Comptroller unveils new economic report showing effects of gentrification across NYC

Share of businesses located in Downtown and Midtown Manhattan fell from 2000-2015 as neighborhoods outside Manhattan boomed

Business growth in City’s top 15 gentrifying neighborhoods up 45% from 2000 to 2015, but benefits not broadly distributed

(New York, NY) – In a first-of-its-kind report, Comptroller Scott M. Stringer today released a comprehensive neighborhood-by-neighborhood analysis documenting the evolution of New York’s economy since 2000 and the changing business landscape in communities across the five boroughs. The Comptroller’s report, The New Geography of Jobs: A Blueprint for Strengthening Our Neighborhoods, shows that despite tremendous business growth in the City’s rapidly gentrifying neighborhoods between 2000 and 2015, the benefits of increased economic activity have not been broadly distributed among residents of those communities. The report offers a series of recommendations aimed at harnessing the economic power of new business growth by connecting local residents to local employment and entrepreneurship opportunities. The Comptroller’s analysis also contains first-of-its-kind economic snapshots of each individual neighborhood in New York City, showing how local economies and populations shifted between 2000 and 2015.

“We need an economy built on fairness. The increasing rents and economic distress that accompany gentrification are challenges that we as a city must confront. As the jobs landscape changes, we need to do everything possible to support those who helped build their communities in the first place. To avoid pricing people out of their own neighborhoods, we need to deliver real, meaningful, local wealth creation. That means taking a community-based approach to linking people who live in gentrifying neighborhoods with local economic opportunities,” Comptroller Stringer said. “As business activity accelerates across the city, we have to do far more to connect local residents to career pathways and entrepreneurship opportunities.”

Business activity provides one of the clearest visual markers of neighborhood change and, along commercial corridors in gentrifying neighborhoods, these changes have been profound. Overall, the number of businesses in the city’s 15 gentrifying neighborhoods grew from 29,132 in 2000 to 42,261 in 2015 – a 45 percent jump. The biggest increases in business growth were in:

  • Central Harlem: 90 percent
  • Crown Heights North & Prospect Heights: 84 percent
  • Crown Heights South, Prospect Lefferts, & Wingate: 67 percent
  • Greenpoint & Williamsburg: 64 percent

From 2000 to 2015, the number of businesses in New York City grew from 203,698 to 237,198. Over this period, the share of businesses located in the Downtown and Midtown Central Business Districts fell from 39 percent to 31 percent, as entrepreneurial activity in New York’s 22 lower income communities boomed. These low-income neighborhoods experienced a 41 percent increase in business establishments from 2000 to 2015 — far outpacing the 12 percent jump in the city’s 33 higher-income neighborhoods.

Job growth from 2000 to 2015 in low-income areas was marked by an increase in the number of Professional and Technical Services businesses, up 100 percent, as well as Information businesses which expanded by 97 percent. The growth of these industries led the job expansion in low-income communities, and provide many medium- and high-wage jobs.

Table 1: Business Growth in Lower Income Neighborhoods

Number of Businesses in 2000 Number of Businesses in 2015  

Growth

Average Wages

in Non-Manhattan Boroughs in 2015

Accommodation and Food Services 2,008 4,580 128% $21,538
Professional and Technical Services 992 1,987 100% $56,666
Arts, Entertainment, and Recreation 225 443 97% $54,378
Information 278 547 97% $73,062
Educational Services 428 756 77% $43,909
Construction 1,651 2,582 56% $67,729
Transportation and Warehousing 690 1,070 55% $52,914
Retail Trade 6,703 9,762 46% $29,574
Finance and Insurance 702 1,016 45% $86,634
Health Care and Social Assistance 3,429 4,927 44% $43,143
Administrative and Waste Services 842 1,074 28% $34,413
Real Estate and Rental and Leasing 3,755 4,567 22% $44,791
Wholesale Trade 1,756 1,978 13% $57,114
Manufacturing 1,334 988 -26% $45,519
All Other 4,651 5,363 15% $39,477
Total 29,444 41,640 41% $44,250

Yet the benefits of this business boom have not been broadly distributed. In gentrifying neighborhoods, 21 percent of Black and Hispanic youth (age 18-24) are out of school and out of work compared to just 12 percent of Whites. Ten percent of Black and 9 percent of Hispanic adults (age 25-65) are unemployed, versus 3 percent of Whites.

