government ought to support as they produce multiple benefits for the city, designer, and manufacturer.
Clothing produced in New York offers a unique marketing opportunity for the fashion industry. Garments labeled ‘Made in Italy’ are often praised and deemed desirable; it is with great hope that one day the ‘Made in NY’ label will also be in demand, increasing sales of these items. The meaning behind the label has yet to be determined, but perhaps it could symbolize paying workers “a living wage, which is then funneled back into the local economy.”45 When people purchase these products, they can feel good knowing that their dollars are positively impacting local communities.46 This is just another reason for Mayor Adams to support reviving garment manufacturing.
New York City must diversify its economic base because it relies too heavily on the finance sector and employment in the securities industry has been declining for the last few decades. During his administration, Mayor Bloomberg believed the solution to this problem was to attract tech companies and young talent. He largely achieved his goal, but to the exclusion of New Yorkers who lacked higher education, worsening income inequality in the city. In light of this, Mayor Adams needs to step up and further diversify the city’s economy in a more equitable manner; he ought to pursue the revitalization of the inclusive sector of manufacturing. With its compensation premium, it offers New Yorkers a gateway to middle-class employment. He can achieve this by reviving garment manufacturing in the already thriving fashion industry. This solution will help the city by diversifying its economic base with a sector that provides high-quality jobs and by co-locating fashion design and manufacturing, which leads to innovation and sustainable practices. It would be a winning situation for NYC, its residents, and the environment, and is the strategy Mayor Adams ought to support if he truly wants to “solidify our place as the city of swagger.”
Notes
1. Partnership for New York City, NYC Jobs Blueprint, (New York: Partnership for New York City, 2013), https://pfnyc.org/wp-content/uploads/2017/02/NYC-Jobs-Blueprint-Partnership-for-New-York-City-2013.pdf.
2. Office of the Mayor of New York City and NYCEDC, DiverseCity: NYC Economic Diversification Program,(New York: Office of the Mayor of New York City and NYCEDC, 2002), http://www.nyc.gov/html/econplan/downloads/pdf/diversification_final.pdf.
3. Darryl K. Taft, “Mayor Bloomberg: NYC to Surpass Silicon Valley in Tech Startups,” eWeek, September 22, 2011, https://www.eweek.com/it-management/mayor-bloomberg-nyc-to-surpass-silicon-valley-in-tech-startups/.
4. Office of the Mayor of New York City and NYCEDC, DiverseCity.
5. Mario A. González-Corzo and Vassilios N. Gargalas, “Recent trends in employment and wages in New York City’s finance and insurance sector,” Monthly Labor Review, U.S. Bureau of Labor Statistics (April 2019), https://doi.org/10.21916/mlr.2019.7.
6. Ibid.
7. Ibid.
8. Partnership for New York City and GLG (Gerson Lehrman Group), “At Risk: New York’s Future as the World Financial Capital,” (June 2015): 1-4, https://pfnyc.org/wp-content/uploads/2020/01/2015-06-world-financial-capital.pdf.
9. Office of the New York State Comptroller Thomas P. DiNapoli, The Securities Industry in New York City, (New York: Office of the New York State Comptroller Thomas P. DiNapoli, 2021), 1, https://www.osc.state.ny.us/files/reports/osdc/2021/pdf/report-12-2022.pdf.
10. “New York City Industry Sector Dashboards: Securities Sector,” Office of the New York State Comptroller Thomas P. DiNapoli, accessed March 24, 2022, https://www.osc.state.ny.us/osdc/reports/nyc-sectors/securities-sector.
11. Ibid.
12. Office of the New York State Comptroller, The Securities Industry in New York City.
13. González-Corzo and Gargalas, “Recent trends in employment and wages in New York City’s finance and insurance sector.”
14. Office of the New York State Comptroller Thomas P. DiNapoli, The Securities Industry in New York City, (New York: Office of the New York State Comptroller Thomas P. DiNapoli, 2009), 15, https://www.osc.state.ny.us/files/reports/osdc/pdf/report-14-2010.pdf.
15. Ibid, 11.
16. “NYS Comptroller DiNapoli: Wall Street’s 2021 Bonuses Set a New Record,” Office of the New York State Comptroller Thomas P. DiNapoli, last modified March 23, 2022, https://www.osc.state.ny.us/press/releases/2022/03/nys-comptroller-dinapoli-wall-streets-2021-bonuses-set-new-record.
17. Office of the New York State Comptroller, The Securities Industry in New York City.
18. Taft, “Mayor Bloomberg: NYC to Surpass Silicon Valley in Tech Startups.”
19. Laura Wolf-Powers, “Economic Development: Resolving the Parallel Universe Dilemma,” in Toward a Twenty-First Century City for All: A Progressive Agenda for New York, ed. Brad Lander and John Mollenkopf, (New York: Center for Urban Research, The Graduate School, City University of New York, 2013), 5.
