AN ECONOMIC DEVELOPMENT AGENDA FOR NEW YORK CITY Prepared by CONSERVATION OF HUMAN RESOURCES Columbia University iEx ICtbrtH SEYMOUR DURST "When you leave, please leave this book Because it has been said "£ver'thing comes t' him who waits Except a loaned book." OLD YORK LIBRARY — OLD YORK FOUNDATION Avery Architectural and Fine Arts Library Gift of Seymour B. Durst Old York Library AN ECONOMIC DEVELOPMENT AGENDA FOR NEW YORK CITY Prepared by CONSERVATION OF HUMAN RESOURCES Columbia University December, 1975 ?5 3 Table of Contents Page Foreword v Introduction 1 The Corporate Office Complex 4 The Quality of the Future Labor Force 9 Strengthening the Manufacturing Base 13 Continued Evolution of the Agenda 17 Summary of Recommendations 20 The Agenda Committee for an Economic Development Strategy for New York 21 Participating Members of the Conservation of Human Resources Staff 22 Consultants 23 Previous Studies Related to New York City's Economy by the Conservation Staff 24 Digitized by the Internet Archive in 2014 https://archive.org/details/economicdevelopmOOcons Foreword This document is the outgrowth of a short-term effort carried out by the Conservation of Human Resources Project, Columbia University, under a grant from the Rockefeller Brothers Fund (RBF), assisted by an advisory group of well informed individuals in the private and public sectors, most of whom occupy decision-making roles. It w as understood from the outset that the effort would be based on knowl- edge that was readily available, since time precluded undertaking new research. In short, the project was seen as a cooperative undertaking between academicians and decision-makers aimed at identifying cri- tical dimensions of the City's economy which, if treated differently, might lead to a strengthening of its economic base. This document, drafted by the Conservation staff, has been in- formed by the contributions of the Agenda Committee at both its June and September meetings, as well as by the additional assistance that the members provided through individual conferences with the staff. Further, the Conservation Project was able to profit from con- sultation with selected specialists in urban economics. A listing of the names and affiliations of all who participated is provided at the end. The project was initiated shortly before the fiscal crisis facing the City came to the public's attention. Once it broke, the decision to focus on an agenda for economic development was reappraised and con- firmed. But it was clear that the manner in which the fiscal crisis was resolved would leave its mark on the near-term future of the City's economy— to note only the future of the capital budget. But it was the unanimous opinion of the Agenda Committee and the Conservation staff that no matter what type of fiscal reconstruction program were adopted, the strengthening of the City's economic base remained a matter of the highest urgency. v vi The Agenda Committee pressed the Conservation staff to select a limited number of areas where action, if initiated and carried out, might make a significant difference. This document has been devel- oped in consonance with this advice. It has identified a limited number of policy areas where early efforts hold promise of constructive outcomes. The decision to make this document available despite the limita- tions of time, scope, and knowledge reflects our belief that the design and implementation of an effective economic development strategy for New York City— more urgent in the late fall than in the early spring of 1975— is so important for the future of the metropolis that even a modest effort may be helpful to those who must assume the lead and participate in mounting a major effort. The principal responsibility for carrying out this assignment was assumed by Professor Dale L. Hiestand with the assistance of Dr. Charles Brecher. The members of the Agenda Committee were sup- portive and constructive. The Rockefeller Brothers Fund staff associate, Mrs. Marilyn W. Levy, served as the Fund's liaison to the Agenda Committee and was ever ready to help. The Conservation Project is deeply grateful to both the Agenda Committee and the Fund. Eli Ginzberg, Director Conservation of Human Resources Columbia University in the City of New York December 1975 Introduction The purpose of this paper is to set an agenda for analysis and action which will promote the economic development of New York City. Setting an agenda necessarily involves selecting priority items from among a range of potential actions rather than comprehensively treat- ing the entire spectrum of possibilities. Thus the agenda is only a starting point for what will hopefully become a broader effort to generate the business and civic confidence which is essential to con- tinual economic development. Setting an agenda for economic development is a complex task for several reasons. First, economic development is a broad goal which has a number of dimensions. A comprehensive and formal definition of economic development should include increases in all forms of income generated within the city— rents, interest, and profits; wages and salaries; as well as taxes. But an action-oriented agenda requires selecting from among these dimensions one or more which deserve priority. Employment levels or the numbers of jobs within the city stand out as the most important aspect of economic development. The greatest proportion of income within the city, 64 percent in 1972, is derived from employment rather than rents, profits and other sources. An even larger proportion of the population is dependent upon their jobs for their livelihood. No single figure better represents the level of economic development than the number of jobs in the city and hence, no other aspect of economic development warrants as high a priority. Second, even when the focus is limited to employment, the goal of economic development remains complex because it is dependent upon diverse factors. The availability of land and space, access to capital markets, the quality of the local labor force, the efficiency of the 1 2 transportation system, tax levels and the quality of local public services, and the attractiveness of the city as a residential environ- ment are all critical factors that influence the profitability and desir- ability of New York City as a location for business activity. Further complicating the problem is the fact that the relative importance of each of these factors varies for different