The latest edition of the Federal Reserve Bank of New York’s Second District Highlights, Challenges Facing the New York Metropolitan Area Economy, is available.
Authors James Orr and Giorgio Topa conclude that the skilled and well-educated workforce of the New York metropolitan area has played a large role in enabling the region to withstand adverse economic shocks and adapt successfully to a services economy. Since 1960, New York City has maintained a relatively stable population and kept employment steady at about 4 million jobs, even though the region during this period has lost much of its once-dominant manufacturing base. Over this same period, New Jersey has seen significant population growth and a twofold increase in the total number of jobs.
Orr and Topa attribute the resilience of the economy to the rise in skill and education levels of the region’s workforce. They note that the average wage of workers in New York City was more than 60 percent above the average wage of workers nationwide in 2003, up from a 20 percent differential in 1980. The authors link these higher wages to higher labor productivity and a shift toward higher paid occupations—both reflections of the superior skills and training of the region’s workforce.
According to the authors, the New York metropolitan region will need to continue developing ways of attracting, retaining and producing highly educated residents if it is to adapt to economic changes and continue its past success as an urban center. The authors also say that the New York area faces other challenges that could adversely affect its prospects for growth, including maintaining immigration flows and meeting the needs of lower skilled immigrants, attracting firms despite the high cost of doing business and coping with competition from other parts of the country.
James Orr is a research officer and Giorgio Topa a senior economist in the Microeconomic and Regional Studies Function of the Research and Statistics Group.