Wall Street’s crisis spells deepening attacks on average New Yorkers
17 December 2008
The rapid deepening of the capitalist economic crisis has shown how fragile the social rights of the working class are. Job losses, utility cutoffs and evictions from homes and apartments continue to increase, and budget cuts in education, healthcare, and social and essential services are mounting.
Nowhere is this process more intense and concentrated than in New York City and its surrounding communities, home to more than 18 million people. The New York metropolitan area, with one of the highest poverty rates in the United States and its highest concentration of multimillionaires and billionaires, provides the nation’s most graphic expression of social inequality.
Since August, massive layoffs in a number of industries, including the city’s massive financial sector, have led to a deterioration of living standards for the entire working class in and around the city, ranging from the poorest layers to better-off professionals.
To compound the social misery of the working class, because of falling tax revenue from Wall Street, both the New York State government under Democratic Governor David Paterson and the city government under billionaire Mayor Michael Bloomberg have announced sweeping budget cuts that will affect education, agencies that serve the homeless, and Medicare for the poor and the elderly. Bloomberg announced last week that city agencies must slash $1.4 billion from their budgets next year.
As of October—before many of the recent mass layoffs had taken effect—225,000 New York City residents were unemployed, according to a report issued last week by the watchdog Fiscal Policy Institute (FPI). Only a third of these workers receive unemployment benefits. Even so, among this smaller section, the number has shot up 75 percent since October 2007.
The New York Times quoted the FPI’s chief economist and author of the report, James Parrott, as saying, “Unemployment is starting to shoot up in New York City, and it’s affecting a spectrum of workers, both professionals and blue-collar. It’s hitting young workers and older workers and it’s poised to rise dramatically in the weeks and months ahead.”
The report cites a 50 percent increase in the number of workers with a college education or higher filing for unemployment benefits, reflecting the substantial job losses among professional layers. One industry particularly hard hit is the information sector, which includes many Internet workers. As the online Information Week observed, “One of the worse IT job markets right now for new jobs is the New York City metro area, which has been hit hard by layoffs in the financial world.”
The FPI report registers a 41 percent increase between October and the same period a year ago in filings for unemployment benefits for those aged 20-25 and a 46 percent increase for those aged 60-65. The number of blue-collar workers filing for benefits increased by 50 percent, and people who work in private households, overwhelmingly poor immigrants, filed at a rate 75 percent higher than a year ago.
Also skewing the jobless rate, particularly for poorer layers of the working class, is the persistent misclassification of workers as “independent contractors” in the residential construction industry, which employs many immigrants from Mexico, China, and the Caribbean and South Asia. “Misclassification,” the FPI report says, “is done to avoid employer responsibility for payroll taxes, health and other employee benefits, paid time off, and other labor protections.… [T]he number of construction workers who have lost jobs is probably greater than the payroll numbers indicate.”
The New York City Comptroller’s Office anticipates a further loss of 175,000 jobs in the next year, roughly double the estimate that state budget offices made five months ago.
The FPI report notes that this number is smaller than 340,000 jobs lost in the city during the 1989-1993 downturn and during the 2001-2003 recession, when 221,000 jobs were lost. However, the report observes, “the unprecedented nature of the current economic crisis makes any forecast fraught with uncertainty so it is conceivable that this downturn could be very long and drawn out and result in a greater cumulative job decline.”
The number of people filing for unemployment in the city and across the state has already become so large that an unprepared New York State department of unemployment is planning to double its staff by the end of December to overcome long wait times. Unemployment call centers will also extend their operating hours.
The New York Post reported recently that nearly 1,000 people lined up on Fifth Avenue outside the Pierre Hotel, which has been undergoing renovations and will reopen in the spring, to apply for 200 positions. Some people showed up as early as 6 a.m.
More foreclosures and evictions
According to Crain’s New York Business.com, in the third quarter of 2008, 3.5 percent of the area’s home mortgage borrowers were seriously delinquent on their payments. While this is lower than the national average, it still marks an increase of 50 percent since last year. One forecast reported earlier this month on Crain’s anticipates the number of home loan borrowers seriously delinquent on their mortgages to double in the next year. Serious delinquency—missing mortgage payments for three months or more—is considered a precursor of foreclosure.
Not only homeowners are affected. According to a recent investigation by the New York Daily News, since mid-April there have been 1,538 evictions of renters in foreclosed housing in the city’s boroughs outside of Manhattan. A study by the Fruman Center for Real Estate and Urban Policy at New York University estimated that in 2007, at least 38,000 renters were affected by foreclosures in the city.
In the borough of Queens, in particular, housing courts are dealing with eviction petitions from banks that own foreclosed properties. The News noted: “Banks there have filed 871 foreclosure-related evictions between April 21 and Oct. 17 involving 480 properties, records show.”
According to court records reviewed by the newspaper, other figures for evictions since April include Rochdale Village in South Jamaica (41 evictions), Far Rockaway (38) and South Ozone Park (32).
“We’ve certainly seen increases, especially in Queens and Staten Island,” said Louise Seeley, executive director of the nonprofit advocacy group, the City-wide Task Force on Housing Court.
