Subsidies in NYC: Now and Forever?

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At today’s Crain’s breakfast in Midtown Manhattan, business leaders got a sneak peak at Congressman and New York City Mayoral candidate Anthony Weiner’s five point plan to spur job creation and retention. For those of us who pay close attention to economic development subsidies, the presentation was more of the same: subsidies, tax breaks and more subsidies.  Rep. Weiner highlighted that there are about 3.75 million jobs in New York, about the same number we had in the 1970’s.  This despite the billions of dollars spent on job retention and creation.

Central to this morning’s discussion was the need to be more competitive with our neighbors in New Jersey and Connecticut. We’d argue this needlessly escalates “the economic war among the states.” Like New York, the benefits of New Jersey’s subsidy programs are questionable.

Over and over again, CEO’s of large firms admit they don’t make location decisions based on tax breaks.  What firms look for – and Weiner got this part right – are good schools, safe streets, and affordable housing. Companies also need access to an educated workforce, suppliers and transportation systems. Manufacturing firms and small businesses certainly have challenges in the city, which the Congressman acknowledged.  Yet, it was unclear how his policies would benefit smaller businesses (which are more inclined to hire locally and less likely to get subsidies) feeling the pressure of high real estate costs and not become a financial windfall for the subsidy machine that is large firms and site location consultants.

The good news is Weiner’s understanding of the impact of big box stores was spot-on. When asked why he supported the campaign to bar Wal-Mart from the city he explained the store won’t bring in net new revenue or jobs, just drive out locally owned businesses. 

Let’s hope that over the course of the Mayoral race, which should kick into full gear here after the Presidential race, Rep. Weiner will find a more nuanced and creative approach to helping New York’s middle class.

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