Chart 5: Business Growth in Gentrifying and Non-Gentrifying Neighborhoods

As the city’s economic landscape has changed, so too has the outlook for minority-owned businesses, which have experienced an uptick in recent years. From 2007 to 2012 – when the Census’ most recent quinquennial Survey of Business Owners was conducted – the number of minority-owned businesses rose in every borough. Yet, while the number of minority- and immigrant-owned businesses in the city is impressive, their share of business employment and revenue is relatively small.

  • Though minorities own 34 percent of all city businesses with employees, these establishments account for only 21 percent of business employment and 16 percent of revenue.
  • Black-owned businesses declined from 2007 to 2012, a sign of the impact many communities – particularly communities of color – have felt as rapid economic changes have swept through gentrifying neighborhoods.
  • In 2007, African Americans owned 13 percent of all businesses in the Bronx and 5 percent in Queens. By 2012, those figures had plummeted to 6 percent and 3 percent, respectively.
  • Among the 25 largest cities in the United States with over 500 Black-owned businesses, New York City is one of just three to see a decline in Black-owned businesses. Nationally, the number of Black-owned businesses grew by 2.4 percent between 2007 and 2012.

Chart 9: Black-Owned Businesses as a Share of all NYC Businesses with Paid Employees, by Borough and Year

To mitigate gentrification and build an economy that works for everyone, Comptroller Stringer’s report lays out several recommendations to better align workforce development with business growth and to ensure that local residents have the skills and guidance to seize new employment and entrepreneurship opportunities. Specifically, the report recommends:

  • Creating a local network coordinator to serve as a point person in every Community District in order to strengthen the pipeline between local businesses and residents, as well as improve collaboration among workforce development providers — To help local workforce development providers coordinate business recruitment, locate job opportunities for their clients, and build new training programs based on employer needs, the Mayor’s Office of Workforce Development should develop and fund a new “Network Coordinator” position in Community Districts across the City. The City should look to the Lower East Side Employment Network — a partnership of seven veteran workforce development providers and Community Board 3 – as a model that could be extended citywide.
  • Creating a uniform assessment tool to ensure a clear entryway into the workforce development system — When a New Yorker enters a local workforce development provider’s office, they should have access to the City’s vast array of counseling, training, entrepreneurship, job placement, and income support services. Each New Yorker should receive a one-time, uniform assessment to document their work, training, and educational history and identify any barriers to entering and advancing in the labor market. An appropriate service plan should be determined and, if services are not available in-house, providers should be compensated for making successful referrals.
  • Leveraging data to connect with local businesses — To improve outreach to local businesses and increase job placements, workforce development organizations should make strategic use of publicly-available government data. Network Coordinators should receive automated alerts when the Department of Buildings issues a permit for street signage or for commercial renovation within their district; from the Department of Consumer Affairs when it issues a sidewalk café or business license; or from the Department of Finance when small commercial properties change hands – all signaling potential job openings at new or expanding businesses.
  • Helping entrepreneurs graduate to storefronts — The City should target corridors with high vacancy rates and provide short-term subsidized rents to the most promising startups at SBS, CUNY, EDC, and NYCHA entrepreneurship programs. Space can also be made available to existing business-owners, who often have multiple business ideas and have the requisite entrepreneurial know-how.
  • Assisting with business succession for retiring business-owners — In the New York City metro area, nearly half of business owners are over 55 years old and 76 percent are over 45. When these entrepreneurs retire, many of their businesses will close, putting thousands of jobs in jeopardy. The City should help create an online marketplace to connect retiring small and midsized business-owners to aspiring entrepreneurs and assist with business succession.
  • Helping solo entrepreneurs scale up — The majority of businesses in New York City are “non-employers” – often freelancers or home-based businesses that are unincorporated. From 2004 to 2014, the number of solo entrepreneurs in New York City grew steadily, from 677,436 to 877,029. The City should partner with the Freelancers Union and other service providers to improve outreach to these solo entrepreneurs and to develop a Business Acceleration Unit expressly dedicated to helping them expand and hire on employees.

