Angry New Yorker

Semi-Daily Rants from New York City's Angry Man

"As I know more of mankind I expect less of them, and am ready now to call a man a good man, upon easier terms than I was formerly." - Dr. Samuel Johnson, Boswell, Life of Johnson, Sept. 1783

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Monday, September 29, 2003
 
To Keep People, Cut Costsby E.J. McMahon
September 09, 2003
Gotham Gazette - http://www.gothamgazette.com/article//20030929/200/544

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Leaving New York
While some New Yorkers are leaving the city, citing bad schools, high housing costs or the daily stresses of urban life, analysts debate whether the exodus is anything alarming or unusual, and what to do about it.

The cost of living in New York City is 240 percent of the national average, according to one recent estimate. That’s not just the highest in the country. It's nearly twice as high as the next most expensive metro areas (Boston and Washington, D.C, in that order).

If you want to keep people in New York, the first thing you have to do is to reduce the staggeringly high cost of staying here. The single biggest factor driving that cost is a crushing state and local tax burden.

We have become so used to hearing about New York City’s high taxes that we have become sort of numb to it. But consider these statistical tidbits:

• New York’s overall tax burden is by far the highest found in any of America’s largest cities.

• Despite relatively low residential property taxes, the overall tax burden on New York City homeowners is the highest in the state.

• For households with incomes of $100,000 a year (middle class by New York standards) the combined state and local tax burden is 32 percent higher than the average for major cities.

• The commercial property tax is absolutely out of sight, reaching nearly $10 per square foot for prime space in midtown Manhattan. The only city that comes close is Chicago. In most other major cities, it is less than $5. In New Jersey, it is $3.

• The combined state and city personal income tax rate this year will reach a maximum of over 12 percent – highest in the nation, almost double the rate in New Jersey, and more than double the rate in Connecticut or Pennsylvania.

With the exception of the last item in the list, these comparative measures do not reflect the impact of the roughly $2.8 billion in city tax increases that have been enacted since Mayor Michael Bloomberg took office last year, or the $3 billion in state tax increases enacted by Albany this year.

Just because many New Yorkers do not directly pay these taxes, either because they are renters or because their incomes are below the median, does not mean they are unaffected by them. The impact of taxes is pervasive, rippling through every sector of the economy. High taxes ultimately drive down the number of new jobs created in the city and drive up the price of goods and services produced there.

Tackling this problem will require a constant, unrelenting effort to steadily bring down the cost of government at both the state and city levels. This is why it is so important for Mayor Bloomberg to continue pressing municipal labor unions for productivity concessions.

Beyond taxes, the most important factor driving cost is the price of housing in the city. This is a classic supply and demand problem, growing directly out of rent regulation and restrictive zoning and building codes. The answer is to stop treating housing as a socialized good, a government-funded entitlement. Clear away the dense thicket of regulatory barriers to building in New York, and let the market do the rest.

Beyond taxes and housing, improving city schools and doing even more to drive down the crime rate obviously are both crucially important to retaining residents. But if its economy is drowning in high costs, the city will lack the tax base to do those good things in any event.

E. J. McMahon is a senior fellow for Tax and Budgetary Studies, at the Center for Civic Innovation at the Manhattan Institute.

posted by anonymous at 12:36 PM

Sunday, September 28, 2003
 
It's difficult to know when things have tipped towards the long slide or conversely to sunny times of improvement. After all, there never was a golden age. There's only myth and nostalgia, and frankly, despite the pressures, cloudy futures, and knowledge that one can never own in the NYC the house one's parents did only a generation or two ago (without a massive amount of luck and some major financial aid), it's easy to lose sight of how far New York has come in two hundred years. Granted, NYC of 2003 is NOT NYC of 1954, when my parents came here from Europe, but neither is it the NYC of 1975. Still, when everything is weighed and the numbers crunched, I keep coming up with the distinct bottomline that a careful, planned and strategic retreat from New York to a handful of the other 50 states is perhaps the wisest course of action. But hope springs eternal.
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BIG-CITY LIFE A PARENT TRAP
By PHILIP RECCHIA and LEONARD GREENE, New York Post

September 28, 2003 -- THE picture-perfect family - where both parents pursue careers and earn good money - is a trap that's sending thousands of big-city couples toward financial ruin, a new book says.

