Density, Intensity, Destiny

1
Density, Intensity, Destiny

• 7th Annual NYC Update for NYSIA
• Creating Tech JobsFebruary 13, 2006
• John Tepper Marlin, Ph.D.
• Chief Economist and Principal Consultant
• CityEconomist.com, 55 Broad Street, 10th Floor,
  NYC 10004
• john_at_cityeconomist.com
• Former Chief Economist, NYC Comptrollers Office,
  1992-2006

2
9/11 Economic Impact About 85 billion. NYCis
envied, is a target
3
(No Transcript)
4
Downsides to Being Big

• Envy from rural area, small cities.
• Less green space.
• More congestion, longer commutes.
• High cost of living, a recruitment issue.
• Vulnerability to pandemics terrorism

5
Density Means High Incomes

• Density intensifies knowledge
• City density correlates with
• More college degrees, therefore productive
  workers
• Higher incomes, therefore good customers.

Sources Correlation Prof. Edward Glaeser, talk
to Manhattan Institute, January 2006. Adam Smith
Book 3, Wealth of Nations. Productivity
Rosenthal and Strange, 2005.
6
NYC Financial Jobs 15 of All Jobs But 35 of
Wages
Source NYS DOL. Chart by NYC Comptrollers
Office, 2005. Financial FIRE finance,
insurance and real estate. Average salary
157,000.
7
High Tech Is Knowledge-Intense, What NYC Must Be

• Originally, cities grew around ports, then
  railroad stations and factories.
• Factories have fled.
• Cities are now places for the exchange nurture
  of ideas.

8
High Tech Is One Form of Intellectual Property

• U.S. intellectual-property firms account for
• 60 of ? U.S. exports
• 30 of ? 10-year GDP
• 18 million workers
• Source Study by Economists Incorporated for NBC,
  Nov. 2005. Excerpts by JTM.

9
U.S. Software Jobs Recovering Well from Post-2001
Decline
Source BLS. Chart by J Martenson, NYSIA, 2006.
10
U.S. Med Lab Jobs Grew Steadily
Source BLS. Chart by J Martenson, NYSIA, 2006.
11
NYC-NYS Software Jobs Picking Up Less Rapidly
than U.S.
 
Source Data from NY State Department of Labor..
Chart by NYC Comptrollers Office, 2005.
12
NYC Lost 1,500 Software Employers, 25, in
2001-2004

• Source Data from NYS DOL. NYC is right scale and
  upper line NYS is left scale and lower line.
  Chart by NYC Comptrollers Office, 2005.

13
NY Metro Med Lab, eShops Growing
Source Quarterly Census of Employment and Wages.
Chart by J. Martenson, NYSIA, 2006.
14
Metro NY eShopMail Order and Management
Consulting Rebounded
Source Quarterly Census of Employment and Wages.
Chart by J. Martenson, NYSIA, 2006.
15
NYC Software Jobs High-ß
Source Data from NYS DOL.. Chart by NYC
Comptrrollers Office, 2005.
16
Job Vacancies React Demand forBlackberry IT
Experts Began Falling 9/05
10/26/05 Supreme Court Denies Stay in RIM
Patent Case
1/23/06 Supreme Court wont review RIM Patent
Case
10/7/05 Court of Appeals denied RIM's request to
have its case re-heard
Source Skillproof. Survey of major U.S.
employers.
17
Metro NYC Job Vacancies for IT Staff Hit a New
High, Need for Mgrs Grows (3-Mo. Moving Average)
2004
2005
Source Skillproof, February 2006.
18
A. Vacancies in Upstate Suburbs Fell (3-Month
Moving Average)
2004
2005
Source Skillproof, February 2006.
19
B. IT Vacancies on Long Island Fell since
Mid-2004 (3-Month Moving Average)
2004
2005
Source Skillproof, February 2006.
20
C. NYC Est. Job Vacancies Hit Plateau End 2005,
But Mgr. Demand Grows (3-Month Moving Average)
2004
2005
Source Skillproof, February 2006.
21
NYC Silicon Alley Market Cap Signs of Recovery?
Source NYC Comptrollers Office, 2005. Market
prices of 15 largest dot-com/IT companies,
weighted by market capitalization.
22
But in 3Q05, NYC 5 Metro in VC , Decline from
3Q04
Source NYC Comptrollers Office, 2005.
23
New York Metro IT Jobs Recovering (As we saw) IT
Job Vacancies, Estimated, Three-Month Moving
Average
Source Skillproof, February 2006.
24
But Route 128 Is on a Faster March IT Job
Vacancies, Estimated, Three-Month Moving Average
Source Skillproof, February 2006.
25
and So Is Silicon Valley IT Job Vacancies,
Estimated,Three-Month Moving Average
Source Skillproof, February 2006.
26
NYC Cannot Be Complacent

• NYC Misery Index proj. 9.4 (3rd unemployment,
  5th inflation) gt 7.8 U.S.
• NYC GCP growth prof. 2.9 (Mayor a bear, 2.1),
  lower than 3.3 U.S.
• Higher interest rates proj. 4.8 (10-yr. Treas.),
  up from 4.3 in 2004 and 2005 will hit Wall
  Street profits/bonuses.
• But Bear Stearns proj. 5.2 10-yr. Krugman says
  either falls or rates rise.

Source Misery Index for 3Q05 NYC Comptrollers
Office, 2005. Projected 2006 GDP growth and U.S.
misery index are based on Feb. 10, 2006 Blue Chip
consensus.
27
How Can We Do Better with IT?

• NYC IT lags Boston and Bay Area (job growth, VC
  ). They have
• MIT Stanford, Compton-Terman cooperation -
  business, govt., academia
• Henry Etzkowitzs Triple Helix.
• Philadelphia, Austin, Albany imitate Boston-Bay
  Area. NYC lagging.

28
Laissez-Faire Triple Helix No Pain No Gain
Governments
Industry
Academia
Source Adapted from a slide of Henry Etzkowitz.
29
Statist Triple Helix Wrong Way, Jose
Governments (Federal, State, Local) Keep
Control, Contract Separately with Industry
Academia
Industry
Academia
Source Adapted from a slide of Henry Etzkowitz.
30
Etzkowitz Triple-Helix Hybrids Centers of
Excellence, Incubators
Governments support academia and industry
working together
Industry
Academia
Source Adapted from Henry Etzkowitz.
31
Densify NYCs Idea Base More Proximity More
Progress
Action (in Order of Historical Evolution) Priority
Create New Physical Infrastructure B
Minimize Crime, Offer Good Schooling A
Attract Companies with Concessions B
Attract Creative People with Facilities B
Densify the Knowledge Base by Supporting Cross-Cutting Centers of Excellence, Incubators, Enterprise A NeededNow

Source Home page of www.cityeconomist.com, 2006.