ECONOMIC ASSESSMENT OF THE BROOKLYN ECONOMY 2017 UPDATE. Submitted by

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1 ECONOMIC ASSESSMENT OF THE BROOKLYN ECONOMY 2017 UPDATE Submitted by January 2018

2 Welcome to the Brooklyn Chamber of Commerce s third annual borough wide economic analysis. The Brooklyn Chamber commissioned the following report in an effort to comparatively detail short term changes, such as growth trends in the borough, to identify areas of improvement and opportunities for growth since last year s findings. The borough s economy has reached record numbers and continues to drive New York s economy to new heights since the last year. Here are some highlights: Brooklyn s job growth continues. In 2016, Brooklyn netted more than 26,000 new private sector jobs. In percentage terms, it surpassed the rest of the city and state by significant margins Brooklyn s unemployment rate is at its lowest in a generation, at 4.9 percent. Brooklyn now has 54 months of year on year declines in unemployment since On a monthly basis, unemployment in June 2017 was the lowest it has been in 15 years. Brooklyn s job growth has changed since 2015, when the most significant growth sector was the information industry. Currently, health care and social assistance, and tourism and entertainment dominate employment and net new jobs in Brooklyn. o Though the national retail sector is struggling, Brooklyn s is strong and the second largest employer with 74,800 jobs, and 10,000 net new. Furthermore, local retail jobs account for more than half of the net new jobs. o If the current rate of job growth continues, Brooklyn could add over 150,000 net new private sector jobs by In terms of population growth, Brooklyn continued growing at a robust pace in 2016, surpassing New York State s rate of growth by a significant margin. o The senior citizen population growth in Brooklyn is now the highest among the five boroughs with an annual growth rate that has almost quadrupled since This population has a combined $8.9 Billion in purchasing power. Home sharing has become a large part of Brooklyn s economy. It provides Brooklyn residents with another form of income, while also presenting competitive nightly prices, increasing tourism to the borough. Local economies have seen an increase in the percentage of money spent in those areas with home sharing. For example, 57 percent of visitors money was spent in the neighborhood they stayed in; Bedford-Stuyvesant saw $14.5 million spent locally. While our growth has been positive, we need to be cognizant of the disparities still challenging the borough. Given the tremendous job creation and expansion of vital industries, there are unique opportunities to close the wage gap, lower poverty levels, reduce inequality and improve the economic standing of neighborhoods throughout the borough. Along with linking employment opportunities to Brooklynites most in need, we must also make significant investments in that which drives economic growth, such as infrastructure, education and workforce training. We should also continue to focus on crafting policies and programs that assist Brooklyn s traditional primary employers healthcare, tourism, retail, and a special focus on small employers. The report would not be possible without the Brooklyn Delegations of the New York City Council, New York State Assembly, and New York State Senate. Andrew Hoan President & CEO Denise Arbesu Chairwoman

3 Table of Contents BROOKLYN AT A GLANCE i I. EXECUTIVE SUMMARY 1 II. BROOKLYN S ECONOMIC PERFORMANCE 7 Population 7 Jobs 8 Unemployment 9 Wages 10 III. ANALYSIS OF BROOKLYN S INDUSTRIES 12 Industry Mix and Specialization 12 Industry Job Growth and Its Components 15 Job Growth Projections 19 Wages by Industry 21 Conclusions 24 IV. IMPACT OF SENIOR CITIZENS 32 V. IMPACT OF HOME SHARING 36

4 STATEN ISLAND MANHATTAN BROOKLYN BRONX QUEENS JOB CREATION Brooklyn's stellar growth continues. It is the seventh consecutive year of robust job growth. Brooklyn continues to outpace the rest of the city and state in rate of job creation. In 2016, Brooklyn's rate of growth (4.6%) was more than twice the city's (1.9%) and more than three times the rate of the state's (1.5%). BROOKLYN AT A GLANCE INDUSTRY REVIEW Between 2012 and 2016, Brooklyn added nearly 104,000 jobs. Eight of Brooklyn's 14 largest industries can attribute more than half of their job growth to local competitive advantages. POPULATION Brooklyn continues its path toward becoming what would be the third largest city in the U.S. If current trends continue, Brooklyn could overtake Chicago by the 2020 census. If job growth continues at the same percentage growth rate over the next five years, over 150,000 new jobs will be created in Brooklyn. Sustaining this job growth requires continued economic expansion and a concerted effort from policy makers to support new job creation. U.S. Bureau of the Census estimates Brooklyn's population as of July 2016 at approximately million.