firms and their relative im- portance is not easily understood by outsiders. A number of basic considerations can be used to guide the selection of priorities from among the diverse possibilities. The recent munici- pal fiscal crisis has resulted in both severe constraints on feasible options with respect to tax and expenditure policy and to the forma- tion of a number of agencies to deal with problems relating to the scale and productivity of municipal government. Proposals which require significant new capital or other expenditures by local govern- ment must be viewed as presently impractical. The range of possi- bilities with respect to public investment in transportation, housing or other social infrastructure is severely limited. The issues of taxation and productivity in the public sector are already being considered by new agencies. There is no need to duplicate the efforts of the Munic- ipal Assistance Corporation, the Emergency Financial Control Board, the Temporary Commission on City Finances, or the Mayor's Com- mission on the Management of Municipal Services. The setting of priorities should also take into account the activities and efforts of the numerous groups in the city that have been con- cerned with economic development for a number of years. The Economic Development Administration is a municipal agency which has initiated a number of major programs aimed at expanding em- ployment. The Governor has recently created the Economic Develop- ment Board to promote job creation throughout the state. The Eco- nomic Development Council, the Public Development Corporation, the Real Estate Board of New York and the Association for a Better New York are but a few of the more prominent private groups which are continually developing and implementing programs to help bolster the New York City economy. Any new initiatives should be informed by what these groups have already accomplished and what they are capable of contributing in the future. Many factors affecting economic development are of considerable importance in their own right. Housing policy, zoning decisions, and transportation systems affect the quality of life of city residents in a number of ways beside their influence on employment. But from the perspective of economic development, such programs can be effectively designed only when their impact on the locational decisions and operating efficiency of different firms is well understood. The design 3 of economic development programs must be based upon detailed knowledge of the operations and locational needs of specific sectors of the economy. Two sectors in which locational decisions are particularly important are (1) manufacturing and (2) corporate offices and the network of services which are tied to them. The erosion of manufacturing em- ployment is one important cause of the decline in New York City's economic base. Some of this loss may be inevitable, but it is important to determine what countermeasures can slow or reverse the trend. The agglomeration of firms and activities related to corporate offices re- present a second important sector because of both the number of jobs they represent and because such agglomeration is a potential source of future growth. But only if the economic operations of this sector are well understood can programs be designed to build on this strength. The future quality of the labor force is one factor affecting all sectors which can be analyzed independently. The city has a sub- stantial continuing investment in this arena through its educational in- stitutions and training programs. While it is difficult to foresee the future, this educational investment should be informed by a realistic view of the potential skill needs of the local economy. Occupational training within the high schools, colleges, and manpower programs should be reassessed to assure that it is better related to future jobs. These three areas— building on the agglomeration of corporate office and related services, enhancing the quality of the future labor force, and maintaining a manufacturing base— are the priority con- cerns considered in this paper. In each case recommendations for an analysis/action program are set forth. Since this agenda is viewed as only a first step towards an evolving economic development strategy, attention is given to ways of con- tinually improving and revising it. The final section of the paper suggests a mechanism for achieving this end. The Corporate Office Complex The most vital sector of New York City's economy is one which defies simple description. It consists of corporate headquarters and a variety of activities in many different industries which support these corporate headquarters. This corporate office complex represents a significant number of jobs. Because it cuts across many of the standard industrial classifications, the complex cannot be gauged directly from available data sources. However, the general order of magnitude is reflected in the Regional Plan Association's estimate that in the mid- 1960s nearly 400,000 jobs were in corporate headquarters in New York City and another 550,000 jobs were in the offices supplying middle level supporting services to these headquarters. This total of nearly 950,000 jobs did not include the segments of the hotel, restaurant, recreational, and transportation industries which are directly depend- ent upon corporate office activity. When these activities are taken into account, it is likely that currently about one-third of all jobs in the New York economy depend on the corporate office complex. New York City has long been a leading national and international center for corporate office activities (see Table 1). In terms of head- quarters themselves, in 1972 New York was the home of 113 of the 500 largest manufacturing companies listed by Fortune magazine. This compared with 50 for the second largest corporate center, Chicago. New York is also the center of the banking industry and corporate finance. In 1974 banks in the city accounted for 34 percent of total deposits among the nation's 200 largest banks. The second largest con- centration of bank deposits was in San Francisco with only 14 percent of the total. New York is the leading center for legal talent with 19 percent of 4 5 TABLE 1 Relative Shares of New York City and Closest Rival in Corporate Headquarters and Related Activities Activity New York s Share (%) Closest Rival Share (%) Headquarters of Fortune 500 firms (1972) 22.6 Chicago 10.0 Total