New York City is in a steep recession, with about 850,000 jobs lost over the past year, most owing to the novel-coronavirus lockdowns. Some of these job losses will be temporary and will return as restrictions are lifted and businesses reopen. But the longer that takes, the more businesses will fail — and the more job losses will become permanent. We’ll need to create new jobs for those who can’t simply return to their old ones.
Rethinking zoning is central to this task.
In good times, the city’s workforce — particularly people without a college education — relied on industries that have taken a direct hit, including hotels, restaurants and retail. These job losses also affect the city’s real estate, where vacancies have risen and once-inflated values have plummeted. City tax revenues have also taken a dive.
City officials face a choice. They can grimly conclude they are in a downward economic spiral, which can be reversed only by massive — and unlikely — federal subsidies. Or they can do something to jump-start the economy.
Their hands aren’t as tied as they might think. In a new Manhattan Institute report released this week, I suggest that the decline in real-estate values and increase in vacancies is an opportunity to encourage private investment in new buildings and new uses for old buildings.
Real-estate investment often leads the economy out of recession, because financing costs are so low. Construction creates both jobs and tax revenues — workers’ income taxes, as well as sales taxes on construction materials and furnishings.
Eric Kober is an adjunct fellow at the Manhattan Institute. He retired in 2017 as director of housing, economic and infrastructure planning at the New York City Department of City Planning. This piece is based on a recent report. Follow him on Twitter here.
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