“In the same period, Brooklyn had the second-highest number of foreclosure-related evictions, at 351. Staten Island had 195, followed by the Bronx with 121 evictions Relatively few evictions occurred in Manhattan, where a vastly different housing stock has been largely unaffected by the foreclosure virus.”
Wealthier suburban areas have also seen a foreclosure surge. Westchester County, just north of the city, boasts one of highest per capita income rates in the state, yet by December, it had recorded 2,431 foreclosure filings and foreclosures, up by almost 59 percent since 2007.
Statewide, foreclosure filings increased 19 percent during the third quarter compared to a year earlier, the state’s banking department said.
An increase in homelessness
More than 35,000 people live in New York City homeless shelters, the majority of them families with children. According to the web site of the Coalition for the Homeless, the most recent city figures show that 1,446 families entered shelters in September. That was the highest number in a single month since the city began keeping statistics 25 years ago. New York has seen record numbers of families admitted to shelters in each of the last three months.
The Coalition’s web site notes: “Despite evidence of rising family homelessness, Governor Paterson, Mayor Bloomberg, and State and City officials are planning dramatic budget cutbacks in vital services—building on recent cuts in homelessness prevention and other services. The current city budget already includes more than $3 million in cutbacks to homelessness prevention programs, while the State has also reduced funding for prevention and other vital homeless services.”
Thousands more sleep on the streets each night. The billionaire mayor’s budget cuts will reduce by 51 percent the capacity at city drop-in homeless shelters and at churches and synagogues, which mostly serve this population, who are often emotionally or mentally disturbed. The city also will cut the number of the drop-in centers, which serve the homeless who live on the streets, from nine to seven.
Shortfalls in food aid
There has been a 28 percent spike in the number of people using food pantries and soup kitchens in the last year, according to the New York City Coalition Against Hunger (NYCCAH). At the same time, there has been a fall in corporate and individual donations to Food Banks in the city. The Food Bank of New York, which provides 300,000 meals a day in the city, has seen a 40 percent decline in donations at the end of the fiscal year.
In a recent New York Times “Q and A” piece on hunger, Joel Berg, the executive director of the NYCCAH commented: “Over all, one-sixth of New York City residents—1.3 million people—are food insecure, a term used by the USDA to describe an individual who cannot always afford to obtain all the food that he or she needs. Four percent of New York City residents (323,974 people) are classified as having ‘very low food security.’ One-fifth of New York City children—417,656 children—are food-insecure; 341,888 are classified as having low food security; and 75,768 are classified as having very low food security.”
Anne Duggan of the Food Bank for New York City told Reuters: “We’re seeing more and more people coming to the front door and less and less food coming through the back door. We’re being squeezed from both sides and we haven’t seen the worst of it.”
Transportation costs to rise
The Metropolitan Transit Authority (MTA), which operates the city’s public transportation, will seek a 24 percent fare hike in 2009. The Daily News quoted a statement by MTA CEO Elliot Sander that the Authority’s budget gap widened to $1.2 billion and that “draconian” cuts and fare hikes were coming. Any increase in fares will put further economic pressure on the millions of New Yorkers who depend on the subway and buses to get to work.
The News quoted a mail carrier from Brooklyn, Bryan Tate: “I’m on the borderline of middle class and poor. You can’t just keep taxing us, fare-hiking us, and asking us for more and more without eventually breaking us,” Tate said. “It’s not fair. You have these Wall Street executives throwing a party with [money they got in] a bailout and we’re left holding the bag.”
Cuts in education and libraries
As a result of city budget cuts, 475 Department of Education jobs are to be eliminated. And each school will see a budget reduction of 1.3 percent. Full-time teaching jobs are not yet being eliminated, but funds for custodial services tutoring, books, and after-school and weekend programs are being slashed.
The city has had to renege on its Capital Plan for schools, which had allowed for the construction of 76 new school buildings and the installation of wireless Internet access over the next five years. The city now claims that it will put up only 42 new school buildings for 25,000 more K-12 students.
The advocacy group Class Size Matters, in a report issued at the end of October, noted that “approximately 167,842 new school seats would be necessary to eliminate trailers and other temporary spaces, relieve overcrowding and reduce class size to the goals in the city’s state-mandated class size reduction plan.”
Cuts of $69 million from the state and $11 million from the city to budgets for higher education have already had an impact. Adjunct teachers at the City University of New York have been laid off, and students now face a $300 tuition increase next semester and a $600 increase next year.
These cuts come at a time when the economic crisis has closed the doors to private colleges for thousands of graduating high-school students in the city and increased applications to the city colleges. Two-year community colleges in the CUNY system have experienced a spike in applications
Noting a similar increase in applications for the city’s four-year colleges, the New York Times observed: “In September and October—one-third of the application period for the spring semester—the number of applicants who made a CUNY college their first choice was already 15 percent greater than all of last year. In some fields, like health services, the growth has been even more rapid, as much as 30 percent on some campuses.”
Bloomberg has also proposed a 2.5 percent cut in subsidies to libraries and cultural institutions this year and 5 percent next year, which would almost certainly result in a reduction of hours for many branches. Many children in New York depend on the library as a place to study, and tens of thousands of adults and children use the library branches to access the Internet because they cannot afford their own computers.
All indications are that these conditions are only the beginning of a massive and abrupt drop in the living standards, economic security, and social rights for all strata of New York City’s working population.