deposits of nation's 200 largest banks ( 1974) 33.8 San Francisco 13.9 Lawyers in the United States (1970) 19.2 Washington, D.C. 8.7 Members of the nation's 48 largest legal firms ( 1973 ) 31.2 Chicago 14.9 Accountants in the United States ( 1970) 13.7 Los Angeles 7.9 Members of the AICPA ( 1973) 15.6 Chicago 7.8 Net fee income of nation's 40 largest public relations firms (1972) 78.1 Chicago 11.2 Foreign sales of the Fortune 500 firms ( 1971 ) 49.6 Detroit 15.7 Foreign deposits in the 200 largest U. S. banks (1974) 54.3 San Francisco 17.8 the nation's lawyers and 31 percent of the members of the nation's 48 largest law firms. The next largest legal centers are Washington with only 9 percent of the lawyers and Chicago with 15 percent of the large firm members. New York is also the home of the nation's accounting profession. Six of the "Big Eight" accounting firms are located here. Moreover, 16 percent of the AICPA members are based in New York, compared to only 8 percent in the next largest accounting center, Chicago. Public relations services are concentrated in New York. The nation's five largest public relations firms are based here and firms located in the city account for 78 percent of the net fee income of the nation's top 40 firms. The second largest concentration of public relations talent, Chicago, accounts for only 11 percent of net fee income. New York is also a center for foreign trade activities. Among the Fortune 500, New York based firms account for 50 percent of foreign sales compared to second place Detroit with 16 percent. Foreign deposits in New York banks account for 54 percent of the total foreign deposits among the 200 largest banks, compared to 18 percent for San Francisco banks. 6 In addition to the various business services that are clearly identi- fiable as components of the corporate office complex there are several other service activities that are economically linked to office activity. New York's two airports are among the largest and busiest in the world and represent an asset for customers and corporate officials traveling to and from the city. The city's approximately 100,000 hotel and motel beds and its numerous restaurants serve those visiting the city for business as well as tourists and local residents. New York's ability to maintain its position as the leading corporate office complex, and thus to retain a major portion of its job base, is dependent upon changes in the economic forces which hold together and attract the various components of the complex. But there is little firm knowledge about the forces which underlie this agglomeration of activity. One widely held belief is that the need for face-to-face contact among decision makers in the corporate world has led to the con- centration of activity in relatively small areas such as the Manhattan midtown and downtown districts. But the recent trend towards re- location of corporate offices in outlying suburbs and other metropolitan areas, together with technological advances in the communications and computer industries, suggest that the significance of face-to-face contact may be declining or may involve a smaller proportion of headquarters' staff. Firms are developing organizational techniques which may permit them to "have their cake and eat it too." Functions may be spatially divided, with operations that require Manhattan locations remaining in the city; at the same time, such firms may require many of those who do business with them to travel to the suburbs. Such actions tend to dismantle the city and may add to the costs of providing services (although higher costs may not always be allocated to the clients in- volved). Corporations may fail to appreciate the long-term impact of their decision to move out on the total agglomeration of services which is a cornerstone of the metropolitan economic base. Individual firms may see themselves as able to make special arrangements, assuming that the total corporate office complex can continue to operate with undiminished efficiency. Such continued out-migration can damage the total complex and undermine the entire metropolitan area. Firms moving out see them- selves as fleeing areas of congestion and high costs to areas free of congestion and environmental problems and characterized by a fa- vorable cost structure and lower personal taxes. At the same time, the build-up of suburban areas can destroy the very attributes that are currently most attractive. The result is that the entire metropolitan 7 area may function less efficiently and be rendered less competitive. In the end, suburbia, too, may suffer. While some factors point to a pulling apart of the corporate office complex, other trends indicate continued concentration. Recent in- creases in energy costs may make the automobile-oriented suburbs less economical as business locations and work to the advantage of cities such as New York with large mass transit systems. The growth and specialization of international trade and finance activities within the city has given New York an early lead which it may continue to hold. In view of the fact that there is a close and systematic relationship among the large number of corporate headquarters, the advanced pro- fessional and technical services, the cultural and recreational base, and other facets of the City's economy, priority should be given to gaining a deeper understanding of the locational decision-making process in this sector. Improved knowledge is essential in order to identify ways of effective intervention to slow or reverse the outflow of these jobs. Preliminary inquiry discloses that the assembling and evaluation of critical new knowledge of the locational decision-making process can be obtained only on a confidential basis through interviews with the principal corporate executives involved. Such cooperation, while dif- ficult to secure, will probably be forthcoming if the effort is launched and carried out under appropriate auspices. One of the nation's lead- ing consulting firms has indicated its willingness to assist. Such an effort would require broad sampling including the follow- ing types of organizations: a) Major corporations that considered leaving the city and later decided to remain. b) Corporations that moved out of New York City but remained in New York State. c) Corporations that remained in the region but that relocated outside of New York State, either in New Jersey or Connecticut. d) Corporations that relocated to another urban community in