They're making more money than their parents did, but are having a much harder time paying for what experts call the single biggest "luxury item" of the 21st century: children.

Today's two-income families earn 75 percent more that their single-income counterparts of a generation ago - but have less disposable income, according to "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke." [See MSNBC book review here.]

Co-authors Elizabeth Warren, a Harvard Law School professor specializing in bankruptcy law, and daughter Amelia Warren Tyagi, a former staffer with consulting powerhouse McKinsey & Company, derived that alarming statistic from three decades of stats from the U.S. Census Bureau and Bureau of Labor Statistics.

Their research also shows that families with kids are now twice as likely to file for bankruptcy as families with no kids.

If this trend continues, the authors say, one out of every seven couples with children will go bankrupt by the end of the decade.

Even many dual-income professional couples are just treading water.

Here in the Big Apple, where the cost of living is skyscraper-high, it's enough to make an otherwise well-off family go to extreme lengths to make ends meet.

Shirley Zaragoza is a business professor at City University of New York. Her husband, Gregory, is a lawyer and part-time actor who recently appeared in the Broadway revival of "Annie Get Your Gun."

Together, they earn more than $100,000 a year, an income that by average American standards should comfortably support a family of five.

But they have sacrificed dearly in order to raise their three kids in Manhattan - where the little ones attend public, not private schools.

The Zaragozas live in a one-room, 450-square-foot apartment in Greenwich Village.

They own the place, though they still carry a mortgage of about $1,000 a month. Tack onto that $1,000 more for maintenance, parking and other household expenses.

Then there's $3,000 a month to feed and clothe the kids, while covering a host of extracurricular actives like piano lessons, soccer and gymnastics.

IN ALL, Zaragoza estimates that she and her husband spend about 60 percent of their net income raising their children, who range from 7 to 13 years old.

"If you're not wealthy, your needs have to be pretty simple to make it work in this city," she told The Post.

Zaragoza said that, in addition to living together "in one tiny room," her family has gotten by not taking big vacations or taking out big loans.

Colleen Marsh has had no such luck.

Despite her annual household income of nearly $80,000 - about 90 percent above the average for New York City families - she feels impoverished.

After the credit-card debt, student loans, rent and private-school tuition, there's barely enough left to buy groceries.

"Right now I think we're poor," said Marsh, who is married with two children and lives in The Bronx. "We go to work every day. It's like, 'What are we working for?' "

The Marshes' dilemma is typical of the financial meltdown that's plaguing couples across the U.S.

Economists call it overconsumption. Elizabeth Warren calls it a trap.

"Everyone thought that a second paycheck would make their families more financially secure," Warren told The Post. "But that's not how things worked out."

Instead of padding their savings accounts, she writes, two-income families are finding their salaries absorbed by mortgages or rents for homes in good school districts.

Toss in the cost of daycare, preschool, a second car and health insurance - to say nothing of a high tax bracket - and the dollar quickly loses its elasticity.

Writer Ellen Freilich says she and husband Mark Packman, a music teacher at Montclair State University, have sacrificed home ownership in order to send their sons to school in Manhattan.

Once again, that's public school.

The couple lives in a two-bedroom, rent-stabilized apartment in Washington Heights and together earns about $100,000 a year. Half of that goes to raising 8-year-old Ben and 11-year-old Lev.

"We'd love the boys to have their own rooms, but buying a three-bedroom place would cost half a million dollars," Freilich said. "Even then, the monthly maintenance would run close to our current rent."

SHE also noted that there are a number of hidden costs associated with her sons' schools - like financial contributions and book purchases - that can exceed $1,000 per child per year.

Then there are swimming lessons, baseball camp, tutors and Hebrew school, which gobble up more than $10,000 a year.

"Working costs money because you have less time around the house," Freilich said.

"My mother darned socks. I throw them out and replace them."

Warren notes that this generation has had a 600 percent rise in consumer debt and a 400 percent increase in bankruptcies over the last generation.

The troubles usually start after someone loses a job, gets sick or divorces.

Evelyn Parkin, who owns an optometry shop with her husband in the Prospect Heights section of Brooklyn, nearly met such a fate after her son, the oldest of three kids, was diagnosed with a brain tumor.

Miraculously, her boy made a full recovery.

The experience, however, was frightening enough to make the couple - who own their house and earn about $85,000 a year - scratch their plans for a fourth child.

