The following is the text of Public Advocate Bill de Blasio’s speech on economic growth in New York City as prepared for delivery at NYU Wagner’s School of Public Service on July 31, 2012. Citations have been removed for ease of reading. A full version with citations included can be downloaded here (.pdf).
Thank you, John. And thank you to my alma mater, New York University, for hosting us here today. I’d also like to thank Bill Rudin, whose family is responsible for this wonderful space, which is one of many contributions they have made to the city.
I invited everyone here today to talk about economic issues facing our city, but since we are here at NYU’s Wagner School of Public Service, I hope you’ll forgive me if I start off by talking a bit about my notion of public service. It is, after all, the reason I’m here in front of you today. And how I feel about public service defines my perspective on responding to crises like the one we find ourselves in today.
So let me pose a question or two. Why do we do this work? What animates us and sustains us? How do we find a sense of mission? I started in public service almost thirty years ago, before politicians were quite so hated, before the internet and the constant scrutiny that came with it, before Lehman Brothers, before the Tea Party, before a sense of futility dominated the Nightly News.
The 1980s were by no means a Golden Age, but perhaps public service was a little less difficult and a little more hopeful. Maybe you didn’t need so gripping a motivation to stay in this work. But today, Lord knows you do.
I’ve found mine. And I’ve felt it more strongly since our world started to change profoundly in 2008. And just last week, I got another jolt to the system that clarified that purpose. You can see it right here: 10%.
Our city, which we love, which we believe in, which gives us all a swagger and a sense of pride, the closest thing there is to the Capital of the World, the undisputed center of commerce and private enterprise, has a 10% unemployment rate according to the New York State Department of Labor. That’s 400,000 people seeking work and unable to find it—more than the total population of New Orleans or Minneapolis.
It is a stain on a place so great in so many other ways. And it is unacceptable. It’s not sustainable for our people. It’s not sustainable for our budgets. It’s not sustainable for our economy.
If I or anyone else in public service needed to remember why we came here, this galling number reminds us. All the other things I believe deep down—advancing social justice, fighting economic inequality, building the Middle Class, giving kids better opportunities than their parents had—it all hinges on this number. If people can’t find good jobs—or, in fact, any jobs—all other bets are off.
That truth leaves us with one mission that stands above all others: we have to get our people back to work. And it almost goes without saying that the way to accomplish that end is by supporting the private sector as the primary engine of job creation.
I want to speak today about actions we need to take, but first I want to acknowledge a bias in who I am and where I come from. I grew up believing that government, at every level and in every way, had to answer the call of crisis. My parents had me at a very late age, and so even as I was growing up in the 1960s and 70s, the stories I heard at the kitchen table were literally about the Great Depression. And the heroes weren’t just FDR and the architects of the New Deal. Fiorello LaGuardia was honored in the same breath, because he took the concept of government helping people back on their feet and applied it locally with such great effect.
And I find these times especially frustrating, as a child of that family, as someone who grew up at a time when government—especially the federal government--was the cavalry coming to the rescue, the dynamic leader that had driven big infrastructure projects and housing development, innovated the GI Bill and Pell grants, built the Middle Class. To go from that to the non-response to Hurricane Katrina, the lack of concern for America’s cities and the congressional paralysis we see in Washington today is jarring, to say the least.
There is no question we are in a crisis today. There is no question that we are failing to sufficiently address it. And the disturbing reality is that the federal government isn’t owning up to its responsibilities. So we have to focus more on what we can do for ourselves as a city.
As a leader in this city today, I look at this 10% figure and I ask, how can we—as a City that is often on its own—make this the LAST time we ever see that awful number? How do we make sure we are doing everything in our power to fix our economy? What will it take to put people back to work? And to keep them at work for the long haul. Every kind of New Yorker, in every neighborhood, in every borough. This is how I define my mission and my public service.
Today, I wish I could say we had the necessary urgency as a city. But when unemployment ticked up to 10% earlier this month, City Hall responded with a self-satisfied laundry list of what it’s already doing. Mayor Bloomberg actually said that our unemployment rate indicated “optimism and confidence in the long-term future of New York City.” Now, I think many of us in this room will give the Mayor high marks for initiatives like the Applied Sciences Center, helping bring hi-tech firms like Google to New York City, or providing incentives to speed the growth of our film industry . But the fact is, these efforts pale by comparison with the magnitude of the crisis in which we find ourselves.