another region of the country, i.e. Houston, Phoenix, Columbus, Denver. e) Corporations that decided within the last decade to move their headquarters to New York City. f) Foreign corporations that have located in the City within the last decade. g) Corporations that have stripped their New York City head- quarters by relocating major functions. s h) Corporations that have brought critical functions into the city that were previously performed outside. With respect to each of the foregoing it would be essential that the confidential inquiry be directed not only at the forces that determined the original decision with respect to relocation but, to the maximum extent possible, to elicit the consequences, anticipated and unantici- pated, that have followed upon the initial decision. The successful design, implementation, and execution of this project requires the following: a) As noted above— proper auspices essential for securing the con- fidential information required. b) Careful design of the subjects that must be explored and on which, to the extent possible, it would be desirable to obtain supporting objective data. c) Employing the services of skillful interviewers who have had a demonstrated record of performance in comparable studies. d) Establishing an advisory committee of corporate executives of major companies in New York City who would be involved in translating the results into programmatic efforts in both the private and public sectors with the objective of strengthening the city's attractiveness as a center of corporate offices. The Quality of the Future Labor Force The foundation of any metropolitan economy is the size, talent, skills and diversity of its labor force. The availability of a productive work force at competitive wages is a critical factor in most employers' locational decisions. It must be recognized that in some instances labor market bound- aries are not and should not be coterminous with municipal bound- aries. Entry positions in many prestigious firms are reserved for graduates of elite business, law and other professional schools located throughout the nation. Less is known about the sources of supply for middle level administrative, accounting, and other white collar posi- tions. The patterns are undoubtedly complex, mixing local recruit- ment of recent graduates and persons returning to the labor force with internal promotions, transfers, and "pirating" from competitors. But firms require a continuing new supply of capable middle and lower level personnel from local sources. Many firms located in New York or considering New York as a place to do business raise questions about the skills and work orientation of the city's labor force. They fear that the supply of suitable resident workers for clerical, technical and lower management positions ma}' not be adequate in the future. This fear is rooted in underlying social trends. An increasing pro- portion of young residents entering the labor market may be poorly trained and socialized. At the time of the 1970 census nearly half the city's youth between the ages of five and fourteen belonged to minority groups and they will be entering the labor market during the coming decade. Many will not complete high school. In the past the drop-out rate from the public schools has averaged nearly 40 percent. This high drop-out rate, combined with a high college entry rate 9 10 among graduates due to open admissions, has limited the supply of high school graduates entering the labor market immediately after graduation. One recent estimate was that only 15 percent of the tenth grade class entered the labor market after graduation from high school; the other 85 percent were either drop-outs or entered college. The concern for an adequate labor supply has been most evident among the large employers of clerical manpower, a group traditionally recruited from among recent graduates. This problem attracted the attention of two groups concerned with economic development— the City Planning Commission and the Economic Development Council. The Planning Commission studied "Clerical Jobs in the Financial Industry" in 1972 and the Economic Development Council studied "New York City's Clerical Manpower Requirements and Problems" in 1970. These studies of clerical manpower revealed four important points. First, the continuing demand for clerical staff among New York firms is substantial due to turnover even in the absence of net growth. The Economic Development Council estimated that the local employers must recruit from 150,000 to 200,000 persons annually just to meet their normal requirements. Second, while employers have been able to meet this demand quantitatively, they have been dissatisfied with the quality of their new hires. Virtually all of the firms surveyed by the Economic Development Council indicated they were experiencing in- creased difficulty in finding quality applicants. Third, firms are already incurring high search costs to fill their needs. The City Planning Com- mission found that financial firms had to screen 3.6 applicants for each person hired. Fourth, employers cannot rely upon the public schools to fill their needs. The Economic Development Council reported: "In the opinion of the responding firms, the present state of public educa- tion in New York City is the most important factor hampering business in its efforts to employ qualified clerical help." As this quotation makes clear, the ability of local educational insti- tutions and training programs effectively to prepare and link students to the labor market is critical to the city's future. Through these insti- tutions and programs local government makes a substantial invest- ment in the future labor force. The Board of Education's current budget (before the most recent cutbacks) contained $642 million for secondary education; the Board of Higher Education's budget totalled $631 million with $148 million for the community colleges which are intended to train many of the middle level technical personnel. The budget for manpower programs is approximately $200 million. Thus New York City has an ongoing investment of over $1.4 billion in secondary and higher education and manpower training. 