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New York Comptroller Raises Job-Loss Estimate

December 12, 2008

A day after launching a Web site for his 2009 mayoral campaign, city comptroller William Thompson unveiled a dismal economic forecast for the city he hopes to run.

Thompson raised his estimate of job losses through 2010 by 5,000 to 170,000 jobs and predicted the city’s unemployment rate will reach 7.4 percent, the highest level since April 2004.

He said Wall Street cash bonuses, which totaled $33.2 billion last year, will decline by at least 50 percent to the lowest level since 2002. The hemorrhaging of jobs and bonuses will contribute to an estimated 4.3 percent drop in New York City tax revenues in fiscal year 2009, he said.

“While the city’s labor and real estate markets outperformed the nation for most of 2008, the toll taken by the financial industry makes this one of the grimmest economic periods for the city in many years,” Thompson said.

Indeed, the city is starting to catch up with the rest of the country, the report says. Job growth in the city continued well after the housing and financial crises had caused significant losses across the nation, but recently, this growth has slowed to a trickle and many sectors are laying off workers.

“During the past several months a negative trend has become unmistakable,” the report said.

Total private sector jobs were up almost a full percent for the first 10 months of 2008. Private payroll jobs in January 2008 were more than 50,000 above the previous year, but that number has been steadily declining. By October, the year-over-year increase had fallen to just 5,300 above 2007 levels. Employment had declined in several professional and business services sectors, and in the arts, entertainment and recreation, but the biggest drop was in financial activities, where year-over-year employment fell more than 13,000.

Another report released Thursday, December 11, by the Fiscal Policy Institute, painted a similarly bleak picture. That report predicted unemployment could reach 8.5 percent in the city by the end of next year, with the rate for blacks hitting 14 percent and Hispanics reaching 10 percent. Overall, the number of unemployed in the city will rise by 120,000 in the next year, the report said.

The city’s unemployment rate, currently at 5.7 percent, is one percent lower than that of the nation’s, but that will soon change, said James Parrott, an economist with the Fiscal Policy Institute.

“We’re going to catch up to the national downturn very quickly over the next few months,” he said. “People should be prepared for things to get worse quickly.”

The Fiscal Policy report showed that less than a third of the city’s jobless receive unemployment benefits, well below the national average. That leaves many without a safety net, Parrott said.

Thompson hopes that the public works package proposed by President-elect Barack Obama will soften the blow to the city. He singled out Penn Station as a project that could employ thousands of New Yorkers and beef up the city’s decaying infrastructure.

But even with a federal stimulus, the city faces deep cuts. Just Wednesday, Mayor Michael Bloomberg ordered all agencies to slash spending by 7 percent in the next fiscal year to save the city $1.4 billion. That was on top of a 2.5 percent cut this fiscal year and a 5 percent cut next year that had been previously announced.

The dire budget news hasn’t dissuaded Thompson from his plans to run for mayor. Wednesday, he unveiled his Web site, http://thompson2009.com, underscoring his commitment to run despite Bloomberg’s presence in the race.

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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