9/11 and the New York City economy: a borough-by-borough analysis: the effect of the terrorist attacks of September 11, 2001, on the New York City economy was far reaching and extended to every borough of the city; hardest hit was New York's "export" sector—the most internationally oriented part of that economy

Monthly Labor Review, June, 2004 by Michael L. Dolfman, Solidelle F. Wasser

The political, security, and social implications of the terrorist attack of September 11, 2001, have been well documented. In New York City, the events of that day resulted in the deaths of 2,699 workers from a wide range of occupational backgrounds. Of the 2,198 non-rescue workers killed in the World Trade Center, 78 percent were employed in finance, insurance, and real estate. Firefighters accounted for 81 percent of the 412 fatally injured rescue workers; 15 percent were police officers or detectives. Thirty-six percent of the 89 individuals killed on the airplanes that crashed into the towers were traveling on services-related business. (1)

The terrorist attack also had a profound impact on the city's economy, its labor market dynamics, and individual businesses. Just what the immediate and long-term economic effects of the attack were and will be on New York City has been the subject of some debate. This article joins that discussion in its analysis of employment and wage data, on a borough-by-borough basis.

The article focuses on the most salient feature of the current city economy: the bifurcation of its industry into "export" and "local" economic sectors. (2) Examining the effect of 9/11 on each of the boroughs makes it possible to isolate the "export" sector, on the one hand, which identifies New York City as a prime center of the global economy, and the "local" sector, on the other, which has its own distinct importance and relation to the city's industry.

In what follows, trends in employment and wage patterns based on the Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW) program are compared, on a borough-by-borough basis, before and after the attack to measure the extent of the losses. The relation of these losses to the entire New York economy completes the analysis.

Understanding the city's economy

In order to comprehend fully the economic impact of the 9/11 attack on New York, it is important to place the recent labor market economy of the city in the context of the developmental forces that began to emerge 30 years earlier. Among the most noteworthy of these forces was the international movement toward a global economy.

Thirty years ago, globalization, as we currently understand it, was beginning to emerge. Although close to bankruptcy in the 1970s, New York was poised to take advantage of these new perspectives. Specifically, the emergence of, and increase in, the complexity of international transactions raised the scale of economic growth and stirred the need for multinational headquarters functions. In addition, the demand that firms across all industry sectors provide specialized services stimulated the need for financial, marketing, accounting, legal, telecommunication, insurance, computer, and management consulting services. (3)

New York City industry has long been international, but its role is becoming increasingly evident as the world's economy places a premium on the free movement of knowledge, ideas, capital, labor, and technology, as opposed to just the exchange and production of commodities. The new North American Industrial Classification System (NAICS) focuses on those factors which better define the elements of the global economy; accordingly, the NAICS figures prominently in the analysis that follows.

Today, in analyzing the economic effects of globalization, attention is usually directed at increases in the mobility of capital, particularly across international borders, and at the power of emerging information technologies. New York, by virtue of its dual international and national orientation, was a prime U.S. beneficiary of these global forces. The international trade and global financial investment activities of the city stimulated further its leadership position in marketing and advertising, finance and banking, broadcasting, information technology, publishing, real estate, and a host of other arenas. In addition, recent literature on global power centers (often called "global cities") notes that an increase in local public administration functions fills the gap created by weakening national regulation. (4) Government employment figures in New York reflect this increasing trend. (5)

By the beginning of the 21st century, New York City's economy was mature and sophisticated. The "export" sector--finance and insurance; professional, scientific, and technical occupations; information; arts, entertainment, and recreation; the management of companies; real estate; and what was left of manufacturing--was focused nationally and internationally, while the "local" market sector--administrative and support, and waste; construction; wholesale and retail trade; transportation and warehousing; utilities; educational services; health care and social assistance; and accommodation and food services--had a regional orientation. Both economies made important contributions to the city and the welfare of its citizens, but it was the "export" sector that gave New York its special place among international cities--its appeal, its reputation, its glamour, and its wealth.