11 The fact that this investment could be better used to benefit both students and employers has been noted by several critics. In a 1971 study the Economic Development Council described the manpower training programs as "fragmented, overlapping, and duplicative while at the same time inadequate for all important areas of need." Passage of the Comprehensive Employment and Training Act in 1973 and creation of the New York City Department of Employment have changed the administrative structure of these programs but have not improved their basic effectiveness. At the secondary level, a review of enrollment trends in vocational programs between 1960 and 1970 found the system slow to respond to shifts in the economy. Patterns of enrollment among the course offerings were similar in both years and only one new program had been introduced during the decade. At least partially responsible for this rigidity is the weak system of advisory committees that serve the high schools. In many cases their advice for strengthening the cur- ricula is not followed. The City University system was able to respond in many useful ways to changes in the local economy during the 1960s. The expanding edu- cational system provided new programs to meet the needs of the local government as its social welfare programs expanded. Thus at the be- ginning of the 1970s over 25 percent of the community college students in career programs were training for jobs in the health sector; another 5 percent were training for jobs related to the delivery of other public services. But the relationship of these large training programs to current labor market conditions has shifted abruptly in recent years due to public sector cutbacks and a reappraisal of this large scale educational investment is overdue. In sum, a balanced consideration of the quality of the future labor supply must take into account three elements— the needs of local em- ployers, the capabilities of educational institutions and training pro- grams, and the expectations of those in the preparatory process. In determining the needs and problems of employers the following approaches should be pursued: 1) Careful questioning of the key executives to be interviewed in connection with the recommended study of corporate locational deci- sions to determine how current or prospective labor force difficulties contributed to their decisions. 2 ) A special sample of major large employers in retailing, communi- cations, utilities, banking, and other services to determine their experi- ences over the last five years in hiring and retaining specified groups of workers. 3 ) Sampling of other large, medium, and small enterprises to deter- 12 mine their experiences in meeting their labor requirements and to identify trends which point to current and future problems. 4) Structured interviews with directors of both public and private employment agencies that specialize in placing skilled personnel. In reappraising the potential of local education and training pro- grams the following approaches should be followed: 1) An analysis of the competences, general and specific, of recent school leavers and graduates from academic and vocational high schools, community and senior colleges. This can be accomplished through follow-up studies of the appropriate groups and their em- ployers. 2 ) A projection of those who will be entering the job market in the next five to ten years with an evaluation of the extent and quality of their preparation. The projections could be based on current enroll- ment statistics and identifiable trends in enrollment patterns, drop-out rates, and college attendance rates. In assessing the fit between the expectations of students and their probable later job and career opportunities, the following steps are indicated: 1) A review of the follow-up studies of recent graduates that have been undertaken by the City University and other organizations. 2) Interviews with career guidance counselors in the state employ- ment service and in various voluntary organizations providing guid- ance services such as the Federation of Jewish Philanthropies, youth organizations (YMCA, etc.) and others. There is a strong probability that the foregoing probes will reveal wide gaps between the types of preparation that many young people are obtaining and the present and future requirements of employers. As these gaps are specified, the basis will exist for identifying correc- tive actions that could lead to constructive results. The more active leadership groups in the educational-training institutions and employ- ers are involved during the several stages of this project, the more likely that they will implement the findings that emerge. Strengthening the Manufacturing Base The facts about New York City's declining blue collar job base are well known. Manufacturing employment dropped by 92,000 jobs in the 1950s, by 180,000 in the 1960s, and over 106,000 manufacturing jobs have been lost in the first half of the 1970s. Some part of the losses were inevitable, given the shifts in the concentration of con- sumers, changes in transportation, and the availability of more desir- able factory space, wage rates and taxes in other areas. Some efforts have been made to reduce the losses, but the magnitude of the problem suggests further action is essential. In seeking to develop new programs, there is a tendency to think of economic development as a one-on-one effort which culminates in the attraction of a single enterprise to the city, or the retention of a firm that would otherwise have departed. Any economic development program will have to deal with particular firms, but to have significant impact such activities cannot be purely opportunistic. For economic development to be effective, it must be capable of generalizing its efforts and repeating its successes. Economic development programs need to focus on particular sectors or industries and to be based on knowledge of the market constraints within which these sectors must operate. Thus a suitable starting point for the development of new programs is to initiate one or more industry-specific studies of eco- nomic trends and the diverse factors which affect the profitability of New York City as a location for that particular manufacturing activity. There are a number of recent developments which may be working in favor of the city. Decline itself may be opening new opportunities. As congestion is reduced, opportunities for improved traffic flow arise; the loss of certain activities may free deserted commercial space for other more viable enterprises. Shifts in market structures and consumer 13 14 tastes may also favor the city. For example, trends in fashion may favor the specialized small-lot production characteristic of New York industry. The