5 UNEMPLOYMENT Unemployment drops to historic lows. In June 2017, Brooklyn achieved its lowest unemployment rate in a generation (4.9%) despite increases in labor participation rates. BROOKLYN AT A GLANCE WAGES Despite impressive job growth and rapidly declining unemployment, wages in Brooklyn remained low and failed to keep up with inflation in Following two years of consecutive growth, Average wages in Brooklyn declined.2%. This stagnation occurred as average wages in all other boroughs, except Manhattan, increased by 2.1%. In addition, averaged wages statewide increased, albeit by just.2%. Wages have been dragged down by shifts in Brooklyn's largest industry, Health Care and Social Assistance. However, some industries did experience moderate increases. For example, the second and third largest industries, Tourism and Entertainment and Retail Trade experienced strong wage growth in SENIOR CITIZENS Brooklyn has 316,403 seniors (12% of total population), the largest number of seniors in any borough in New York City. Brooklyn's senior population has grown at over twice the rate of the total population for the past three years. HOME SHARING Home sharing provided thousands of Brooklyn residents with substantial supplementary income in % of Airbnb properties are located outside of Mid- Manhattan while 30-40% of hotels are located outside of Mid-Manhattan, resulting in less competition between home sharing and hotels. Brooklyn's seniors earn approximately $9 billion in income per year. That income supports nearly 55,000 jobs in Brooklyn and contributes more than $7 billion to the local domestic product per year. Workers are retiring later in Brooklyn. Between 2010 and 2016, the percentage of seniors aged 65 and over that continued to be active in the labor force increased from 11.2 percent to 14.9 percent.

6 I. EXECUTIVE SUMMARY The Brooklyn Chamber of Commerce aims to contribute positively to the economic performance of Brooklyn, and acts to promote healthy business environments to ensure continued economic growth and success in the borough. With this goal in mind, and under the guidance of the Brooklyn Chamber of Commerce, the Land Econ Group and Washington Square Partners conducted this third consecutive annual report to analyze Brooklyn s recent economic performance, evaluate Brooklyn citizens economic stability, particularly with regard to Brooklyn s senior citizen population, summarize Brooklyn s industry by industry statistics, identify potential areas of need, and determine Brooklyn s future economic prospects. This report revisits the 2015 Economic Assessment of the Brooklyn Economy, which was the baseline study for this report, and the 2016 Economic Assessment of the Brooklyn Economy. Over the past three years, Brooklyn has continued to build its population, construct more housing, create more jobs, lower unemployment, reduce poverty, and increase personal income, largely at a faster rate than the rest of the city and the state. After decades of lagging behind the other boroughs and the rest of New York State in economic activity, Brooklyn is experiencing a sustained period of economic expansion. Over the last ten years, Brooklyn has transformed as a cultural and economic destination not only for New Yorkers, but also for Americans and people from all around the world. Brooklyn possesses a welcoming living environment for the creative class, is a hub for innovation economy business, and due to its cultural evolution in the media, the Brooklyn Made brand is extraordinarily desirable across the country and globe. As illustrated in this report, Brooklyn boasts impressive job growth as employers move closer to where their employees live, record low unemployment, and a high labor participation rate, stacking up with Manhattan and the rest of the country as a hub of economic activity. However, while Brooklyn is continuing to make positive strides each year, the borough has experienced small declines in average wages as other boroughs have experienced slight increases, a concern given the high cost of living in the borough. Brooklyn currently has the highest number of seniors in New York City, a population that requires special support and attention from policymakers. Brooklyn s number of private sector jobs held by seniors has increased 126 percent since 2001 (by comparison, overall job growth increased 49 percent). Brooklyn seniors earn approximately $9 billion in income per year, supporting 55,000 jobs and contributing more than $7 billion to the local domestic product per year. However, seniors are particularly burdened by housing costs: 55.3 percent of senior households pay over 30 percent of their income on rent or mortgages, a higher share than the city and state, and Brooklyn seniors have very high rates of poverty (36.6 percent), well above the general population (31.9 percent). While that is a general trend nationwide, Brooklyn seniors also have high poverty rates relative to seniors elsewhere in the city (29.9 percent) and state (19.8 percent). As Brooklyn has become more desirable, a growing number of households and residents across the borough are able to cover increasing living costs by utilizing home sharing programs such as Airbnb, unlocking tourism and economic activity in neighborhoods that were previously untouched by hotels. Overall, Brooklyn s prospects for continued and sustained economic growth are as high as they have ever been and represent a remarkable turnaround. These are some of the highlights for Brooklyn continues its path toward becoming the third largest city in the U.S. Millions If current trends continue, Brooklyn could overtake Chicago by the 2020 Census The Race for Third Population Estimates 2.70 Chicago Brooklyn s stellar job growth continues Brooklyn continues to outpace the rest of the city and state in the rate of job creation. In 2016, Brooklyn s rate of growth (4.6%) was more than twice the city's (1.9%) and more than three times the rate of the state. In percentage terms, Brooklyn's 4.6% annual job growth in 2016 was the second fastest in the state (only behind Schoharie County, which just 6,111 jobs) and the fastest among New York City boroughs. In 2016, Brooklyn added almost 26,000 new jobs. Only Manhattan, which added 39,000 jobs (at a rate of growth of just 1.8 percent) added more jobs in the State of New York. It is the seventh consecutive year of robust job growth. 1