When I speak to people in Melrose in the Bronx or Canarsie in Brooklyn, the City’s marquee initiatives seem distant and illusory. As bad as unemployment is citywide, it’s actually 11% in Brooklyn and 14% in the Bronx —and young people have the worst of it.
When I talk to developers who are actually trying to build affordable housing and create good jobs, they feel there’s more red tape in the way than ever.
When I talk to small business owners, they feel under siege by fines and fees like never before.
These are NOT the hallmarks of a City responding to crisis. They are the signs of a City unconsciously accepting the status quo and quietly adjusting to the “new normal.”
We need to all wake up to the world we’re living and competing in globally, and stop hoping that “business as usual” is going to take us where we need to go.
And this is more than a challenge between ourselves and our own potential. We are facing a dramatically different landscape than the one we faced even a decade ago. The competition for jobs is coming from all corners. Our city is now losing jobs in business support services to places like Salt Lake City, Utah and—can you believe it—places as obscure as Lake Mary, Florida.—population 15,000. Forgive me, but Lake Mary is poaching jobs from the Big Apple?
And our major global competitors have been aggressively improving their competitiveness through increasingly innovative efforts led by their own governments. Last year, a survey of investment bankers found that only one percent of industry respondents believed that New York City would create the most financial jobs in the coming year – rather they believed that Singapore, London, Shanghai and Hong Kong would lead the world in financial sector growth. While our government at all levels has been grappling with an ongoing discussion about budget cuts and securing our medium-term public finances, China has been increasing its investment in infrastructure by 20% each year for the past decade, and Singapore has been aggressively promoting its proactive environmental and quality of life initiatives to attract new global talent. Shanghai has launched a major initiative to attract 90,000 new finance professionals by 2015 as part of a larger vision of becoming a new global finance capital. In contrast, our city and state have been voted one of the most business unfriendly places in the United States, compounding the challenge we have to keep and attract new businesses in our city.
We risk losing ground to a significant extent because our competitors are articulating clear ways in which government can work with stakeholders to achieve growth. If WE are going to overcome these tremendous challenges, we need to organize our government, businesses and residents around a coherent, public strategy to create jobs and strengthen the fundamentals of our local economy.
I want to discuss the first piece of that today—the role government can and should play. There are places where government needs to get out of the way, and also places where government needs to do more. In everything we do as a City, our objective MUST BE to pursue an aggressive five-borough growth strategy that directly faces the challenges of global competition and insufficient opportunities for our own people. Let me repeat that: In everything we do as a City, our objective MUST BE to pursue an aggressive five-borough growth strategy that directly faces the challenges of global competition and insufficient opportunities for our own people.
There are conventional tools in government’s hands—common sense proposals like raising the minimum wage to address income inequality and boost family spending power. And we need to get this done at the state level next year. But so many other levers are going unused right here in New York City. I’d like to focus on four critical areas today: 1.) Maximizing opportunities for development, 2.) Lessening the burden on small businesses, 3.) Investing more smartly with our procurement tools and pension assets, and 4.) Building the workforce of tomorrow. These are areas where our approach has failed to match the times we are in.
Our city can again be a place where we all rise together. It is going to take leadership from all of us, and an unwavering political will, but we don’t have to look far back in our history for guidance on how we confront serious challenges to our position as a center of opportunity for residents and entrepreneurs from all walks of life. When I first entered the City Council in the wake of 9/11, nothing was certain about the city’s future. It was an open question how fully New York would bounce back, of whether businesses would want to locate here or tourists would bring their families. But our city--residents, businesses and government--came together with a unity of purpose to address our unprecedented economic development challenges. We did not let the challenges we faced deter us from action – rather we used these challenges as an opportunity to implement bold steps to strengthen our city. Our response to the crisis that began in 2008 needs to exceed our response to 9/11 in its inclusiveness and in its breadth, because this crisis runs so much deeper.