effort to preserve a blue collar job base in the city need not be limited to the struggle over retaining jobs in industries which are al- ready declining. An effort needs to be undertaken to identify activities which are not presently in the city which might be established here. This would involve the careful identification of changes in the city's advantages and disadvantages, as well as ongoing changes in the requirements of different kinds of firms. Are there new opportunities because of changing energy costs and requirements? Does increased space availability in lofts, buildings, and land areas in the various boroughs create new opportunities for land accumulation, conversions, or off-street parking and loading which could be selectively marketed? Are there opportunities in the changing economics and technology of waste material handling and utilization? Does the city now have op- portunities, under appropriate conditions, to selectively "repatriate" some activities which left the city twenty or so years ago but are now faced with new investment decisions as their post-war investments become obsolete? Counter movements to apparent trends often appear selectively in particular firms or small sub-sectors because of particu- laristic changes in technologies, markets, costs, products, and personal attitudes. The groundwork for an industry-specific approach has already been provided by the New York City-Rand Institute's study of "Candidate Growth Industries for New York City" for the Economic Development Administration. This analysis of employment changes in highly spe- cific industries (four-digit SIC codes) identified 142 manufacturing industries which have growth potential. The potential growth industries were selected on the basis of their national growth and/or their local growth during the 1963-1973 period and/or during the brief 1971-1973 period of national economic recov- ery. They represent specific industries which are already growing in New York City and may require constructive intervention to continue in that direction and industries which are growing nationally but not locally and are therefore potentially expandable locally if proper inter- ventions can be designed. The logical follow-up to this important initial effort is a careful examination of the largest of these potential growth industries to determine the factors which influence their profitability in New York. From this improved understanding it may be possible to develop public and private programs to contribute to their potential growth. Although only 5 of the 142 potential growth manufacturing indus- 15 tries are part of the broadly defined apparel industry, this large and important sector should also be given special attention. While growth may not be possible in the near future, it may be possible to slow its decline. Programs to improve the city's competitive position in this industry will require considerable insight into the dynamic forces shaping locational decisions, including environmental requirements; transport needs; marketing shifts; labor-management relations; manpower re- quirements; public service needs; the impact of changing production and distribution technology; and the connection between plant and market locations. It also requires considerable sensitivity to the complex interrelations with specialized institutions and organizations, such as the Fashion Institute of Technology, and to the changing role of designers in the industry. Implementation of this second-stage effort would require the fol- lowing cooperative arrangements : 1) Active participation by the Administrator of the Economic De- velopment Administration and his staff. 2) The involvement of a group of urban economists who would work closely with the Administrator in an operational-research mode. 3) The selective participation of private sector personnel with spe- cialized knowledge and interests in the particular industries. 4) Advisory group structures consisting of informed persons from management, labor and other interested groups able to contrib- ute to the design, evaluation and implementation of these efforts. A second direction for action to strengthen the manufacturing base is a review of programs already developed to deal with these problems. In particular, two programs should be analyzed to identify their costs and benefits and determine their prospects for expansion. One of the major efforts of the Economic Development Administra- tion working with the Public Development Corporation (PDC) has been the creation of industrial parks and the development of relatively large areas of land for commercial use. Under municipal auspices land is acquired, improved, and made available to appropriate firms. The PDC now has three parks under active development— College Point, Staten Island, and Springfield Boulevard. These parks, together with related PDC projects, already represent nearly 9,000 jobs for the city and development is still in progress. Recently announced plans for industrial development of the South Bronx through joint efforts of the 16 Economic Development Administration and private developers repre- sent another variation in this approach. In each case it is important to review the initiative in order to identify the steps required to bring it to fruition and the possibilities of doing so through future coopera- tive public-private efforts. A second economic development mechanism is the neighborhood development corporation. The Bedford-Stuyvesant Restoration Corpo- ration (BSRC) provides an example of how capabilities can be used to promote retailing and local housing as well as to attract manufac- turing activity. A unit of IBM was first located in the neighborhood in 1969. More significantly, IBM decided to expand its operations in 1975. While the initial decision involved limited outlays and may have reflected the pressures of that time and the willingness of Thomas Watson to make a goodwill gesture, the recent decision involved larger sums and seems based more on economic than philanthropic grounds. IBM appears to have been able to develop a productive minority labor force to fill middle level blue and white collar jobs. A detailed assessment of this experience could help determine whether the results justify seeking the cooperation of other large employers to replicate the effort. Continued Evolution of the Agenda As noted in the introduction, this paper is intended to be only a first step in what is hoped will be a continuing