Government entities are the six largest employers in New York City, Crain’s NY Business reports in its latest annual employer ranking. Some are suggesting that this means the city’s economic recovery hinges on preserving government jobs. They’re wrong. The data actually suggest quite the opposite.

In order of full-time equivalent headcount, Crain’s ranked employers as follows:

  1. City of New York (excl schools) — 152,836
  2. NYC Department of Education — 121,255
  3. Metropolitan Transportation Authority — 66,240
  4. Federal government — 52,800
  5. NYC Health and Hospitals Corp. — 36,964
  6. State of New York — 26,500

Another 20 percent of large employers were in the health care sector, which is heavily dependent on government subsidies, Crain’s noted. Also not counted in the government category was the City of University of New York (CUNY).  Adding CUNY and the health care sector to the top six on the list would raise the government and quasi-government share of large employers in the city to more than 70 percent.

“New York City’s reliance on government work adds an intriguing local economic layer to some of the political debates over public-sector spending in Washington and Albany these past few years,” Crain’s says in its article accompanying the employer list. The article continues:

The recently passed state budget, for instance, calls for $450 million in state workforce cost reductions for the fiscal year that began April 1. If the costs cuts can’t be negotiated with public worker unions, then the state might have to lay off as many as 9,800 employees over the next 12 months.

“We could be seeing the loss of thousands of middle-income jobs in New York City,” said James Parrott, chief economist at the Fiscal Policy Institute, a liberal think tank based in New York.

Cutbacks in public sector jobs could “act as a brake on recovery,” Mr. Parrott warned, adding that “the reduction in state government contracts for social services, senior services and child welfare that go to non-profit organizations are [also] likely to mean job cutbacks in the private sector as well.”

The article goes on to quote your faithful correspondent:

E.J. McMahon, a senior fellow at the conservative Manhattan Institute, downplays such dire talk. The new state budget introduced “not so much cuts as non-growth,” he said, noting that the city’s 100,000-plus job losses during the Great Recession makes 9,800 potential state layoffs a “rounding error.”

“This won’t affect the city at all,” Mr. McMahon said. “The [government] layoffs in the city have to do mostly with people retiring or accepting early retirement.”

To elaborate on that point, and to keep it all in perspective, we would note that U.S. Bureau of Labor Statistics (BLS) data show that government, hospitals and K-12 education combined account for just over 20 percent of all jobs in New York City, a percentage that is actually below the 23 percent peak level in 1993, and slightly below the current statewide average of nearly 23 percent. Average employment in the city, as measured by BLS, was up slightly (a net 14,500 jobs, non-seasonally adjusted), despite a small drop in combined employment by government, hospitals and K-12 education.

Taken together, the Crain’s numbers and the official labor statistics underscore the importance of small- and mid-sized firms to the city’s economic recovery. And this, in turn, strengthens the case against state and city tax hikes that would, among other things, sap the working capital of such firms.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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