Sunday, July 28, 2013

Why New York City Is Not Detroit.

I read the article by "Ed the Apple" and must disagree that the bankruptcy in Detroit is a warning sign for New York City when negotiating with the unions.  The differences between New York City and Detroit are like "night and day" and here's why.

Per Capita Income:  New York City has a per capita income of $31,500 compared to only $14,200 for Detroit.  More importantly New York City's average household income is $56,009 compared to only $25,000 for Detroit.  This shows that New York City has more income to spend and is less reliant on government assistance.

Poverty Rate: While the New York City poverty rate is at an all time high of 21% under Mayor Bloomberg, the Detroit poverty rate is an astounding 36% and the unemployment rate is 18%, compared to less than  9% for New York City.

Unfunded Liabilities:  Detroit has billions of unfunded liabilities and when 38% of the budget pays
for legacy costs (retiree pensions and health care), it does not leave much for existing City services.  By contrast New York City, while under pressure, is only 12% of the City's budget. In addition, New York City has been able to cover the ever escalating legacy costs while Detroit cannot. In fact, New York City has shown a budget surplus every year since 2005.

Economic Future:  New York City has experienced an economic boom with tourism at an all time high and the financial industry, while still losing jobs, providing the engine to power the City's economy.  Detroit, on the other hand is an economic wasteland with rows oi boarded up houses and long abandoned factories. Furthermore, New York City has a low crime rate and a booming technology sector while most small businesses are fleeing Detroit with its high crime rate, the highestin the nation, where it take an hour for the police to respond to calls for assistance.  In the misery index, Detroit finds itself one or two nationally, depending on the methodology.

Vibrant Middle Class:  New York City fared fairly well in the recession and are seeing many poverty ridden areas attracting middle class families and singles into the area.  Despite the ever widening wage gap under the Bloomberg Administration, the City has maintained  diverse middle class communities and has seen housing prices rise that has attracted ever increasing number of middle class families to the City.  Unfortunately, the same cannot be said for Detroit.  The middle class is almost non-existent.  "White flight" after the 1967 riots was followed by the auto industry leaving and along with them the black middle class.  Left was the poor minority class with high unemployment and low wage jobs, many of them living off government benefits to survive.

Public Services:  Say what you like about the Bloomberg Administration's policies, "good or bad", for the most part City services for the residents are top notch.  Good schools, police, fire, and sanitation are a hallmark for the City.  By contrast, city services are almost non-existent as police, fire, and sanitation is cut to the bone and response times are counted by the hours not the minutes.  As for the schools?  Over 75 schools are closing and the new schools are staffed by TFA recruits, the two year wonders, will take their place.  Will the Detroit  schools get better when TFA recruits replace the experienced teachers laid-off by the school closings?  Yeah when it snows in the Caribbean.

Comparing the problems in Detroit with New York City is like comparing "apples and oranges".  While they are both cities, one is losing population while the other is attracting more people, many with the skills that make them productive citizens in a vibrant City like New York.  The problems in Detroit should not and will not affect contract negotiations with the City.


Anonymous said...

What do you expect from the Unity mouthpiece? Is he trying to tell us something?

I agree with you that Detroit has no impact on City/union negotiations.

I noticed that... said...

Great compare and contract piece between Detroit and NYC.

ed notes online said...

Peter Goodman is putting out an advanced line from Unity to expect little. Softening everyone up. They will use Detroit to try to bludgeon people. Keep this analysis handy. It will be useful.

reality-based educator said...

9 govaizeEd in the Apple is a shill for the union - they're looking to sell us out again next contract.

Great pushback, Chaz.

Anonymous said...

Good comparison. I think that Ed the Apple is a sounding board for the UFT and we need to let them know that New York City is not Detroit.

loretta said...

Thanx for this. We will need this information in the coming months as the Unity leadership, the Post, and others will make the case.

john said...

Your points are well taken and remind me of the 2005 contract with UFT reps stating that we should take a cold hard look at manufacturing jobs going to Mexico and accept the economic realities of this! I said, they cannot export our jobs to Mexico.

But, now there's Khan Academy. Going to a tech conference Wednesday at Murry Bergtraum. Let's see if there is any smell of using tech to outsource our jobs.

28 year retired NYC teacher said...

Yes Chaz. You make some valid points. NYC is not going bankrupt next year. But remember something: NYC almost went bankrupt in 1975. You're too young to remember that, but I do! In Oct 1975, before reversing himself and supplying loan guarantees, Pres. Ford said at the end of a speech to the national press club:

" ...we must never forget what brought this great center of human civilization to the brink. If we go on spending more than we have, providing more benefits and more services than we can pay for, then a day of reckoning will come to Washington and the whole country just as it has to New York City.
And so, let me conclude with one question of my own: When that day of reckoning comes, who will bail out the United States of America?"

It's funny that nobody remembers this, yet 40 years later that's just where we are.

And it's real funny to me that you look past the bloodbath that teachers are facing next year, with this new evaluation system, to worry about a miserable little raise. You should be worrying about what your pension will buy after it is cut, and inflation eats into it.

GeoKaro said...

I agree also, Detroit in no manner is NYC. Fundamental economics:

Detroit was based on auto manufacturing.
NY shed much of its light manufacturing, but today, as for generations, the financial sector is as strong a factor in the economy as it ever has.

Even Michigan's (Republican) attorney general Bill Schuette has said that the snatching away of Detroit pensions is improper:

28 year retired NYC teacher said...

A previous poster, Geo Karo, thinks that the financial sector will ALWAYS supply 1/3 of the revenue that NYC takes in. If the financial sector ever goes to online trading and leaves NYC, this city will be bankrupt. Who can be sure that it won't happen?

Anonymous said...

"...the bankruptcy in Detroit is a warning sign for New York City when negotiating with the unions..."

Detroit wasn't bankrupted by unions. Back when the unions were strongest, Detroit was at its strongest. And at that time, the middle class standard of living was rose dramatically. Detroit went bankrupt at a time when unions were weaker than they had been in decades.

Other factors in Detroit's demise were white flight, corruption at the top, and astronomically-wealthy CEO's sending jobs overseas and passing the profits on to themselves rather than to workers to spend in the economy.