On Tuesday, in the space of about fifteen minutes, I received e-mails from two colleagues, both freelancers, asking if I had any leads for work possibilities. Unfortunately, I didn't. These colleagues, one a journalist and the other a statistician, are both highly skilled individuals who have long track records and a lot of well wishers in our field; that both of them are having as hard a time finding gigs as I am is pretty frightening.
And it's probably just going to get worse, based on two stories in Crain's New York Business today. The first is on the city's suddenly spiking unemployment rate:
The city’s unemployment rate increased nearly one percentage point last month, indicating that Wall Street’s woes are starting to take their toll on the local economy. At 5.8%, New York City’s seasonally adjusted unemployment rate is still below the national average of 6.1%, but that gap is steadily closing.
New projections suggest Wall Street’s meltdown could cost New York up to 40,000 private-sector jobs and $3 billion in tax revenues over the next two years. The analysis includes the stock market drop, lost revenue from projected transactions and lost income tax revenue from Wall Street’s employees, which account for 5% of the city’s jobs, but 23% of its wages. Securities firms in the city have already cut 11,000 jobs since the employment peak in the summer of 2007, according to the state Department of Labor.
The job loss on Wall Street has an enormous ripple effect: it's estimated that each financial sector job lost accounts for between two and three jobs in other sectors, primarily personal services. If you drive a limo, run a flower shop, or provide catering, it's your crash too.
The other story is even more troubling in terms of what it likely will mean for hundreds of thousands of New Yorkers in much, much worse shape than a few fretting freelancers--though it's bad news for us, too:
For New York’s nonprofits—which rely on the last three months of the year to raise about 50% of their annual budgets—Wall Street’s meltdown couldn’t have come at a worse time.
Though many charities are facing direct losses from companies like Lehman Brothers Holdings Inc. and Merrill Lynch & Co., fundraising experts said the biggest cuts are expected to come from individual donors who either work in the financial industry or are simply affected by the financial crisis.
“The real concern is that at a company like Lehman, which really nurtured employees to give back, having 25,000 employees not doing that anymore will be terrible,” said Doug Bauer, senior vice president at Rockefeller Philanthropy Advisors. “The money that has emanated from Wall Street individuals is going to be restricted going forward.”
And so, too, will corporate donations. City Harvest, which delivers excess food from restaurants and other businesses to hunger relief agencies, received $100,000 from Lehman—one of its top five corporate donors—over the past two years. The six-figure checks from Lehman won’t be coming in anymore. And executives at the agency said such losses could multiply. City Harvest needs to raise $5.7 million during November and January, with $3 million expected to come in December alone.
Nonprofit executives said they expect the fallout to be significant enough to change the way the entire industry functions. Just as government, corporate and individual funding decreases, the need for social services is expected to increase exponentially.
“We have to think about new ways of doing business,” said Gordon J. Campbell, chief executive of United Way of New York City, who is planning a Town Hall meeting with corporate and nonprofit leaders to figure out ways for charities to survive and their clients to get the help they need. One likely outcome, according to Mr. Campbell and other experts, is that smaller nonprofits will be forced to merge or close down completely.
Lehman, which has recently made major grants to the Harlem Children’s Zone and DonorsChoose, gave $39 million in corporate and foundation grants in the 12 months ended November 2007, according to its Web site. Merrill Lynch provided more than $40 million in grants in 2006. Those gifts include a $5 million pledge to the Sesame Workshop and grants of more than $300,000 a year to the Asia Society.
While organizations such as CUF have been urging city leaders for years to take steps toward diversifying the local economy, and some efforts on this front have gone forward, the fact remains that when Wall Street thrives, the city thrives, as well as the reverse. The fallen financial behemoths are likely to drag down any number of nonprofits in their wake, putting hundreds if not thousands out of work and forcing many thousands more to scramble for services.