Other key findings from the report include:

  • Transportation and Warehousing businesses 55 percent, and Finance and Insurance businesses 45 percent.
  • Despite rapid business growth, many young adults remain disconnected from the labor force. Across the city, 17.2 percent of youth aged 18-24 were out of school and out of work (OSOW) in 2015. This aggregate figure, however, masks persistent racial and ethnic disparities, even within neighborhoods. The number of Black, Hispanic and White OSOW youth in gentrifying neighborhoods, for instance, stood at 21 percent, 21 percent, and 12 percent, respectively.
  • Further, while 6.4 percent of adults (aged 25-65) were unemployed across the five boroughs, the unemployment rate specifically in gentrifying neighborhoods for Black, Hispanic, and White New Yorkers was 10 percent, 9 percent, and 3 percent, respectively.
  • In 2015, 9 percent of African American and 7 percent of Hispanic adults were unemployed in New York’s low-income neighborhoods, compared to just 4 percent of whites. Education levels cannot fully explain these disparities. Among college graduates, only 3.5 percent of whites were unemployed in 2015, compared to 6.4 percent of Blacks and 4.4 percent of Hispanics.

David Garza, Executive Director of Henry Street Settlement, one of the co-founders of the Lower East Side Employment Network (LESEN), said: “The local training and hiring commitment we’ve achieved through the Lower East Side Employment Network (LESEN) in response to increasing economic development is a win, win, win for our community. It meets the demands of employers, creates meaningful access for local job-seekers, and strategically positions community-based providers to collaborate instead of compete.  We’re grateful to the Comptroller for calling attention to this important work and to the constellation of public and private stakeholders, notably Community Board 3 and our funders that make the Network possible and are committed to its success.”

“CPC is dedicated to providing services, skills and resources for immigrant and low-income communities to achieve economic self-sufficiency.  CPC is a proud member of the Lower East Side Employment Network and works collaboratively to promote hiring locally, and we are very pleased that Comptroller Stringer has recognized our approach as a model that could work for every neighborhood in the city. Additional funding for workforce development programs is needed to enhance the work we do,” said Wayne Ho, President and CEO of CPC.

“Over the past decade, JobsFirstNYC has developed and sustained several employer-facing networks to improve the way workforce organizations engage with and provide services to employers. This is best represented through the Lower East Side Employment Network, but others also include Youth WINS in Staten Island and the myriad of sector-based partnerships presently operating through the Young Adult Sectoral Employment Project,” said Lou Miceli, Executive Director at JobsFirstNYC. “The reason for this has always been straightforward: Truly collaborative partnerships bring not merely added value to employers, but actually influence their bottom line. When that happens, employers and young people alike benefit in tangible, measurable ways. We laud the recommendations of the Comptroller to expand upon these strategies.”

“We’re very happy to join Comptroller Stringer today in drawing attention to the need to link economic development in the City to workforce training providers, making smart connections between local nonprofits, small businesses, and government,” said Mary Ellen Clark, Executive Director of the NYC Employment and Training Coalition. “Even as we must defend our City against funding cuts from Washington, we can use models like the Lower East Side Employment Network and the East Harlem Talent Network to most effectively utilize scarce resources to help unemployed and low-income New Yorkers get the skills and opportunities they need to lift themselves out of poverty.”

“”Our state is currently in a young adult poverty and unemployment crisis, and the new Administration has already proposed cutting federal funding for workforce development programs that benefit young adults,” said Kevin Stump, Northeast Director of Young Invincibles, a Millennial non-profit organization that works to expand economic opportunities for young people in New York and nationally.  “For the 15 percent of unemployed young adult New Yorkers, Comptroller Stringer’s recommendations are timely and vital to seeing a financially secure future.”

“So much of our City’s character is reflected in the rich diversity of our streetscapes and storefronts. They anchor our communities — and we have to do more to support them,” Comptroller Stringer said. “If we want to preserve the essential character of our City and foster shared growth and opportunity, we need a clear, collaborative, and comprehensive action plan today that gives all New Yorkers a bite at the economic pie.”

To read the full report, click here.

To read the full Neighborhood Economic Profiles report, click here.

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