Economy of New York City
Economy of New York City
New York City is a major center for international business and commerce and is one of three “command centers” for the global economy (along with Tokyo and London) according to sociologist and economist Saskia Sassen. The financial, insurance, and real estate industries form the basis of the city’s economy. New York is also the most important center for mass media, journalism and publishing in the United States as well as the preeminent arts center in the country. Other important sectors include the city’s television and film industry, second largest in the United States after Hollywood; medical research and technology; non-profit institutions and universities; and fashion.
The city’s stock exchanges are among the most important in the world. The New York Stock Exchange is the largest stock exchange in the world by dollar volume, while the NASDAQ is the world’s largest by number of listings. Many international corporations are headquartered in the city, including more Fortune 500 companies than anywhere else. New York is unique among American cities for its large number of foreign corporations. One out of every ten private sector jobs in the city is with a foreign company. Often this makes the perspective of New York’s business community internationalist and at odds with the federal government’s foreign policy, trade policy, and visa policy.
Specialized manufacturing accounts for a large but declining share of employment. Garments, chemicals, metal products, processed foods, and furniture are some of the principal manufacturers. New York’s fine natural harbor has meant international shipping has always been a major part of the city’s economy, but in recent decades most cargo shipping has moved from the Brooklyn waterfront across the harbor to the Port Newark-Elizabeth Marine Terminal in New Jersey. Some cargo shipping remains; Brooklyn still handles the majority of cocoa bean imports to the United States.
History
New York City’s economic growth was made possible by its harbor, widely considered one of the finest natural ports in the world. The value of this port was greatly enhanced in 1819 with the opening of the Erie Canal, which gave New York a decisive advantage over the competing ports of Boston and Philadelphia.
The old port facility was at the South Street Seaport in Manhattan, but today there is still residual activity remaining at Red Hook in Brooklyn, and the Howland Hook Marine Terminal in Staten Island. Red Hook, for instance, handles the majority of the cocoa bean imports to the United States. Since the 1950s, most shipping activity in the area has shifted to Port Newark-Elizabeth Marine Terminal in New Jersey. But despite changes in international shipping, trade and the tertiary sector have always remained the real basis of New York’s economy.
Manufacturing first became a major economic base for New York City in the mid-nineteenth century with the advent of industrialization and the railroad. New York was formerly a national center for clothing manufacture, and some continues, sometimes in sweatshops. There are still around 120,000 manufacturing jobs in the city compared to over a million in the middle of the 20th century. Like international shipping, though, manufacturing gradually declined in the late-twentieth century with rising land values. The city was also a first center of the American film industry, along with Chicago, Illinois, until it moved to Hollywood, California, and still has some television and movie production.
Finance and trade
Today , New York City is a major center of finance in the world economy, with Wall Street in Lower Manhattan’s Financial District. Financial markets based in the city include the New York Stock Exchange, NASDAQ, American Stock Exchange, New York Mercantile Exchange, and New York Board of Trade.
This contributes to New York City being a major financial service exporter, both within the United States and globally. Many corporations also have their headquarters in the city, including companies as prominent and diverse as Altria Group, Time Warner, American International Group, Pfizer, Bristol-Myers Squibb, JetBlue, DC Comics, Estee Lauder, and Sony Music Entertainment, among many others. As the North American terminus of the transatlantic fiber optic trunkline, New York has extremely high internet connectivity and is the leading international internet gateway in the United States with 430 Gbps of international internet capacity terminates. By comparison, the number two U.S. hub, Washington/Baltimore, has 158 Gbps of internet terminates.
Since the founding of the Federal Reserve banking system, the Federal Reserve Bank of New York in Manhattan’s Financial District has been where monetary policy in the United States is implemented, although policy is decided in Washington by the Federal Reserve Bank’s Board of Governors. The New York Fed is the largest, in terms of assests, and the most important of the twelve regional banks. It is responsible for the Second District, which covers New York State and the New York City region, as well as Puerto Rico and the U.S. Virgin Islands. The New York Fed is responsible for conducting open market operations, the buying and selling of outstanding US Treasury securities. In 2003, Fedwire, the Federal Reserve’s system for transferring balances between it and other banks, transferred $1.8 trillion a day in funds, of which about $1.1 trillion originated in the Second District. It transferred an additional $1.3 trillion a day in securities, of which $1.2 trillion originated in the Second District. The New York Federal Reserve is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee’s vice chairman. The bank also has the largest gold repository in the world, larger even than Fort Knox. Its vault is 80 feet (25 m) beneath the street and holds $90 billion worth of gold bullion.
Media and advertising
New York is by far the most important center for American mass media, journalism and publishing. The city is the number-one media market in the United States with 7% of the country’s television-viewing households. Three of the Big Four music recording companies have their headquarters in the city. One-third of all independent films are produced in the Big Apple. More than 200 newspapers and 350 consumer magazines have an office in the city. The book publishing industry alone employs 13,000 people. For these reasons, New York is often called “the media capital of the world.”