process of broadened and deepened support for economic development programs. In recent decades, the interest in, and constituencies for, economic development in New York City have been limited. The nucleus of any economic development group must be drawn primarily from the business sector. However, the underlying diversity of the city's economy and of its business interests has inhibited the emergence of an organization able to decide upon and implement— either privately or in conjunction with public officials— a major strategy for the city's economic development. There are multiple subgroupings within the business community: manufacturing and service firms share some interests but disagree on others; international corporations have interests that are dissimilar from those who trade primarily in national or local markets; Manhattan businessmen may disagree with Brooklyn businessmen on certain development issues; the banking community, split between commercial and savings banks, does not speak with one voice. Symptomatic of these multiple and shifting centers has been the failure of New York City economic interests effectively to focus on issues of common con- cern. Instead, numerous business and trade associations with relatively specialized clientele tend to address particularistic issues. Extending the base of support for economic development outside the business community presents further difficulties. Put simply, the number of persons for whom economic development has a negative or no clear positive meaning is far larger than the number of persons likely to support a particular development program. For this reason, active support for economic development from political leaders has been difficult to elicit. However, active opposition to developmental 17 18 proposals is always present. A certain segment of the political commu- nity views economic development as materialistic and/or contributing to the perceived influence of the business or corporate elite. The re- surgence of "neighborhoodism" and community control in the city's politics has inhibited specific development projects, including both private and public construction and alterations that threaten to change the local environment. While some organized resistance to economic development often reflects ignorance, other resistance is rooted in perceptions of local or particularistic self-interest. It is likely that the influence of those interested in economic devel- opment will increase in the near future as a result of the city govern- ment's financial crisis and the secular decline in private employment. To some extent, this already is occurring. Strong resistance to tax increases which has been the principal development policy of the business community, now seems to be a goal widely shared throughout the city. The Municipal Assistance Corporation and other newly- created groups represent an institutional response, not only to debt problems but political-managerial problems as well. These agencies and the new leadership they have attracted may have a significant impact on future policies. The current financial crisis has had another useful by-product in creating new opportunities for a large number of urban specialists who had previously worked largely in narrowly circumscribed circles to become aware of colleagues with shared interests and competences. This is true both within specific sectors— governmental, business and academic— as well as across sectors. Moreover, the longer it takes for the crisis to be successfully resolved the larger the number of new persons who are being drawn into assignments directly concerned with the city's economic future. There have long been a small number of organizations with limited staff support whose activities were wholly or partially focused on the economics of the city such as the Economic Development Council, the Regional Planning Association, the Port Authority, the Economic De- velopment Administration, the City Planning Commission, the Clear- inghouse Banks both cooperatively and individually, the Association for a Better New York, and still other private and publicly based groups. In addition, there exists scattered expertise in the region's colleges, universities, foundations, and research institutions, including New York University, Columbia, New School for Social Research, the City University, Rutgers, the Institute for Public Administration, New York City-Rand ( until its recent demise ) and still others. Despite these considerable, if scattered, resources, there has been no sustained effort of sufficient scale and quality to provide leadership 19 in focusing attention on the economic future of the city and in devel- oping alternative proposals for review and action. Yet such an effort, if it were closely linked to the decision-makers in the public and private sectors, could play a critically important role. Analysis alone will not be able to solve the city's problems, but without more and better understanding of the underlying problems and choices that confront the city, strengthening of the city's economic base will be that much more difficult. Accordingly, the following approach is recommended as a first step in creating an expanded opportunity for urban specialists to interact with one another and thereby to enlarge their contribution to the process of designing and implementing an economic agenda for the city: 1 ) A conscious effort should be made to involve more than the staff of one institution in putting together the personnel required for the three projects outlined above. 2) Regularly scheduled meetings and seminars should be held as work proceeds on these projects so that a larger group than those specifically assigned can have an opportunity to contribute. 