Structural Changes in Manhattan's Post-9/11 Economy: Since the Terrorist Attacks of September 11, 2001, Manhattan's "Global Economy" Has Seen Its Employment Diminish While Its Role as a Wage Generator Has Increased; High Wages in the Global Sector May Be Driving Demand in the Local Sector
Dolfman, Michael L., Wasser, Solidelle F., Skelly, Kevin, Monthly Labor Review
Business cycle ebbs and flows are common features of the U.S. economy. In Manhattan, where there is a concentration of finance, information, and professional services industries, the economic downturn of 2001 started earlier and lasted longer than it did in other parts of the country. (1)
The national economic downturn that hit Manhattan hard in early 2001 was exacerbated by the terrorist attack on the World Trade Center on September 11. As this article will show, the economic decline, lasting from 2001 until 2004, was unique in its contribution to a fundamental shift in Manhattan's economy.
In previous decades, job creation in Manhattan's "global sector" was the economic engine driving the borough's entire economy. Today, as a result of the 2001 downturn, high wages generated by global-sector industries emerge as a new determinant of Manhattan's economy.
The Manhattan economy
With approximately 1.8 million private-sector jobs, or about 61 percent of New York City's total job base, and an average annual wage exceeding $92,000 in 2005, (2) Manhattan is the driving force of the city's and the New York regional economy. While modern-day business is the focus of Manhattan, along with many historical attractions, the borough also has numerous vibrant neighborhoods, each with a unique mix of restaurants, shops, and riving accommodations.
The short-term effects of the 9/11 attack on the Manhattan and New York City economies were examined in a previous article. (3) Here, attention will be directed at how Manhattan has fared following the economic decline that gripped the borough immediately after September 11.
In order to assess Manhattan's recovery from the events of 2001, it is essential to understand first that Manhattan's labor market economy is unique. With the prominence of its financial sector and other advanced industries, as well as its focus on international finance, global markets, and transnational enterprises, Manhattan has contributed to the development of a new conception of what global economics implies. In effect, the borough has become a world center for the servicing and financing of international trade, for investment, and for headquarters operations. (4)
However, the rise in importance of these sectors not only has driven the New York regional economy, but also has changed the nature of Manhattan itself. Specifically, the changes have deepened a duality in the borough's economic structure. By virtue of its location, industry, labor markets, and population, Manhattan (though only a county (5)) has become nothing less than a "global city"--a city characterized by a notable number of highly paid workers who exert significant effects on the consumption patterns in the neighborhoods, city, and region in which they work and live.
Having soaring incomes and little time, those global-city workers who live in Manhattan demand and pay for high levels of personal consumer services provided by other workers. Thus, Manhattan--the "global city"--is really two interdependent components, one composed of highly paid workers who focus their activities on international pursuits and another, locally based, that provides services and commodities to the "globally focused" workers and Manhattan's other workers, residents, and visitors.
To assess how Manhattan has recovered from the terrorist attacks and economic downturn of 2001, it is essential not only to examine changes in both aspects of the borough's economy, but also to gain insights into the interrelationship between these two components--that is, how expansion or contraction in the global sector influences developments in the local sector. Although conceptually independent, each sector is unable to support itself; therefore, both must be assessed as an integrated entity.
Global and local industries
To understand the interrelationship between Manhattan's global and local economies, it is necessary to define the industries they comprise. …