During today’s guest spot we are talking to Richard Florida about his latest book: The Rise of the Creative Class. Be sure to tune in at 3pm for the full conversation.
Excerpt
Just as they did after the Sept. 11 attacks, pundits were quick to count New York City out after the economic meltdown of 2008. Four years later, it’s clear how wrong they were: The city’s recovery has been remarkable.
While much of the nation remains mired in a housing slump, Manhattan real estate is on fire. And despite the continuing nationwide jobs crisis, underscored by Friday’s dismal numbers, the city added 75,000 jobs over the past year. New York now ranks as the world’s most economically powerful city, outclassing London, Hong Kong, Shanghai and the rest.
But behind this encouraging news is a troubling trend: Huge numbers of middle and especially lower-income people continue to struggle. To complete its transition, New York must develop strategies that enable many more of its workers to benefit from the ongoing transformation of its economy.
As the Nobel Prize-winning economist Joseph Stiglitz explained in these pages, the U.S. is “going through a transformation from a manufacturing economy to a service economy (just as, in the years of the Great Depression, it was moving from agriculture to manufacturing.)”
New York’s economy exemplifies this shift. Nearly half of all workers in Manhattan — and more than a third in the broader metropolitan area — are now employed in the highly skilled professions that make up the creative class: science and technology, arts, culture, media, entertainment and management and knowledge-based jobs in law and health care. And New York has surpassed Boston and its storied Route 128 tech corridor as a magnet for high-tech startup capital; only the vaunted Silicon Valley attracts more.
Simultaneously, and not surprisingly, the economic gaps separating New Yorkers have deepened. The greater New York region ranks among the 20 worst in the country for wage inequality and in the top 10 for income inequality.
Middle class, family supporting jobs in manufacturing have largely disappeared. Investment houses and brokerages began exporting back office and call center jobs long before the crisis. Lately they have begun “near-shoring” middle-level services like accounting, trading and legal support to places with cheaper labor and overhead costs, like Salt Lake City and Jacksonville, Fla., leaving thousands of middle class New Yorkers high and dry.
What’s replaced them are low-wage, low-skill service jobs. Many of the region’s leading and fastest growing jobs in fields like food preparation, personal care, health care support, retail sales, clerks, cashiers and home health aides pay average salaries between $20,000 and $30,000. And lest we forget, black and Latino workers, new immigrants and single mothers are tremendously overrepresented in these jobs.
How is that kind of paycheck supposed to feed a family, much less produce any social mobility, in a high-cost city like New York?
The city’s already-sky-high housing costs are soaring ever higher. The average monthly rent for a one-bedroom apartment in Manhattan is $2,800, impossibly out-of-reach for much of its workforce. One-third of New York City households currently devote more than half their paychecks to rent.
There are several things the city and region can do to address these social and economic divides.
The first step must entail upgrading the more than 3.8 million low-wage, low-skill service class jobs in the metro area, which employ nearly half of the metro’s workforce.
It’s not a pipe dream. Upgrading service work and improving pay can lead to productivity improvements and greater profitability. As Zeynep Ton of the MIT Sloan School of Management recently wrote in the Harvard Business Review, “bad jobs are not a cost-driven necessity but a choice.”
The retail companies that invest the most in their lowest paid workers — that offer the most intensive training, the best chances for advancement, and the highest possible pay — “also have the lowest prices in their industries, solid financial performance and better customer service than their competitors.” Most importantly, they provide a model that can be “applied in other service organizations.… These include hospitals, restaurants, banks and hotels.”
The service economy provides countless opportunities for the same kinds of productivity improvements that helped raise wages in the manufacturing sector generations ago. My own father saw his job in a Newark factory transformed from low wage work — it took nine family members to make ends meet during the 1930s — into a good middle-class job when he returned from the war, enabling him and my mother to buy their own home and put my brother and I through college.