Phil Burnett, who lives in Union Square, is more optimistic.

"If my wife got pregnant tomorrow, we'd find a way to make it work," he told The Post.

This at a time when he has no Internet access in his rent-stabilized apartment because both family PCs recently died.

Burnett, a sound engineer, and his wife, Melanie, a sales associate at Wachovia Securities, have two sons.

LIKE the Zaragozas, the Burnetts - whose kids chew up about 45 percent of the household income - scrimp by taking shorter, cheaper vacations.

"We used to fly to places like California or Spain. Now we drive to Sesame Place [in Langhorne, Pa.], just for the weekend. We can't afford to take any days off from work," Burnett said.

Marsh says she'd rather file for bankruptcy than take her son, Hakeem, 12, out of private school. She is unhappy with the public schools in her neighborhood, and prefers to spend the $450 each month on tuition than pay off her credit card debt.

"I'll do what it takes to get the best education for him," she told The Post.

"The public schools are not meeting the needs for my son. If I have to pay until we move into the right neighborhood, that's what I have to do."


posted by anonymous at 9:19 PM

Friday, September 12, 2003
 
How do you do business in a city like this?

While getting a bit of breakfast at the corner deli on Lexington and 40th St., I saw an NYPD Traffic tow truck towing someone away at 10:07 this morning. The sight's hardly unusual in NYC, but this was no ordinary tow truck. Rather it was one of those huge tow-trucks on steroids; the kind that can tow buses and other trucks. And it was towing away a Nectar Fizz delivery truck. Though the truck was certainly parked illegally, and I noticed a ticket on the windshield as they towed it, it wasn't double-parked or blocking traffic.
So, here's a company making a legitimate delivery during business hours in a city that never sleeps, but that makes it increasingly difficult each year to actually DO real business here. The cost to the delivery company of lost wages, lost time retrieving the truck, and wasted effort dealing with the city could easily top $600. If this happens frequently how can the business, or any business actually stay viable?
Frankly, I don't understand how UPS and Fedex can stay in Manhattan. Every single Fedex and UPS truck I see inevitably sports a parking ticket. Is ticketing companies doing reasonable business a smart idea? I don't think so. Those costs must be passed to someone, and that someone is ultimately the businesses' customers. This can only make them less competitive compared with companies not facing these extra transaction costs. And yet Mayor Bloomberg is ever fond of spouting his chest-thumping, NYC-centered jingoism that any company that wants in to the big leagues has to be in NYC. Tell that to Nectar Fizz, Mr. Mayor.

posted by anonymous at 10:46 AM

Thursday, September 11, 2003
 
September 11th - Two Years Later


posted by anonymous at 12:52 PM

Monday, September 08, 2003
 
City Is Told to Abandon Its 'Doomed' Tactics of Encouraging Growth
September 8, 2003, By JANNY SCOTT, New York Times


Arguing that the industries upon which New York City has depended for its economic well-being have been losing ground and are unlikely to generate many new jobs in future, a new study [available here; and here {PDF version}]suggests that New York's longtime approach to economic development is obsolete and must be reconceived.

The study, financed by the Rockefeller Foundation and written by a nonprofit group called the Center for an Urban Future, says the city should abandon the "doomed strategy" of favoring a few industries like finance — an approach the study says has left the city increasingly vulnerable to economic shifts.

City resources should go instead to improving the climate for small businesses and entrepreneurs, tapping the immigrant population as well as academic and research institutions, and improving basic services so the middle class will not leave the city, according to the study, to be released today.

"Start small," the report urges. Large firms are decentralizing operations and adding new jobs elsewhere, and New York's future growth will depend on "whether it can restore its entrepreneurial vitality and create a better environment for smaller firms to grow and prosper."

The recommendations run counter to the city's practice of using tax abatements and real estate development subsidies to keep big companies in New York. That tactic became common in the 1990's as competition among the city, its suburbs and other places intensified.

Several economists and others who have seen the report said the recommendations were sound. Some said they also seemed consistent with some recent moves by the administration of Mayor Michael R. Bloomberg toward delineating a clear strategy and diversifying the economy.

"The city has never had a clear economic development strategy," said Kathryn S. Wylde, president of the Partnership for New York City, a business group. "The city's strategy has been real-estate-driven and has been reactive to the threat of corporate move-outs and job losses rather than job creation."