We have to be uncompromising in the pursuit of a five-borough economic growth strategy that empowers all of our neighborhoods. We cannot choose to ignore the burdens that are facing many of our city’s residents and businesses like unresponsive government bureaucracy, aging infrastructure, and an education system that isn’t adequately preparing our young people for tomorrow. City government needs to play the critical role of organizing our citizens, businesses, and all of the considerable resources at our disposal toward a meaningful and sustainable growth plan that supports all of our neighborhoods, all of our people.
First, let us discuss MAXIMIZING DEVELOPMENT.
If you had to identify one area where City policy seems stuck in a different era, look no further than our land use process. This is a world of man-made impediments. The Mayor touts the clock in City Hall’s bullpen ticking down the minutes of his Administration—but when it comes to development, entire months and years slip away, stalling and scuttling projects.
Now, I don’t discount the benefits of many—though certainly not all—of the rezonings of the last ten years. But I think the City had an approach that assumed the good times would never end. If we missed an opportunity here or there, we’d make it whole in the next go-around. The upzoning on Fourth Avenue in Brooklyn comes to mind, where the City left hundreds of potential affordable housing units on the table. Maybe we could accept that in 2005 when the economy was booming there weren’t enough construction workers to keep up with demand. But we can’t accept it today.
Post-2008, the world has changed and it’s time for our development process to catch up. History will judge us, not just on whether we saw the iceberg ahead, but whether we mustered the will and had the focus to change course.
We can’t afford a process rife with delays, subject to knee-jerk NIMBYism and tangled in bureaucracy. The process we have now distracts from and impedes the things that should matter in this economy: creating good jobs and affordable housing for our workforce of today and of tomorrow.
Before I was elected Public Advocate, I served eight years in the City Council representing a part of Brooklyn where development became a lightning rod—Park Slope, Windsor Terrace, Cobble Hill, Carroll Gardens, Kensington and Borough Park. So I have some experience in watching this drama unfold.
Perhaps some of you here are familiar with a small, humble, uncontentious project called Atlantic Yards? It abutted my Brownstone Brooklyn district. To say it faced opposition in the neighborhoods I represented would be an understatement.
When I looked at Atlantic Yards, I saw all the things my neighbors did: the traffic, the big shadows cast by buildings, the crowds, the disruption during and after construction. I didn’t dismiss those concerns at the time and I don’t dismiss them now. But I also saw the chance to build a staggering amount of affordable housing and put thousands of people to work. As an elected official representing neighborhoods where the cost of housing was driving families out, where the loss of jobs in warehousing and the trades had cost people their livelihoods, I saw a choice—to build, or not to build; to grow or not to grow. And as an act of economic equity and opportunity, there was no question in my mind about the right thing to do. When it came time to make an up or down decision, I supported the project—including its use of eminent domain. It did not make it easy to walk down Seventh Avenue in Park Slope; the critics were many and they were vocal. I also emphasize they were usually very well-intentioned. But when it came to the criteria that mattered above all others—good jobs and affordable housing—it was clear that Atlantic Yards would help stanch the bleeding in an area facing huge problems of affordability.
We had a very different set of issues out at Brooklyn Bridge Park—which is now being built apace and has become an incredible public space. Here we had a swath of public land sitting idle literally for decades. On a purely human level, I could never take the wastefulness of this situation. It honestly sickened me. Everyone said they believed in the vision of transforming it into a waterfront park, but there arose this lightning rod in the shape of a high-rise condo tower. Never mind that the private development was the only real money on the table to finance the park’s operations and make it sustainable—there was an intense community opposition to giving over that slice of public land to private developers. It was rigid orthodoxy, and it was standing in the way of building the park. The idea that a developer might profit from the exchange, even if their involvement was essential to getting the park built and keeping it running in tough budgetary times, was just anathema to some people.
All I could see was this huge swath of land laying fallow while families in Farragut Houses as well as the booming neighborhoods along the waterfront waited. Every type of person would see the benefits of this project. The ideological hang-ups with the private developer paled by comparison—we had a chance to build, and we needed to take it. Imagine what we’d have in place of that new park today if we’d let those hang-ups dictate our actions.
