Forbes: New York City Is Losing Out On $12 Billion Annually Because Of Remote Work
New York City Is Losing Out On $12 Billion Annually Because Of Remote Work
Feb 14, 2023
With fewer people commuting into Manhattan, the Big Apple stands to lose its luster and reputation as being the epicenter of commerce, finance, media, entertainment, tourism and a vibrant social scene.
New York City businesses are losing customers and revenue with people working remotely. The workers coming into Manhattan are spending $12.4 billion less per year than they were before the pandemic, according to a Bloomberg report citing data from Stanford University economist Nicholas Bloom’s WFH Research team.
Three years after the pandemic's start, there is still an ongoing debate about remote versus in-office. People working from home say they’re more productive and have a better balance of work and life. Meanwhile, old-school, Baby Boomer CEOs, such as Goldman Sachs chief executive David Solomon and JPMorgan’s Jamie Dimon, have reluctantly allowed remote work, but strongly prefer to have their people back in the office. In 2021, Solomon said about remote work, “It’s an aberration that we’re going to correct as soon as possible.”
The Business Ecosystem Will Crumble
Although working remotely offers some a better work-life balance and enables them to spend more time with their families and attend school plays, ballet recitals and sporting events, it will adversely impact major cities, like Manhattan. Restaurants, bars, clubs, gyms, nail salons, haircutting establishments, retail-shopping stores, Broadway shows, sporting and concert venues will see revenue decline if the remote trends continue as a standard practice.
The Partnership for New York City, a nonprofit organization of preeminent business leaders and companies that employ more than one million New Yorkers, cite that as of late January 2023, a little more than 50% of Manhattan office workers are currently at their offices on an average weekday. This number is up from 49% in September 2022. Less than 10% of employees are in the office five days a week. The number of fully remote employees fell from 16% in September 2022 to 10% as of January. The Partnership group anticipates that the return-to-office rates will, ultimately, reach a steady 56%.
Bloom’s survey analysis indicates Big Apple workers are spending nearly $5,000 less per person in the areas near their offices, ranging from grabbing breakfast, ordering lunch or taking clients to dinner and a show. This signifies the largest loss per employee of any major city in the United States.
When business is down, tax revenue also declines. As a result, the city will have to cut back on municipal services. This means less hiring and accelerated job cuts to police officers, firefighters, sanitation workers, mass transit personnel, nurses and teachers.
Last year at around this time, concerned about a downward economic spiral, New York City Mayor Eric Adams met with 100 chief executive officers, in an effort “to get their workers back into the office to stimulate the city’s economy.” Adams said, “We can’t send mixed messages,” by delaying the return to work dates. “We can’t keep kicking the can down the road.”
Adams explained his thought process. The local economy depends upon people coming into New York. "That accountant from a bank that sits in an office, it's not only him. It feeds our financial ecosystem. He goes to the cleaners to get his suits cleaned. He goes to the restaurant. He brings in a business traveler, which is 70% of our hotel occupancy. He buys a hot dog on our streets; I hope a vegan hot dog, but he participates in the economy."
As people come into Manhattan, see empty streets, closed retailers and their favorite restaurants gone, they may decide not to return again. There is a big incentive for politicians, landlords, corporate executives and business owners to get commuters to return. Consider what would happen if workers don’t return to the Big Apple. It could cause a cascade of business closures. Without the throngs of workers commuting into New York, restaurants, bars, gyms, shops and stores may be forced to close down.
The deserted landscape could create a vacuum in which crime, violence and open drug usage worsen. Last year, New York City saw an alarming increase in crime and violence. Wall Street executives told younger bankers to return to the office, but remain vigilant and careful whilst commuting. Bank of America advised its bankers, brokers, traders and other personnel to keep a low profile. By avoiding dressing too fancy, wearing expensive jewelry or prominently displaying the bank’s logo, there’s a greater chance they’ll remain undetected from a possible aggressor.
With fewer garbage collectors, firefighters, police officers, teachers and hospital personnel, the quality of life would suffer.