The Streets Were Paved with Gold (6 page)

What explains the decline in city unemployment despite the loss in 1977 of 41,000 jobs? A smaller population might be one answer, but Bienstock says the population had stabilized. The answer, laments a Bureau official, is that “people are dropping out of the labor force, becoming so discouraged that they give up looking.” Or perhaps many subsist more profitably on the streets. We often ignore this because we cannot quantify it and because it is so painful. Unemployment is actually higher than our already bleak statistics suggest.

By early 1978, the Bureau was reporting the good news that city
jobs had grown by 16,500 from February 1977 to February 1978. But even this hopeful sign was potentially misleading. Such an increase reflected an expanding national economy, growing at a rate of 4 percent, and obscured the depressing news that New York’s job growth of one-half of 1 percent lagged behind that of every major city in America. Deputy Bureau Chief Sam Ehrenhalt told me in April 1978 that he expected the city to lose another 250,000 jobs over the next five years. “The bleeding has stopped—for the moment,” he said.

That New Yorkers should become dispirited in such circumstances is inevitable, since imperceptibly the outrageous has become normal. Potholes and dirty streets are normal. Poor people are normal. Fear of crime is normal. Corrupt building inspectors, doctors and nursing home operators stealing from Medicaid, city workers not working, pushers and pimps roaming streets as freely as hot dog vendors—all are normal in New York City.

Terrified teachers are normal. While visiting Harren High School one day, I stopped to wait for the elevator on the fourth floor. Classes were in session, and the corridor was empty except for a pretty, middle-aged woman who was also waiting for the elevator. She was a teacher.

“Excuse me,” she inquired softly. “Are you going to the first floor?”

“Yes,” I said.

“I don’t like to walk down the staircase alone,” she explained, smiling. “Would you mind escorting me?”

Her nonchalant tone bespoke neither fear nor shame. When I went to high school, we feared bumping into teachers in the stairwells. Today, teachers fear bumping into their dangerous students. To a visitor, that change is a surprise; what’s shocking is the teacher’s air of resignation. She had come to assume that danger was part of her job.

People may accept danger, but they don’t enjoy it. An August 1977
New York Times
–CBS survey of city residents revealed that two-thirds rated the city a fair or poor place to live. One month earlier, a similar nationwide poll found that only 6 percent of Americans thought New York City a good or excellent place to live. The attitude becomes a statistic when people pick up and move. “We know the image of New York that many people have is exaggerated,” Robert F. Flood, Vice President for Corporate Services of Union Carbide, said just weeks before that giant decided to
depart. “We have many employees who live safe and happy lives here. But it is an image we have to contend with. And it isn’t just crime and high living costs. It’s the city’s changing ethnic mix, which makes some people uncomfortable, and the graffiti on the subways, the dirt on the streets and a lot of other things.” The company’s surveys found that “a substantial majority” of executives and managers, down to those earning $15,000 a year, wanted Union Carbide to move.

It is difficult—no, dangerous—to ignore the economic and social contagion that has swept New York City. The contagion observes few borders. Between 1970 and 1975, New York State lost 2.5 percent of all its nonagricultural jobs. In that same period, the nation’s nonagricultural employment leaped 7.4 percent. The state’s economic stagnation, a 1977 report by Syracuse University economist Roy Bahl disclosed, meant the loss of $6 billion in potential tax revenues since 1973.

The contagion afflicts most of the Northeast. Since 1934, there has been a massive geographic redistribution of the nation’s wealth. Forty-five years ago, New York was in fact the Empire State, its per capita income about 60 percent above the nation’s average. Connecticut, Massachusetts, Rhode Island and New Jersey ranged from 37 to 55 percent above the nation. No longer. A 1976 study for the New York State Economic Development Board disclosed that after adjusting for the region’s higher living costs, the “real” income of the average citizen of the Northeast was 1 percent below the national average. The region’s economic growth rate has lagged behind every other region in the country. Between 1975 and 1977, the Bureau of Labor Statistics reported, employment in the Northeast inched up 2.1 percent—three times slower than the next slowest growth region, the North Central.