We’ve seen what we can accomplish when we sidestep the development dog and pony show, and the City brings developers and community together EARLY as partners. Look at Extell’s development on the Upper West Side. Both sides saw the impending, and all too common, conflict over height and bulk a mile away. Area residents, facing overcrowded schools, wanted the developer to build a new one on site to accommodate so many more families. I hasten to add that while I am uncomfortable with traditional NIMBYism as a general rule, I obviously value the voice of communities in the development process. As officials, we have to distinguish between the voices of “not here, not ever” and the constructive input of a community that knows its own needs. The decision to add a new school at the Riverside development came out of and was pushed forward by the surrounding community. It’s a perfect example of how a constructive process between a neighborhood, a developer and the City yields a better project. My office worked with the Council Member Brewer, the City, Extell and community leaders to reach a compromise about building heights and the school, avoiding an endless standoff that could have undermined the project. It’s going to be a showpiece development.
Unfortunately, I’ve also seen inaction win out. Toll Brothers presented us with an incredible opportunity to build along the Gowanus Canal several years ago. Here was a private developer willing to come in and build a mixed-use development, close to 30% affordable units, commercial space, union labor, a waterfront promenade, and THEY were going to help pay for the environmental clean-up of the site. $400 million in private investment on a stagnant piece of polluted waterfront. We got everything we could possibly want from them as a community—and then, just as things are poised to move forward, in stumbled the EPA.
The EPA waded into the waters and declared it wanted to do the clean-up itself and declare the canal a Superfund site. Their timeline for the clean-up? 15-20 years. So, here we were. We had a bird in the hand—development, jobs, affordable housing and remediation here and now. And over in the bush, is one of the slowest and most bureaucratic corners of the federal government promising us nothing, other than a loose timeline articulated in decades. I give Mayor Bloomberg tremendous credit for fighting them tooth and nail, and I was proud to stand with him. We tried every play in the book to save the development deal.
In the end, the EPA won out, the development stalled and every time I drive past that site I see derelict lots where we should now have hundreds of new homes and jobs. It’s one of the worst examples of heavy-handed, rapacious bureaucrats standing in the way of a local government that was doing everything right. It’s another reminder that we as a City are often on our own.
What have all these experiences taught me? First and foremost—when given the choice to grow or to sit idle, we need to grow and we have to be aggressive about it. There are factors beyond our control—economic conditions, bureaucratic interference from afar—that can kill good projects. The things I value as a progressive—good jobs and affordable housing—cannot happen if projects stall or never materialize. If we aren’t doing everything possible as a City government to spur on development, even if valid compromises are included, we risk nothing getting built at all—and that is the worst possible outcome.
We need to break down those bureaucratic barriers to development that exist for our developers and businesses and that aren’t a meaningful way to uphold community voices. The best example of this is the pre-certification process run by the Department of City Planning. This process – which developers must complete in order to move into the subsequent seven-month official review process – can take half a decade to complete, increasing costs and leaving developers and businesses, as well as communities, uncertain about project outcomes.
The Bloomberg Administration recently announced an initiative – BluePRint – to tackle this problem for smaller development projects, but I believe the Administration has to do more to accelerate land use proposals and avoid projects getting lost in our bureaucracy. We should move beyond the Planning Department’s efforts to add more oversight to the pre-certification process by REQUIRING a specific time period for those smaller project applicants to get an up or down decision about each aspect of their completed applications. I believe our goal should be providing developers certainty that they will receive responses within 30 – 60 days of each program aspect submitted for City Planning and other City agency review. Promising and delivering on a specific window for approvals, like we have with our official land use review process , can unlock new growth potential, lower costs and prevent good projects from getting derailed. And if there are some new personnel costs involved in managing these approvals in a more predictable way, we will more than recoup those costs in new and earlier tax revenue and economic activity. And developers will help pay for it GLADLY. Let’s make speed and predictability our stimulus, especially in the window that precedes our public review process. We need to do this to address our present reality, and to build our future.
UNBURDENING SMALL BUSINESS
The next place we need to focus is something I hear about in every corner of this city—changing the way we assess fines on small businesses. Is there anyone in this room that questions whether the amount of fines and tickets the City heaps on small businesses is driven by revenue?
