Partnership for New York City CEO Kathryn Wylde on Why Corporations are Critical for the City
By Kathryn Wylde for Crain’s New York Business
Big business does not command much affection in New York's political circles, but that will have to change if our city is going to accelerate its recovery from the economic consequences of the Covid-19 outbreak.
Throughout the pandemic pause, Wall Street and other large firms successfully maintained operations and payrolls by moving swiftly to a remote work from home model. Manhattan was hollowed out, yet the financial system and global commerce continued to function.
What the Covid-19 experience proved is that New York's largest companies and their employees do not have to be here.
For one thing, the financial and professional services, media, information and real estate entities that make up the corporate sector directly employ 1.2 million New Yorkers and are responsible indirectly for an additional 2.1 million jobs in small business and construction.
They are a major source of the tax revenue that funds the city budget. Finance and insurance account for 35% of the city's business income taxes; professional services follow closely behind at 31%. Finance represents 20% of all private-sector wages in the city and employs most of the top 1% earners, who pay 43% of all city personal income taxes.
In the near term, big companies will not flee the city. They have leases or own buildings here, and they are part of an ecosystem of professional and personal relationships that cannot easily be replaced or replicated. Corporate leaders have homes here and are heavily engaged with the boards of the city's great cultural, educational and medical institutions. Most are committed New Yorkers.
The same may not be true of corporate employees, at least half of whom are millennials without long-term ties to the city. Surveys by the Partnership for New York City indicate that only about 10% of corporate workers plan to return to the office during the summer; that number builds up to 30% by the end of the year. Many have settled elsewhere, in larger, cheaper living accommodations, and plan to come back only when they feel safe and can socialize in favored gathering places.
It will be months before a coronavirus vaccine is available and fear of disease subsides. In the interim the restaurants, retailers, vendors and service businesses throughout the city that depend on the corporate office workforce are in severe jeopardy.
We need action now.
Employers and commercial building owners are ahead of the game. They have retrofitted their offices and instituted protocols that guarantee a healthy workplace. Similarly, the MTA has done everything in its power to provide a clean and safe commute.
But the package of incentives is incomplete.
Public officials and community and civic leaders need to signal loudly that corporate workers are valued and will be welcomed back. Assurances that New York is committed to a stable and more competitive personal income tax structure would help, along with a firm commitment to plans for reopening schools in the fall. It is critical that crime is under control, which became a question a few weeks back, when looting took place.
The timely restoration of the more than a million jobs and $9 billion in city tax revenue that was lost to the pandemic is an enormous challenge, but New Yorkers can rise to the challenge if we unify around a plan that draws upon all our strengths, including the talent and resources of our corporate sector.
Kathryn Wylde is president and CEO of the Partnership for New York City.
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