Economic stagnation afflicts many older cities. Every time they construct a new building, Detroit and St. Louis, like New York, proclaim the resurgence of their downtown areas; but these downtowns cannot compete with Broadway (ever think of vacationing in Detroit or St. Louis?) nor do they hide the population and job loss mirrored in Cleveland, Philadelphia, Gary, Buffalo, New Orleans, Trenton, and other aging cities. A nationwide Gallup poll, taken in late 1977, found that 36 percent of all urban residents would vacate cities if they could, with overcrowded conditions and crime cited as the chief reasons. The unemployment rate among black Americans, who crowd older cities, is twice that of whites and
higher than any time since World War II. The median income of blacks has gone up 105 percent in the last ten years; black poverty has decreased, as has the salary gap between whites and blacks. Still, ten years after the national Commission on Civil Disorders warned that America was moving toward “two societies, one black, one white—separate and unequal,” the average median income of a black family ($9,252) is about 60 percent that of the average white family ($15,537). A more recent Rand Corporation study said it was 75 percent. Teenage black unemployment is almost three times greater than for whites—double the gap that existed in the mid-1950’s. Nationally, over 50 percent of all black births were illegitimate in 1976; one of every three black youths is supported by welfare. Public schools are more segregated, and the education levels achieved by blacks—central to competing for the growing number of white-collar jobs—is far behind that of white Americans. “A lot of black kids simply feel they don’t count, and they don’t,” says black psychiatrist Alvin Poussaint. “In terms of what makes this society run, they’re expendable.”

The nation’s economy is hardly robust. Inflation is growing faster than income. True, as I write this, the gross national product and consumer spending are expanding, and personal incomes and housing construction are advancing at a brisk pace; in February 1978, the jobless rate was 6.1 percent, the lowest level in three years. But, here again, we run into the water glass problem. At the end of 1977, 92 million Americans were working; nearly 7 million were not. Looking at those figures, the Commissioner of the federal Bureau of Labor Statistics, Jules Shiskin, told the Joint Economic Committee of Congress, “We ought to be cheering.… In terms of unemployment and in terms of gross national product, we are doing better in the current expansion than in any previous expansion in history.” The glass was half full, as it was for Gerald Ford when he boasted of growing employment in 1976 (and opponent Jimmy Carter complained of growing unemployment).

To the Chairman of the Committee, Senator William Proxmire, the glass was half empty. “We have lost our sense of outrage, and complacency has set in,” he scolded Shiskin. “… the continuation of today’s high unemployment is a tragedy for nearly 7 million Americans and is costing the federal government some $54 to $60 billion annually.”

Some “facts” are hard to dispute. Decomposition, which attacks our older cities, also plagues America’s aging industries—often for
the same reasons. The lagging productivity of our cities is matched by that of American industry. According to the General Accounting Office, for instance, the average coal miner produced 14 tons a day in 1965 and only 8.5 tons in 1976—yet President Carter’s original energy plan called for doubling coal production by 1985. In the first three months of 1978, the productivity of American workers fell 3.6 percent, the steepest decline in four years. Productivity is rising by an average of about 2 percent in the U.S.—three times below the rate in Germany and Japan. As New York or Detroit have trouble competing economically with suburban Connecticut or the Sunbelt, many American industries are getting clobbered by cheaper foreign competition. In 1977, foreign steel imports rocketed 114 percent—up 19.3 million tons. This explains why the steel industry laid off 20,000 employees over a span of just several months in mid-1977. For eighty-five years, steel mills have bordered the Mahoning River in Ohio; today, they are closing—victims of age, Oriental and European competition, and federal neglect. While the federal government decided to subsidize and help mechanize American agriculture, allowing the U.S. to become the world’s chief food provider, it made short-term steel decisions. The government occasionally complained about steel prices, but it ignored the industry’s pleas for subsidies and protective tariffs. In contrast, Japan planned ahead, subsidizing the modernization of its steel mills and protecting them with tariffs.

The steel-related automobile industry, which used to dominate the world, has seen its share of the American market diminish under the assault of smaller, cheaper foreign cars—often subsidized by their governments. Two million of these cars glut the American market each year. General Motors’ profits are up, but the little sister of the big three auto companies, American Motors, is teetering and, like New York and the steel industry, has requested federal loan guarantees.