The endless fees and fines drive people to shut their doors for good. One of our Park Slope institutions—a great restaurant named Aunt Suzie’s—closed on New Year’s Day this year because the red tape became so unworkable. This was a 25 year-old business. When it opened in 1987, it was one of the only places you could bring a family in a commercial corridor filled with check-cashing operations and the occasional bodega. Does anyone remember Fifth Avenue in Park Slope in the 80s? It was a struggling place. Aunt Suzie’s helped stabilize the neighborhood.
But the endless fines drove her crazy and threatened the business’s bottom line. At one point toward the end, Irene was told she needed a $250 permit to have candles in the restaurant. Can you imagine having built a business over 25 years, and on top of a series of other heavy-handed, arbitrary fines, the inspector who has been in your business dozens of times suddenly rediscovers an arcane regulation like that? And you have no choice but to cough up the money. Well, for Aunt Suzie’s restaurant, it just became too much.
Think about that. City Hall contributed to closing a business—an employer that was a vital stakeholder in a neighborhood--at a time when we have 10% unemployment. Since this is Brooklyn, the rate is actually 11%. This isn’t about health and safety—if it was, fines would have been forgiven after you fix your problems. This is about revenue.
The City is hauling in twice as much from fines as it did ten years ago; it’s now close to $820 million each year. And it’s across the board. Department of Finance’s fines went up 50% since 2002. Consumer Affairs’ doubled. The Buildings Department tripled. And the Health Department? Their fines went up more than four-fold. What’s driving these numbers? Are New Yorkers really twice as law-breaking as ten years ago? Are inspectors that much more observant?
I was at a Community Board meeting out in Throggs Neck in the Bronx a few years ago and a business owner who was also a retired police officer approached me. He said when he was on the force and saw a double-parked car, his orders were to get the car to move. Ticketing was a last resort. But when he talks to his colleagues on the force today, they’re told to write tickets first, ask questions later.
I’ve held round tables with small businesses all over the city , and I hear the same thing: City cares less about enforcing the laws than it does about raising revenue any way it can. Nothing is too small to overlook. Return policy printed on your receipts instead of posted behind the counter? That’s a $250 fine…per register. If the knife sticks out past the napkin on a dining room table? That could run anywhere from $200 to $2,000. It doesn’t matter if it’s a first-time offense. It doesn’t matter if you fix it right away.
Ask City Hall to explain the record haul from fines, and you will be met with stony silence. My office has released two reports based on small business complaints about how the City should improve its enforcement of regulations. City Hall refused to take up our recommendations, again focusing on initiatives it had launched in years past. Two months ago, I tried prying information from City agencies about which violations are generating all the new revenue, which neighborhoods and businesses are being hit hardest, and whether quotas were responsible for driving the record level of fines. Not a single agency turned over the data.
This past week, I filed a lawsuit to open the books on small business fines. Suing the Mayor isn’t something I take lightly—this is the first lawsuit the Public Advocate’s office has filed in fifteen years. But if it takes a judge to compel the Mayor and his commissioners to admit that budget quotas and a drive for revenue are responsible for all these fines, so be it. We need this information to fully assess and correct the counterproductive, job-killing effects of this hyper-enforcement. This should not be a question of revenue production. It should be a question of protecting health and safety while simultaneously fostering job retention and creation. This is a public policy question and it should be treated as such and debated openly.
The question remains, why on earth are we sabotaging small businesses like this? We know our small businesses create jobs at twice the rate of big ones, according to the New York State Department of Labor. We know they are facing stiffer headwinds than ever before. One in six New York small businesses doesn’t have the cash to pay bills on time. Nationally, only 3% of small businesses expect to add jobs in the coming year according to the respected risk assessment firm, Dun & Bradstreet. Again, the city is failing to react to the crisis we face, failing to understand how fundamentally the world has changed. Our economic future depends on working WITH business owners to address actual consumer and public safety concerns without driving them into the ground. Instead of “fine-first,” let’s make our policy “fix-first.”