20. Ibid, 7-8.
21. Rose Tan and Franklin Qian, “The Role of High-Tech Firms in Driving Gentrification,” Kenan Institute, February 23, 2022, https://kenaninstitute.unc.edu/kenan-insight/the-role-of-high-tech-firms-in-driving-gentrification/.
22. Wolf-Powers, “Economic Development,” 8-9.
23. Ibid, 18.
24. Mitchell L. Moss, “Technological Trends Affecting the Manufacturing Sector of New York City,” Federal Reserve Bank of New York Economic Policy Review, February 1997, https://www.newyorkfed.org/medialibrary/media/research/epr/97v03n1/9702moss.pdf.
25. Lawrence Mishel, Yes, manufacturing still provides a pay advantage, but staffing firm outsourcing is eroding it, (Washington DC: Economic Policy Institute, 2018), https://www.epi.org/publication/manufacturing-still-provides-a-pay-advantage-but-outsourcing-is-eroding-it/.
26. Ibid.
27. Wolf-Powers, “Economic Development,” 18.
28. SFMade and Citi Community Development, Urban Manufacturing: An Equity Engine, (San Francisco: SFMade and Citi Community Development, 2015), 1, http://sfmade.org/wp-content/uploads/2015_State-of-Local-Manufacturing.pdf.
29. Ruth Reader, “The manufacturing job of the future: clean, urban, and better paid,” Fast Company, March 14, 2019, https://www.fastcompany.com/90312543/the-manufacturing-job-of-the-future-clean-urban-and-better-paid.
30. Ibid.
31. “Special Garment Center District Text Amendment,” NYC Department of City Planning, accessed March 18, 2022, https://www1.nyc.gov/site/planning/plans/garment-center/garment-center.page.
32. Office of the New York City Comptroller Scott M. Stringer, The Creative Economy Art, Culture and Creativity in New York City, (New York: Office of the New York City Comptroller Scott M. Stringer, 2019), https://comptroller.nyc.gov/reports/the-creative-economy/#_ftn102.
33. Ibid.
34. Congresswoman Carolyn B. Maloney, Vice Chair Designate, U.S. Congress Joint Economic Committee, The Economic Impact of The Fashion Industry, (New York: Congresswoman Carolyn B. Maloney, Vice Chair Designate, U.S. Congress Joint Economic Committee, 2019), https://www.jec.senate.gov/public/_cache/files/39201d61-aec8-4458-80e8-2fe26ee8a31e/economic-impact-of-the-fashion-industry.pdf.
35. Tan and Qian, “The Role of High-Tech Firms in Driving Gentrification.”
36. NYS Department of Labor, “Occupational Wages,” New York State, Computer and Mathematical Occupations, Software Developers, Quarter 1 2023, accessed July 2, 2023, https://dol.ny.gov/occupational-wages-0.
37. NYS Department of Labor, “Occupational Wages,” New York State, Art, Design, Entertainment, Sports, and Media Occupations, Fashion Designers, Quarter 1 2023, accessed July 2, 2023, https://dol.ny.gov/occupational-wages-0
38. U.S. Bureau of Labor Statistics, “Quarterly Census of Employment and Wages: NAICS 315 Apparel manufacturing, All Counties in New York,” U.S. Department of Labor, 2022 Quarter 4, last modified September 7, 2022, https://data.bls.gov/cew/apps/table_maker/v4/table_maker.htm#type=2&st=36&year=2022&qtr=4&own=5&ind=315&supp=0.
39. Congresswoman Carolyn B. Maloney, The Economic Impact of The Fashion Industry.
40. Wolf-Powers, “Economic Development,” 18-19.
41. Nichola J. Lowe and Laura Wolf-Powers, “Who works in a working region? Inclusive innovation in the new manufacturing economy,” Regional Studies 52, no. 6 (2018): 837, https://doi.org/10.1080/00343404.2016.1263386.
42. Ibid.
43. “6 positive impacts of becoming an in-house manufacturer,” QuickBooks, last modified on November 16, 2018, https://www.tradegecko.com/blog/supply-chain-management/6-positive-impacts-of-becoming-an-in-house-manufacturer.
44. Ibid.
45. John Caplan, “Made In New York: The Future Of New York City’s Historic Garment District,” Forbes, September 1, 2021, https://www.forbes.com/sites/johncaplan/2021/09/01/made-in-new-york-the-future-of-new-york-citys-historic-garment-district/?sh=121984143ac3.
46. Ibid.
Victoria Penacchio is at the tail end of the Master of Urban Planning program at Hunter College. She is interested in placemaking, economic development, and historic preservation. She loves to travel and hopes to learn more about international planning.