The hot breath of foreign competition has invaded another American sanctuary, advanced technology. Just as England, which invented radar, lost its technological lead to America after World War II, America is today losing its near-monopoly. Want to purchase a fine camera and lens? The shelves of American camera stores are crammed with Japanese Nikons. A watch? We have trouble competing with the Swiss. A pocket-size tape recorder for journalists? I wouldn’t own anything but a Japanese Sony or Panasonic. Japanese radios, phonographs and television sets are more
compact and cheaper. The U.S. may have invented the microwave oven and the citizens band radio, but our share of the world market is dwindling. How can American fabricated clothing compete with clothing fabricated in Taiwan for half the price?

It’s tough, which explains the clamor from labor and business executives and liberals—who once advocated free trade—for protective tariffs. “Foreign trade is the guerrilla warfare of economics,” declares AFL-CIO President George Meany, “and right now the United States economy is being ambushed.” Perhaps Mr. Meany had in mind the RCA Corporation, once the world’s television giant, now reducing its payroll and shifting much of its operation overseas to tap cheaper labor. Or perhaps he was thinking of Zenith, the country’s largest television manufacturer. In September 1977, Zenith announced that it was laying off one-quarter of its domestic work force and transferring “substantial portions” of its TV module board and chassis assembly operations to plants in Taiwan and Mexico, eliminating another 3,500 jobs. Zenith would also buy stereo products overseas because it was cheaper than making them here, thus erasing another 1,500 jobs.

Foreign competition can also be measured by the U.S. balance-of-payments deficit. In 1977, the chasm between our imports and exports reached a record $20.2 billion—double the figure for 1972, the previous record year. Between January and May 1978, 46 percent of all imports were foreign machinery, electronics, transportation equipment and manufacturing goods. These had overtaken oil as the largest drain on America’s growing trade deficit. Still, America’s dependence on foreign oil remained a profound problem. Before the Arab oil boycott in 1973, the U.S. imported 35 percent of its oil. By 1977, the U.S. imported 48 percent ($44.3 billion), a 25 percent jump over the previous year. And if current trends continue, federal officials caution that this sum will one day multiply to $550 billion. U.S. Energy Secretary James Schlesinger has warned of a “severe economic trauma of the sort we have not witnessed since the Great Depression.”

The Secretary’s dire words have been sounded by others. Often. Americans consume energy with the same abandon and unconcern for limits once practiced by New York officials toward their budgets. There is alarm—often exaggerated—that Arab oil interests will come to dominate the American economy and alter our traditional foreign alliances; that we will permanently bespoil the
environment; that the planet itself is in danger. Despite the chorus of foreboding, despite President Carter’s cardigan sweater and proclamation that 1977 was “the Year of Energy,” the year ended with his energy proposals mired in Congressional committee.

The same cannot be said for the economy. It seems that no one knows what to do about the twin problems of unemployment and inflation, though President Carter, with a straight face, promised that 1978 would be “the Year of the Economy.” The federal government spends money to attack one problem—unemployment—and contributes to another—inflation. The government simply prints more money, and in 1978 the deficit was expected to reach $60 billion. After a brief lull, inflation in early 1978 was raging at a near-record pace. America’s trade imbalance also means we are exporting dollars. As the supply of dollars overtakes demand, the value of the dollar shrinks; investors switch to other currencies, driving down the dollar and America’s once-dominant economic role even further.

Not that other nations have answers. The new wave of wealthy immigrants flocking from Europe to Manhattan are seeking to escape their own economic plagues. These refugees, unlike earlier immigrants, do not flee famine or religious persecution. But, like their predecessors, they see their old world crumbling. They fear higher taxes, political instability, terrorism and kidnappings. The oceans offer safety. Manhattan offers tax havens, security, the good life. “In 1965 if I saw a friend from Paris, I would cross the street,” Jean de Noyer, owner of Manhattan’s fashionable La Goulue restaurant, told a reporter. “Now I just wave.…”