To that end, I’m calling on the City to immediately launch a fine-reduction pilot program in one community board district per borough. Let’s prove inspectors can utilize education as effectively as fines to enforce many laws. And I’ve introduced new legislation to create a new category of low risk violations where no fines can be assessed for the first offense, and to streamline the appeals process so owners can contest all violations by phone or online, instead of having to close shop and appear in Lower Manhattan.
We also need to help new businesses get off the ground and grow. I give the Mayor credit for streamlining the permitting process and creating new incubators for entrepreneurs. But it’s just not enough to match the times we are in.
Earlier this year, the Fund for Public Advocacy, which is the non-profit affiliated with my office, working with the Federal Reserve Bank of New York and ACCION USA released a landmark report based on interviews with 625 immigrant-owned small businesses across all five boroughs. This is a huge and growing piece of our economy, about which very little information has been publicly collected. What we found was how little of the City’s business assistance and outreach programs were reaching the immigrant community. Of the hundreds of immigrant business owners we spoke with, 92% started and operate their businesses without any outside help, including government assistance. And just over half of those businesses were unaware that any City programs even existed to support their efforts. And we also found a huge demand. Four out of five business owners wanted support services including access to capital, legal guidance, and marketing help.
The implications of this report were clear to me: we have to do more and do better. These businesses want support, they want to create jobs and our government should be doing a much better job of supporting them. We should first address the major concern of small business owners today – access to credit. Since the financial crisis of 2008, bank lending to small businesses has significantly decreased. And even as bank profits have recently increased, credit opportunities for small businesses have perversely lagged. The lack of accessible, flexible credit has led to too many short and long-term crises for too many of our small business owners . Again and again in our interviews with immigrant business owners, we heard stories of owners using credit cards with outrageous interest rates to meet expenses or to grow because they couldn’t secure a loan.
In this time of unprecedented need, the government must take a more active role to prevent more small businesses from closing and thereby undermining our long-term growth potential as well. We should start by immediately increasing the New York City Capital Access Revolving Loan Guarantee Program. This program, run by the Economic Development Corporation in partnership with local lenders, provides loan guarantees for small business loans. However, it is only capitalized with $5 million in City money, which means it can only fulfill a small fraction of the need our small businesses have. We should not only immediately increase the amount of City capital in this program but we should also allow loans to be used for a greater number of purposes, including allowing companies to scale up their operations.
We must also address the other key concerns of our small business owners. The Fund for Public Advocacy’s immigrant small business report recommended improvements in debt management counseling, access to marketing firms, and legal advice resources for small businesses. We are developing new pilot programs to assist small businesses to obtain these resources. We will also be creating and distributing a toolkit of available City services to 5,000 immigrant small business owners in every borough. I encourage the City to work with us on this effort, so that we can share best practices and implement proven strategies for supporting small businesses. This is the work of our time and of our future. Like the Catholic Liturgy, I’ll keep repeating that phrase.
Third, let’s discuss how we can start INVESTING IN OUR OWN PEOPLE
If the theme of all these efforts is the imperative that we react more decisively and fully to the times we are in, then we also need to turn our focus to some of the most underused tools we have in City government. It amazes me how little we know and focus as a City on how our tax dollars are used to support local hiring. I asked the Independent Budget Office last year to report back on what I thought was a simple question: how many local jobs have been created through the City’s Economic Development Corporation grants and incentives? Jobs are, after all, what these projects are intended to create. IBO reported back that EDC does not track results in a way that allows us to tell if the millions of dollars they invest are actually creating jobs. Let me repeat that: we cannot say with any certainty whether our economic development dollars are creating jobs here in New York City. I have put forward new legislation to strengthen reporting, and we are going to push for its passage this fall. We simply MUST know if the dollars we spend are advancing something, or if jobs weren’t created. Or, just as bad, WOULD have been created without investing any taxpayer money at all.
