NYC economy still ‘fragile’ as state Dems push $7B in new taxes


More than 650,000 city jobs have vanished, key businesses are on the brink of collapse, it will be years before the economy recovers — and Democratic legislators think it’s a great time for $7 billion in new taxes.

As Albany lawmakers negotiate the state budget that’s due April 1, a series of studies paint a dire picture of the damage that the coronavirus has inflicted on the Big Apple and the long road back to recovery.

A survey involving the bellwether restaurant industry this week found that 75 percent of more than 400 city eateries reported their annual revenues had plunged by more than half last year.

The NYC Hospitality Alliance group also said that while the $1.9 trillion American Rescue Plan signed by President Biden was providing a “crucial lifeline” to eateries, taverns and nightclubs, 46 percent of owners predicted their businesses will fold without continued government help.

“The survival of our restaurants and bars is essential to the economic recovery of New York City, so the continued number and nature of these struggling small businesses is alarming,” said Andrew Rigie, the group’s executive director.

Meanwhile, monthly figures released by the state Labor Department on Thursday showed that unemployment in the city ticked up slightly, to 12.9 percent in February from 12.6 percent in January.

The number of private-sector jobs grew by just 11,500 statewide during the same time, the Labor Department said, amounting to a minuscule, 0.2 percent increase that’s half the nationwide rate.

Statistics released earlier in the week by city Comptroller Scott Stringer were likewise grim, with overall hiring flat and a measly 3 percent increase in education-related jobs marking the biggest gain by any industry between December and January.

The total number of city jobs — 3.4 million — was also 668,000 shy of the peak hit in February 2020, just before the pandemic struck, according to Stringer’s weekly “Economic and Fiscal Outlook” report.

The hardest-hit sectors were leisure and hospitality, down 55 percent, followed by transportation and warehousing, along with unspecified “other services,” which were both down 23 percent, according to Stringer’s report.

People walking outside in New York City on March 22, 2021.
People walking outside in New York City on March 22, 2021.
Photo by Spencer Platt/Getty Images

A March report by the Independent Budget Office also concluded that “New York City has entered a slow and uncertain period of recovery” that “will remain slow and fragile until greater and more sustained progress is made to increase the vaccination rate.”

The IBO said the city will gain just 152,000 jobs this year — and nearly as many next year —  before growth slows to 107,000 in 2023 and plunges to 53,000 in both 2024 and 2025.

“By the end of the forecast period, total city employment will have nearly — but not quite — reached levels seen at the end of 2019, before the pandemic began,” the report said.

“By the end of 2025, IBO forecasts an unemployment rate of 7.1 percent, roughly equal to the rate in mid-2014, five years after peak unemployment in the aftermath of the financial crisis.”

That prediction is even more pessimistic than the one offered by Gov. Andrew Cuomo in January, when he unveiled a $192.9 billion budget plan that said, “New York State employment is not expected to reach its pre-pandemic peak until 2025.”

Despite the bleak outlook, Democrats in the state Senate and Assembly last week unveiled plans to wallop businesses and wealthy residents with new taxes to pay for massive spending increases on education, health care, COIVD-19 relief and other programs.

That move prompted 250 major employers and small business owners to warn Tuesday that it could trigger the worst exodus of state residents since the city faced bankruptcy during the 1970s.

“This is not about companies threatening to leave the state; this is simply about our people voting with their feet,” the group said.

A day earlier, Cuomo had said there was no need to raise taxes or slash spending in the budget, thanks to the $12 billion-plus allocated to New York as part of President Biden’s $1.9 billion American Rescue Plan.

But the governor reversed course on Wednesday, saying taxes might need to be raised to eliminate a projected $2.5 billion deficit.

Meanwhile, state Sen. Majority Leader Andrea Stewart-Cousins on Tuesday refused to rein in the Legislature’s spending plan and downplayed the impact of the new taxes it would require.

“We are asking those who have a little more to do a little more so that we’re not looking at the same inequities year after year, day after day, the same austerity — and not really giving the kind of future that we want every New Yorker to have,” she said.



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