Film
New York’s film industry is much smaller than that of Hollywood, but its billions of dollars in revenue makes it an important part of the city’s economy and places it as the second largest center for the film industry in the United States.[4] It is also a growth sector; according to the Mayor’s Office of Film, Theater and Broadcasting New York City attracted over 250 independent and studio films in 2005, an increase from 202 in 2004 and 180 in 2003.
The Kaufman-Astoria film studio in Queens, built during the silent film era, was used by the Marx Brothers and W.C. Fields. It has also been the set for The Cosby Show and Sesame Street. The recently constructed Steiner Studios is a 15 acre (61,000 m²) modern movie studio complex in a former shipyard where The Producers and The Inside Man, a Spike Lee movie, were filmed.
Silvercup Studios revealed plans in February 2006 for a new $1 billion complex with eight soundstages, production and studio support space, offices for media and entertainment companies, stores, 1,000 apartments in high-rise towers, a catering hall and a cultural institution. The project is invisioned as a “vertical Hollywood” designed by Lord Richard Rogers, the architect of the Pompidou Center in Paris and the Millennium Dome in London. It is to be built at the edge of the East River in Queens and will be the largest production house on the East Coast. Steiner Studios in Brooklyn would still have the largest single soundstage, however. Kaufman Studios plans its own expansion in 2007.
Miramax Films, a Big Ten film studio, is the largest motion picture distribution and production company headquartered in the city. Many smaller independent producers and distributors are also in New York.
Fashion and advertising
Manhattan’s Madison Avenue is synonymous with the American advertising industry, while Seventh Avenue is nicknamed “fashion avenue” as it serves as an important center for the fashion industry. Ninety percent of the diamonds imported to the United States pass through New York, and most of these are handled and cut in the city’s Diamond District on 47th Street between Fifth and Sixth Avenues. New York also has among the most important scenes for art, music, and theater in the U.S., with an increasingly active artists’ community. The city also has a large tourism industry. According to the Center for Women’s Business Research, there are nearly 250,000 women-owned firms in New York City.
Technology and telecom
According to New York’s Economic Development Corporation, telecom carriers, cable companies, Internet service providers and publishers were a $23 billion industry in 2003. This represents over three percent of the city’s economy. The sector employs 43,000 city residents. New Yorkers are tech savvy; more than two-thirds are online.
High-tech industries like software development, gaming design, and Internet services are also growing; New York is the leading international internet gateway in the United States, with 430 Gbps of international internet capacity terminates, because of its position at the terminus of the transatlantic fiber optic trunkline. By comparison, the number two U.S. hub, Washington/Baltimore, has 158 Gbps of internet terminates.[5]
Medicine and biomedical research
Medical services and research drive New York’s major healthcare industry. The city has the most post-graduate life sciences degrees awarded annually in the United States, 40,000 licensed physicians, and 127 Nobel laureates with roots in local institutions. New York receives the second-highest amount of annual funding from the National Institutes of Health among all U.S. cities.
Major publicly-traded biopharma companies include Bristol Myers Squibb, Eyetech Pharmaceuticals, ImClone Systems, OSI Pharmaceuticals, Pfizer and Regeneron. Pfizer shifted 1,000 jobs to New York City from New Jersey, Missouri, Michigan and California in 2003. According to the Partnership for New York City, New York institutions create more biotechnology-related patents than any other metropolitan area in the United States.
The health care industry employs approximately 375,000 people in New York City, making it the city’s largest employer. 40,000 physicians work at more than 70 hospitals in New York; the city’s 20 public hospitals served 1.5 million people in 1998 alone.
Manufacturing and Industrial Sector
There are over 233,000 jobs[6] in more than 10,000 New York City industrial businesses[7], with the highest concentration of industrial employment in Manhattan. This includes manufacturing, warehousing, utilities, and transportation. Manufacturing jobs average $41,000 annually (NYS DOL, 2nd Qtr 2005), about $10,000 more than comparable jobs in retail or restaurants. The manufacturing sector has the highest percentage of first-generation immigrants making up 64% of the workforce (NYC Dept. City Planning) and people of color comprising 78% of the production workforce (2004 American Community Survey).
These are small businesses, with an average size of 21 employees (NYS DOL, 2nd Qtr 2005). Examples of goods manufactured in the city include broadway costumes, custom-made cabinets, croissant for hotels, and wooden crates for shipping fine art. These items are labor-intensive and require collaboration between the end-user and the manufacturer. In recent years, as real estate and globalization pressures have increased, the remaining manufacturers have become more design-oriented and single customer-focused. To boot, production methods have become cleaner and more technology-driven.
Despite the adaptability of New York manufacturers, there remain looming challenges to the sector’s survival. A 2003 city-sponsored survey of the industrial sector identified three major local challenges to retaining businesses: 1) high cost of real estate; 2) high costs of doing business; and, 3) uncertainty about land use policy.