We also need to be much smarter and more ambitious about the less conventional tools we have as a City with which to invest locally, specifically our contracting and procurement opportunities, as well as our pension assets. It was a little over a year ago when these missed opportunities really came into focus for me. Who here has heard of the Taxi of Tomorrow? This is a showcase franchise for the City. The exclusive right to manufacture our city’s taxis. The Mayor and TLC challenged bidding companies on practically everything: headroom, legroom, climate controls, mileage, finishes, outlets for electronics. But one requirement the City didn’t put any of the competing bidders? Jobs. Here we were. This competition has been happening since 2010, unemployment still unacceptably high, we are giving a company a billion-dollar opportunity —effectively a monopoly—and not only is local hiring not part of the final decision, but the City wouldn’t even ASK the question in the Request for Proposals. One of the three finalist bidders actually offered to build and maintain its vehicles in Brooklyn and employ 600 people—and it didn’t matter. In the end, the contract went to Nissan, a foreign company with zero commitment to build or service its vehicles here. It was one of those moments when you realize where our priorities lay, and why they must change. We can never allow another wasted opportunity like this again.
The City is one of the country’s largest purchasers of goods and services. We spend $17 billion each year. How much of it goes to local employers? We don’t know because the City doesn’t track it. There is no reason why we should not be doing more to connect our local businesses with these important contract opportunities and strengthening our local economy. We should start by immediately tracking bids from local businesses and develop guidelines to provide targeted outreach and goals for purchases from small businesses. Today, we have a limited City effort to prioritize and track purchases from local Minority and Women-Based Enterprises (MWBEs), but we give no such distinction to a business located in the five boroughs or committing to employ New Yorkers as part of their bid. We do not monitor how our existing procurement dollars support job creation, and without additional information, we cannot conduct a more comprehensive set of reforms to enhance the multiplier effect of spending locally.
But the $1 billion franchise for the Taxi of Tomorrow or the $17 billion in procurement are not the biggest or more under-examined figures I will mention today. The biggest piece on the table is that of our public pension assets. Together, our City pension funds top $120 billion. NYCERS, on which I sit as a trustee, holds over $41 billion in assets. Of that, only about $800 million was authorized in recent years for Economically Targeted Investments right here in New York City. But until this year, 2012—four years after the recession began—only $450 million of that had actually been invested. What we did invest earned us a higher than expected rate of return, and helped finance construction and rehabilitation of over 14,000 affordable housing units across the city. The other half of what was allocated sat waiting. Here it was again, that business as usual inertia, blind to the intense needs we face. I put forward and the board passed a resolution to invest the remaining $350 million immediately. We also secured a resolution to expand our investments in infrastructure substantially, following the lead of major pension funds in Canada and in states including California , Connecticut, Florida and North Carolina. Again, a little New York pride, please. We are not going to let North Carolina be more creative and strategic in its pension investment than New York City.
I firmly believe that this is yet another area where we have underutilized too many common-sense opportunities in the face of tremendous challenges. Our region faces major, long-term infrastructure problems that cannot continue to be ignored. And the success of our future economy depends on our infrastructure – if we fail to act, we may ultimately undermine all of our growth and quality of life goals; if we invest, we can and will move forward. It is unacceptable that we have continued to approach our long-term infrastructure challenges in traditional silos, instead of trying to utilize every resource at our disposal. As we’ve learned from the experiences of other major pension funds, investments in infrastructure are win-win solutions for our local communities and workers as well as our efforts to seek strong pension investment returns. This is going to be a critical area for us in the coming months. And now, I’ll invoke the refrain a third time: we need to do this for our present as well as our future.
Finally, let’s focus on training THE WORKFORCE OF TOMORROW
All of the initiatives I’ve touched on today focus on putting New Yorkers to work using the tools at hand to create new economic opportunities. But we cannot overlook another piece of the puzzle: educating and training New Yorkers to take those opportunities. This is critical to bridging economic inequality in a city where the record number of private jobs coincides with such high unemployment. Education is the equalizer in that equation, and it is as important for the companies looking to hire as it is for those in the work force.
The goal should be nothing less than preparing every student who goes through our public school system for readily-available career options or for college upon graduation. This requires new investment in early childhood education--not the cuts this crucial area has suffered in recent years. This requires a curriculum that teaches skills for the modern economy rather than teaching to the test. And this requires more than lip service for Career and Technical Education--it requires an updating of our whole approach to CTE.