David Hochman, a consultant with the Technology Partnership Practice at the Battelle Memorial Institute, who worked on a similar report for the city in 2000, said: "It's really only in times of downturn that people get creative, get thoughtful about what needs to be done next. This would be a great road map to start with."

The deputy mayor for economic development and rebuilding, Daniel L. Doctoroff, said the administration was already doing many things recommended in the new study. For example, it has taken steps to improve the business climate and cultivate business districts far beyond Midtown Manhattan through projects in such places as downtown Flushing, Long Island City, Harlem and the Hub area of the Bronx.

In addition, he said, the administration has overhauled what is now called the Department of Small Business Services and has taken steps to give immigrant- and minority-owned businesses better access to contracts. The city is opening small-business satellite centers in each borough, offering advice on such things as financing, negotiating the bureaucracy and other aspects of starting and running businesses.

"We've essentially stopped" the longtime practice of favoring a relatively small number of large companies with tax abatements and subsidies, Mr. Doctoroff said. "We have basically ended the era of corporate welfare, basically paying people to stay."

The study, based on an analysis of census and economic data and interviews with business leaders, developers, ethnographers, government officials and others, was conducted over the past year by the center, a nonprofit policy institute that examines economic and work force development issues in New York.

Jonathan Bowles, the group's research director and a writer of the report, said the center was told to take "a real hard look at the city's economy in the post-9/11 world." The aim was to explore in a comprehensive way the long-term economic, demographic and political challenges facing New York.

Of the city's attitude in the past, Mr. Bowles said: "There was sort of an arrogant policy that we don't need to look at the future because we've already got Wall Street and we're the media capital. What more do we need? As long as we hang on to what we've got, the rest will fall into place."

The group found that the finance, insurance and real estate industries, which accounted for one in six of all city jobs in 2000, were rapidly losing jobs and market share to other places. New York City accounted for 36 percent of all securities industry jobs in the country in 1987; its share has since dropped to 23 percent, the report says.

Other important industries, including professional and business services and technology, have trailed the country and the region in job creation. The city accounted for 60 percent of the region's jobs in professional and business services in 1970; by 2000, that was down to 45 percent.

As large firms everywhere have decentralized, cities like Los Angeles have benefited by the rise of small, home-grown businesses, the study says. But New York "has become one of the worst environments for entrepreneurs and growing firms," the report says, citing rankings by groups like the National Commission on Entrepreneurship and declines in venture capital investments.

One big problem for growing businesses is high real estate costs, which the study traces in part to the city's practice of subsidizing the real estate costs of large employers. The report says the practice has distorted the "real estate market in ways that actually inhibit the development of new businesses and the retention of lower-margin industries."

In addition, the study says: "Businesses in New York also face a daunting regulatory environment in which firms are required to get licenses and permits from as many as a half-dozen agencies, most of which are understaffed and few of which coordinate with each other. It's no wonder that a cottage industry of fixers and go-betweens has developed in the city."

The study recommends that the city work harder to help growing businesses thrive, in part by addressing "the fundamental issues hampering business growth in the city, such as permitting, business taxes and policies that spur exorbitant real estate speculation."

The city should also do more to encourage the growth of immigrant and minority-owned businesses, the study says, perhaps by following the example of cities like Los Angeles and Houston. According to the report, those two cities rebuilt their economies in recent decades in part by diversifying, reducing regulatory hurdles and helping immigrant-run businesses to develop.

In addition, the city should extend its economic development efforts beyond large-scale commercial projects in Manhattan to include neighborhoods in all five boroughs, the study recommends. It notes that the Bloomberg administration is already working to develop viable and more affordable business districts in Downtown Brooklyn, as well as Long Island City and Flushing, Queens.

Finally, the report suggests that the city support policies that will help retain middle-class residents. It should follow through with plans to increase the housing stock. And it should use scarce city resources to maintain and improve basic services like law enforcement, sanitation, public transit, education, parks and the infrastructure.

The report states, "This vision should begin with the premise that blindly following the post-1950's strategy of ever-intensifying real estate speculation, over-concentration on selected sectors and `Capital of the World' rhetoric will erode the city's overall competitiveness even further, strain the city's financial resources and widen the gap between rich and poor."

Copyright 2003 The New York Times Company

posted by anonymous at 11:00 AM

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