RISING VIOLENCE MAY UNDERCUT NEW YORK'S EFFORTS TO REBUILD ITS ECONOMY

Crime and Diminishment

 

By Steven Malanga

 

City Journal

January 19, 2021 

 

In the late 1980s, U.S. Athletics was a 13-store footwear chain bucking competition from big national retailers to carve a market for itself in New York City. It had the right styles at the right price and by the end of the decade was projecting $20 million in sales. What the chain lacked was a strategy to deal with New York’s exploding crime. In 1990, the company’s owner wrote to city officials complaining that its Manhattan stores had been held up at gunpoint 15 times in the past year, suffered 25 break-ins, and been victimized by 1,000 shoplifting incidents. He warned that he might have to shut down his city operations. It wasn’t an idle threat; the next year, U.S. Athletics closed its city retail operations.

U.S. Athletics wasn’t alone. New York businesses during the late eighties and early nineties suffered hundreds of millions of dollars from pilferage and had to invest billions more in extra security to fend off crime. Many gave up, and the result was shopping districts dotted with boarded-up, empty stores, and industrial areas with vacant warehouses. Crime was another reason that a city with other competitive disadvantages—including high taxes and heavy business regulation—struggled to create jobs during that era.

What happened then is also a warning for New York of today. Pandemic-induced lockdowns have led to the stunning decline of half a million jobs in New York in the last year. Nothing like those losses has occurred before in a single year. The city’s economic future is now clouded with uncertainty because of dramatic changes in work that have taken hold during the pandemic, most especially the many office jobs now being done remotely instead of in the city’s expensive business districts. Thousands of city residents who worked in local businesses and supported them, meanwhile, have fled the city, and a Manhattan Institute poll last year found many more thinking about leaving. Along with those significant obstacles, New York faces another threat to its economic revival, one that it didn’t confront during the last two recessions—violent crime, which rose abruptly and significantly last year. Murders increased a shocking 42 percent, and shootings almost doubled to 1,531. More people were victims of shootings in the city than in any year since 2002.

It would be a mistake to minimize the impact that crime has on a city or a neighborhood’s ability to revive itself after an economic downturn. Anyone who lived in New York or visited it during the late seventies or in the eighties remembers the mostly deserted shopping areas where retailers closed before dark and businesses built up a heavy security presence in industrial areas. To firms struggling to survive in an already tough, expensive location, crime was often the tipping point to lead them to pack up and move elsewhere.

One 1989 study by the public policy group Interface, for instance, reported that more than 70,000 small businesses throughout the city’s outer boroughs alone had been victimized by crime in the past three years, costing them some $750 million in lost merchandise. More than one-fifth of firms surveyed said that crime had made it harder for them to hire workers. Nearly one-fifth said that they had lost sales because of rising crime, while more than one in ten cancelled expansion plans because of growing violence. Another 20 percent said that they were thinking of moving out of New York because of crime. Nine percent of businesses had confessed to thinking of closing shop, like U.S. Athletics, thanks to the city’s crime spree.

Those startling numbers almost certainly contributed to the deep recession that emerged the next year and that sparked the greatest single-year loss of jobs in Gotham until 2020: a decline of 191,000 positions in 1991. The recession persisted for three years, costing New York a total of more than 300,000 jobs. When it was over, the city had given back all the job gains that it had accumulated after the fiscal crisis of the seventies, reversing more than a decade of growth. Those losses sparked a four-year budget crisis as revenues sank and social-welfare costs exploded.

Nightmare stories about crime in New York, like the 1990 murder of Utah tourist Brian Watkins, had driven away visitors. In a poll taken during that time, travelers ranked New York as the least likely major U.S. tourist attraction that they intended to visit. Largely as a result, more than half of Broadway’s theaters were dark. Restaurant owners in the theater district were so panicked by the impact of crime that they enlisted the Guardian Angels to patrol their streets. Meantime, the city’s many outer-borough shopping districts were littered with vacancies, and the stores that did populate commercial avenues like 14th Street in Manhattan were mostly independent general-merchandise retailers selling cheap goods.

The well-documented, well-publicized decline in the city’s crime that began soon after that recession, however, reshaped New York’s image. Visitors poured back into the city. By 2000, there were 15 million more a year, spending 50 percent more in the city than a decade prior. Despite the attacks of 9/11 and the deep international economic downturn of 2008, those numbers have risen virtually every year since; in 2019, 66 million people came here.

This boom has helped revived whole areas of the city. The number of people working in arts and entertainment more than doubled since the early nineties as Broadway theaters filled up again. The city added a stunning 163,000 restaurant jobs—an increase of more than 150 percent in that time, as street traffic revived. Outer borough shopping districts, including in tiny neighborhoods like Crow Hill in Brooklyn, rebounded. Many national retailers arrived, vastly expanding the local economy. Retail employment alone has grown by 120,000 since the recession’s low of the early nineties. Total employment in the city, which had been stuck in a boom-and-bust cycle that the city had been unable to break out of for 25 years, hit new highs, culminating in 4.65 million jobs last year—850,000 more than the city’s previous employment high, which it had reached in the early seventies, before New York’s long decline set in.

Small businesses were among the biggest beneficiaries of this decline in crime, especially minority-owned firms. In the economic expansion of the mid-1990s, for instance, the number of black sole proprietors soared by three-quarters, while the ranks of Latino entrepreneurs increased by 120 percent. By the end of the decade, blacks owned 5,700 small businesses in the city and Latinos 9,100.

The recession of the early nineties was the last one in which crime rose as jobs disappeared. In the two recessions since then—in 2002 and then again in 2008—crime rates largely continued declining or remained stable. That helped make the city’s economy more resilient. Those recessions took less of a toll on the city, even though the impact nationally, especially from the 2008 recession, was far greater.

The city’s resilience and prosperity are threatened by the deep uncertainty created by the pandemic, compounded by New York’s flagging efforts against crime. Violence rose as the NYPD was strained by protests and riots this past summer in the wake of the death of George Floyd in the hands of Minneapolis police. The rise in crime also took place in a year in which the state passed criminal-justice reforms putting more defendants back on the streets while they await trial, even as studies show that a significant number of these freed individuals commit new crimes while free. A series of local prosecutors elected on an agenda of decriminalizing many minor crimes have sent a message that certain kinds of disorder seem acceptable again. Cops, eyeing these changes to law enforcement, are backing off on enforcement or, worse, simply giving up, making it harder to maintain the kind of street presence that deters bad guys.

What the city lacked in the early 1990s was a roadmap on how to cut crime. That created doubts about New York’s future. Today, we have that roadmap, even as New York confronts other doubts created by the pandemic. But city and state political leaders seem intent on throwing away much of what we have learned in the last 30 years about civic disorder. If the city’s social order disintegrates, New York’s 30-year economic miracle will likely go with it.