I’ll raise one example here that really points to so much of what is going right and going wrong in our schools today: William H. Maxwell High School in East New York. This is a success story—although an equivocal one. This is a school that for years ranked on the persistently low-achieving list. Five years ago, it earned an F rating on its progress report and had a huge truancy problem. And then the school community came together. Principal Jocelyn Badette started personally calling and meeting with parents to get truancy under control. Teachers started working until 5pm helping tutor their students after hours and catching them up. Today, math scores are up 70%, reading is up 49%, and science is up 33%. The graduation rate has doubled since 2005. Maxwell went from an F to an A in its most recent report card.
Then what happened? Did the City applaud the parents and faculty for their efforts? Did its lessons get applied elsewhere in the school system? No. The Department of Education decided to close Maxwell High School and fire half of its faculty as part of its “turnaround” program. Let’s get this straight: the actual turnaround had already happened, and yet the Department of Education tried to fire the very people responsible. It was one of the most frustrating moments I have had as a public servant. Fortunately, we stood with the school community and fought back the closure with intense public pressure. It was a happy ending, but it points to exactly what has gone wrong under the current approach.
One of the reasons Maxwell High School had such deep problems to begin with is because it is part of one of the most neglected—and largest—areas of our school system: Career and Technical Education. Thirty-thousand students are enrolled in CTE-designated high schools, and approximately 150,000 students have exposure to some CTE programming. Yet one in three CTE schools is low-achieving. They are under-resourced and have gotten little attention in this Administration. The City shows up only to shut schools like Maxwell down. My office released a comprehensive report on our City’s CTE system earlier this year that found vast disorganization coupled with a lack of results-focused goals is disserving too many of our young people. Our most numerous programs are targeted to some of the lowest-growth career fields, while high growth, high paying fields like Information Technology are chronically shortchanged.
Today, I am calling for the development of three-year strategic plans with city businesses, economic development agencies, and CUNY to ensure student curriculum is actually tied to skill development for high-growth industries. This new strategic orientation for our CTE system should focus on outcomes including improving actual employment and higher education opportunities.
Second, we must also create new career pathways with local employers for graduates of our CTE programs. We must proactively partner with our local higher educational facilities to address critical gaps in workforce skills today, and I believe there is no better way to start than by addressing the oft-discussed talent shortage in our growing technology sector. New York City is by no means unique in this problem – cities across the country, including in other technology hotspots like Silicon Valley; Austin, Texas; and Boston, are facing similar problems. New York City has just such partnership with IBM, but it’s a lonely example in a system with hundreds of thousands of students and a sector of our economy with such an acute shortage of qualified job applicants. I applaud the IBM model, but we need bigger and we need faster.
And yes, you guessed it, we have need to do all this for our present and for our competition-defined future.
These are substantive changes that government needs to make, and together they can make a major impact on our local economy. This is not the kind of conventional stimulus to which we have all become accustomed. These are examples of a new urgency we need to see from every level of government. These are investments we can make within our present means. These are tools in our hands as City leaders, waiting to be used.
My eyes are open when it comes to the varied challenges our city faces – to what we’re doing right, but more importantly, to the flaws and the insufficiencies of the current policies to meet the rising competition, growing inequality and lack of opportunity we confront today. It is easier to ignore these problems, and just focus on some of the good things the City is doing and get stuck by the many impediments to doing more. But I firmly believe that we can fix these problems, we can start today, and that we can engage all of our businesses, neighborhoods and residents in meeting this challenge. They are ready for it.
We need to be a City that works with the Bill Rudins of the world to do big things. We need to be a City that sees a small business owner like Irene LoRe and sees not a revenue stream, but a partner who, given the right support, can continue to grow and prosper to the benefit of her whole community. We need to be a City that looks at a success story like Maxwell High School, understands what is working, and builds on that foundation instead of tearing it down. That’s what it will take to keep this city great in an increasingly competitive world.
But that can only happen if we recognize that we are all in this fight together, and that no matter our differences, we must be united in the pursuit of broad-based economic growth.
And it’s all with a single purpose: to make this the last time we ever see 10% unemployment in the world’s greatest city.