3) As results begin to emerge from these several projects they should be occasions for critical reviews not only of the specific findings but also of their larger implications for the strengthening of the city's economic base. 4 ) It is inevitable as work proceeds on these projects that additional issues of critical importance to the economic future of the city that require early attention will be identified. An active group of interacting urban specialists would be in a good position to suggest alternative strategies and identify possible personnel to work on the enlarged agenda. The foregoing approach leads to a natural evolution of an enlarged core of interested analysts and decision-makers who are drawn to- gether by the work in which they are mutually engaged. At some point in the future it might be desirable to think of institutionalizing such an effort, but for the present the presumption is that it must first prove itself. Summary of Recommendations The action/ analysis program suggested in this paper has four major components— holding together and expanding the corporate office complex, assuring the future availability of a competent labor force, slowing the decline of manufacturing employment, and continuing work on specifying an economic development agenda. The specific recommendations follow: 1. To gain a better understanding of the economic forces holding together and attracting corporate office activities, a study of corporate location decision-making based on confidential interviews should be undertaken in close cooperation with private sector representatives. 2. To identify the current and potential future labor supply prob- lems, a survey of large and medium sized employers is recommended. The results of this effort should be used as a guide for reassessing the current distribution of the billion dollar municipal investment in occu- pational education and training. 3. To stop the rapid erosion of the local manufacturing job base, it is recommended that committees of knowledgeable people from spe- cific manufacturing industries be created to guide detailed analysis of the market constraints operating in these industries and the ways in which combined public-private initiative might make New York City a more attractive and profitable setting for the industry. It is also recommended that current efforts using the mechanisms of industrial parks and community development corporations be reviewed to deter- mine the strengths and weaknesses of these approaches and the ways in which they can be used most effectively in the future. 4. To broaden interest in and support for economic development programs, it is recommended that periodic meetings be held to bring together interested specialists. The findings of the analysis recom- mended above can provide the initial bases for such meetings and may lead to a continuing process of revision of a development agenda. 20 The Agenda Committee for an Economic Development Strategy for New York James O. Boisi Executive Vice President Morgan Guaranty Trust Company of New York Alfred Eisenpreis Administrator Economic Development Administration of the City of New York Karen Gerard Economic Unit Chase Manhattan Bank Leo A. Larkin Vice President, General Counsel, and Secretary W. R. Grace & Company Dick Netzer Dean Graduate School of Public Administration New York University Kenneth Patton President Real Estate Board of New York Bernard J. Ruggieri, Esq. Shea, Gould, Climenko and Kramer Jacob Sheinkman Secretary-Treasurer Amalgamated Clothing Workers of America Franklin A. Thomas President Bedford-Stuyvesant Restoration Development Corporation John R. White President and Chief Executive James D. Landauer Associates, Inc. Marilyn W. Levy Rockefeller Brothers Fund 21 Participating Members of The Conservation of Human Resources Staff Charles Brecher, Ph.D., Adjunct Assistant Professor of Political Science, Fordham University and Lecturer, New School for Social Research Robert Cohen, M.A., Research Associate, Columbia University Alfred Eichner, Ph.D., Professor of Economics, State University of New York at Purchase Eli Ginzberg, Ph.D., A. Barton Hepburn Professor of Economics, Graduate School of Business, Columbia University Dale L. Hiestand, Ph.D., Professor of Business, Graduate School of Business, Columbia University Raymond Horton, Ph.D., J.D., Associate Professor of Business, Graduate School of Business, Columbia University David Lewin, Ph.D., Associate Professor of Business, Graduate School of Business, Columbia Universitv Thomas Stanback, Jr., Ph.D., Professor of Economics, New York University Emmanuel Tobier, Ph.D., Professor of Economics and Planning, Graduate School of Public Administration, New York University 22 Consultants The following individuals and institutions contributed to the work of the Conservation staff in preparing the present document. Their assist- ance is gratefully acknowledged: Richard Bernstein, Executive Director New York City Public Development Corporation Paul Busse, President Economic Development Council of New York City, Inc. Saverio Capello, Regional Studies Section Port Authority of New York and New Jersey Matthew Drennan, Associate Professor of Public Administration New York University Alexander Ganz, Research Director Boston Redevelopment Authority James Heilbrun, Professor of Economics Fordham University Joel Koblentz Columbia University Warren Love joy, Central Research and Statistics Division Port Authority of New York and New Jersey Richard Richardson, Executive Director Economic Development Board, New York State Gail Schwartz, Director of Economic Development New York City Department of City Planning George Sternlieb, Director Center for Urban Policy Research, Rutgers University Louis Winnick, Deputy Vice President Ford Foundation 23 Previous Studies Related to New York City's Economy by the Conservation Staff 1. ELECTRONIC DATA PROCESSING IN NEW YORK CITY: LESSONS FOR METROPOLITAN ECONOMICS Boris Yavitz and Thomas M. Stanback, Jr.: Columbia, 1967 2. MANPOWER STRATEGY FOR THE METROPOLIS Eli Ginzberg and the Conservation of Human Resources Staff: Columbia, 1968 3. THE METROPOLITAN ECONOMY: THE PROCESS OF EMPLOYMENT EXPANSION Thomas M. Stanback, Jr. and Richard Knight: Columbia, 1970 4. URBAN HEALTH SERVICES: THE CASE OF NEW YORK Eli Ginzberg and the Conservation of Human Resources Staff: Columbia, 1971 5. UPGRADING BLUE COLLAR AND SERVICE WORKERS Charles Brecher: Johns Hopkins Press, 1972 6. NEW YORK IS VERY MUCH ALIVE: A MANPOWER VIEW Eli Ginzberg and the Conservation of Human Resources Staff: McGraw-Hill, 1973 7. EMPLOYMENT EXPANSION AND METROPOLITAN TRADE Richard Knight: Praeger, 1973 8. THE LABOR MARKET: AN INFORMATION SYSTEM Boris Yavitz and Dean Morse: Praeger, 1973 9. WHERE HAVE ALL THE DOLLARS GONE? PUBLIC EXPENDITURES FOR HUMAN RESOURCES DEVELOPMENT IN NEW YORK CITY, 1961-71 Charles Brecher: Praeger, 1974 10. THE URBAN LABOR MARKET: INSTITUTIONS, INFORMATION, LINKAGES David Lewin, Raymond Horton, Robert Shick, Charles Brecher: Praeger, 1974 11. WORK AND WELFARE IN NEW YORK CITY Miriam Ostow and Anna Dutka: Johns Hopkins Press, 1975 12. SUBURBANIZATION AND THE CITY Thomas Stanback, Jr. and Richard Knight: Allanheld, Osmun & Co., 1976 24