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New York City’s economy: more than Wall Street?

That's the title of a chapter I wrote for a new book, London After Recession: A Fictitious Capital? The book is edited by three University of East London academics - Gavin Poynter, Iain Macrury and Andrew Calcutt - and is published by Ashgate.

One of the aspects I was surprised to learn in researching the topic was how the city's economy has relied more on health services than financial services for job growth in recent decades. Here's an excerpt:

Obviously, there are linkages between finance and professional services, and many associate the two together under the "white collar" rubric. But the services industry with the most employees in the city is "Education and Health Services", and it has little direct connection with the world of finance.

This industry has seen solid and consistent growth in employment since 1990. Its share of total employment has increased from 13 per cent in 1990 to 19 per cent in 2008. More than three-quarters of the jobs in this category are health-related. One sub-industry, "Home Health Care Services" has experienced stunning growth: the number of jobs quadrupled from 1990 to 2008. Unlike financial services, jobs in the education & health services industry are generally lower-paying: in 2008, the sector’s 19 per cent of the total jobs produced 11 per cent of the total wages. The typical profile of a home health worker is a black or Hispanic woman who is 45 years of age or older, with a high school diploma (equivalent) or less, and who earns $26,000 a year, which is slightly above the minimum wage (NYC LMIS 2009).

This growth in employment in education and health services is part of a national trend, as this industry’s share of total national jobs has steadily increased since 1990. What’s behind this growth? There are a number of potential contributing factors: the ageing of the population; sustained levels of state spending; the general tendency towards cost inflation in the US health sector; the growing preference for home care rather than institutional care.

But, given prevailing perceptions, most people would probably be surprised to learn that healthcare outstrips finance in terms of NYC’s job creation. When people think of the Big Apple’s economy, it is still Wall Street bankers, not home health workers, which spring to mind. There is also a geographical dichotomy between the two: financial services are dominant in Manhattan, while education & health services predominate in the outer boroughs. Despite their distance, there is perhaps a symbiotic relationship between them, as tax receipts from financial services are then used to support public spending on education and health services.

My chapter is intended to provide some international context for a discussion of economic, social and cultural trends in London. I heartily recommend the entire book - it is rich in excellent materials that illuminate not just London, but trends throughout the developed world. In particular, those interested in how the US economy has become "financialized" will learn much, as there are many strong parallels with developments in the UK.

To check out the contents, and buy the book, go here.

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