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Trickle-Down Community Development Comes Up Dry for Most New Yorkers

March 19, 2013

Caution Sign From Author of Creative Class Theory - Will It Impact EDC & Next Mayor?

In New York we have seen millions of city dollars poured into large-scale projects aimed at attracting "highly-skilled knowledge, professional, and creative workers" as the driving force for City economic development. However, the notion that an economic development strategy that provides more opportunities for the highest-income earners will benefit all residents is being challenged, even from Richard Florida whose book The Rise of the Creative Class (2002) served as a foundation for many of these policies. In a recent interview on NPR, Florida explains that while evidence confirms these knowledge workers increase city wages and incomes,  "the problem is that others have said this has a trickle down effect - that these wages benefit everyone." (1)
In reality this economic development strategy of targeting the high-income earners is leaving the low-, moderate-, and even middle-income residents of the City further behind. Studies by Florida and others show that this strategy often only benefits the top earners and can exacerbate class divisions: "On close inspection, talent clustering provides little in the way of trickle-down benefits.  Its benefits flow disproportionately to more highly-skilled knowledge, professional and creative workers whose higher wages and salaries are more than sufficient to cover more expensive housing in these locations. While less-skilled service and blue-collar workers also earn more money in knowledge-based metros, those gains disappear once their higher housing costs are taken into account." (2) Yet, it is these very types of polices that have been a cornerstone of the City's economic development strategy. The City committed $100 million to arts facilities and public plazas in Downtown Brooklyn.  Another $100 million will go towards infrastructure and land for Columbia University's new Tech campus on Roosevelt Island. And perhaps most glaring is the $97 million in City dollars for a public golf course operated by Trump National and International Golf Clubs in the Bronx neighborhood, Ferry Point Park, where more than 30 percent of residents live below the poverty line. Time and again we hear that these publically-funded projects create tickle-down economic opportunities for low and moderate skilled residents -be they construction jobs from luxury housing developments, ticketing attendants at the new cultural district, or the seasonal food staff job in area stadiums. In a city with a long history of income polarization, where even the middle-class is often struggling to make ends meet, continuing on this path is a flawed economic development strategy:   "There is a rising tide of sorts, but it only lifts about the most advantaged third of the workforce, leaving the other 66 percent much further behind." (3) Florida and others point specifically to the rising cost of living, primarily the high cost of housing that ultimately leave the majority of City residents with negative wage gains from this 'high-skilled' economic strategy. This is all the more-so in New York City which has some of the highest housing costs in the nation. Creative Class economic development is one important strategy for our city. But is also needs to be coupled with a new economic development policy that explicitly focuses on creation and retention of low and moderate income economic opportunity. Neighborhood-based non-profits have long known that stabilizing communities requires both a stable affordable home and stable, livable incomes.  It's time that the city's economic development policies reflect this on-the-ground reality. If the City is to continue to be a diverse economic engine it will need an economic development strategy that creates long-term sustainable opportunities for all New Yorkers. ----- 1. http://www.creativeclass.com/rfcgdb/articles/NPR%20Cities%20Must%20Strategize%20To%20Boost%20Service%20Workers.pdf 2. http://www.theatlanticcities.com/jobs-and-economy/2013/01/more-losers-winners-americas-new-economic-geography/4465/ 3. Ibid

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