7 3.4% Annual Job Growth 5.7% 5.6% 3.6% 4.0% 3.5% 2.7% 2.8% 2.6% 2.8% 2.5% 4.6% 1.9% Mar ' % 9.1% 8.0% 6.0% 7.1% 4.0% 2.0% Unemployment Rate Convergence (12 month average) Jun '17 4.9% 4.7% 0.5% 2.0% 1.8% 1.7% 2.0% 2.0% 1.5% % Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar '16 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Brooklyn Rest of NYC Rest of State Unemployment drops to historic lows This summer, Brooklyn achieved its lowest unemployment rate in a generation (4.9 percent). The unemployment rate has declined while labor participation rates have increased, further highlighting the strength of Brooklyn s economy and labor market. Despite impressive job growth and rapidly declining unemployment, wages in Brooklyn remain low and failed to keep up with inflation in 2016 Average wages in Brooklyn declined as other boroughs experienced a slight increase. However, some industries did experience moderate increases. For example, the second and third largest industries, Tourism & Entertainment and Retail Trade, experienced strong wage growth in % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Brooklyn's Historic Unemployment Rate 12 Month Average Jul '01 5.8% Jul '07 5.2% 0.0% Jan '91 Jul '94 Jan '98 Jul '01 Jan '05 Jul '08 Jan '12 Jul '15 Jun '17 4.9% 3.0% 2.0% 1.0% 0.0% 1.0% 2.0% Private Sector Real Wage Growth, % Brooklyn 2.1% NYC (Excluding Brooklyn and Manhattan) 0.2% NYS (Excl. Brooklyn and Manhattan) 2

8 Summary by Industry We used a variety of tools widely used in economic development analysis to assess Brooklyn industries across nine dimensions. This analysis permits us to understand what industries are driving growth, what industries are emerging, and what industries are struggling. This summary presents a brief overview of five strongly performing industries in Brooklyn. Section III of this report has a detailed breakdown for each of the fourteen largest industries in Brooklyn. The following five industries are Brooklyn s strongest, accounting for 70,600 (68 percent) of Brooklyn s 103,900 net new jobs created from Health Care & Social Assistance Accounts for a third of private sector jobs in Brooklyn and added the most jobs to the local economy (33,000 net new jobs) since The industry is projected to continue growing at a robust pace (2.16 percent per year) in New York City through 2024, adding nearly 172,000 net new jobs to the regional economy. Brooklyn is well positioned to capture a large share of those new jobs. One potential red flag is that average wages have been declining. Wage declines have been driven by declines in the Ambulatory Care and Services sub industry. Tourism & Entertainment Accounts for almost 10 percent of jobs in Brooklyn. Employment has grown at an astounding 9.9 percent per year since 2012, adding nearly 16,900 net new jobs to the local economy. The industry is projected to continue to grow at a very healthy rate of 2.2 percent per year in New York City, and add nearly 100,000 net new jobs by Brooklyn is also very well positioned to capture a significant share of those new jobs. The industry experienced the second highest wage increase among Brooklyn industries, growing at approximately 5.2 percent per year. Retail Trade Consists of 74,800 jobs and is Brooklyn s second largest industry. It accounts for nearly 13 percent of all private sector jobs in the borough a share that has been declining. It added 2,600 net new jobs to the local economy since Given current trends in the retail industry, the outlook for the industry nationwide is pessimistic. Projected growth citywide is weak going forward (one percent per year through 2024). However, most of the growth (58 percent) observed in Brooklyn over the past few years is due to local competitive advantages. So, even as the industry as a whole struggles, Retail in Brooklyn appears to buck the trends. Wages are also low at $31,100 per year, however, they have been increasing at a relatively strong pace of 2.2 percent per year in real terms and offer an important source of entry level jobs. Professional, Scientific, and Technical Services In 2013, PSTS surpassed the Transportation and Warehousing industry in number of jobs in Brooklyn, and in 2016, it surpassed the Manufacturing industry. PSTS is now Brooklyn s ninth largest industry with 21,400 jobs in 2016 (3.6 percent of total private sector jobs). It has been growing at a very robust rate of 5.4 percent per year, with approximately half of that growth attributable to local competitive advantages. The industry is projected to continue experiencing healthy growth of 2.19 percent per year through 2024, adding approximately 91,900 net new jobs in NYC. If job growth in this industry continues as projected, it could soon surpass Wholesale Trade as Brooklyn s 8th largest industry. Brooklyn is not highly specialized in this industry, but that trend is reversing as the industry grows. The industry has the fourth highest average wages in Brooklyn and they have been increasing at an impressive 3.1 percent per year in real terms since Construction Buoyed by strong demand for residential and commercial space, the construction industry surpassed the Educational Services industry and is now Brooklyn s fourth largest industry. It has grown at a remarkable 6.4 percent per year since 2012, adding nearly 6,600 net new jobs to the local economy. The industry is projected to set the pace in job creation citywide, growing at approximately 2.56 percent through 2024 the highest growth rate among all industries. The industry has average annual wages that are 45 percent higher than the average wage for all industries in Brooklyn, and has been growing a moderate rate of 1.5 percent per year. 3

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10 The Impact of Senior Citizens in Brooklyn The Vulnerability of Brooklyn s Senior Citizens Brooklyn has the largest number of seniors (65 year and over) in New York City 316,403, or more than 12 percent of total population. The senior population in Brooklyn has grown at over twice the rate of the total population for the past three years. Workers are retiring later in Brooklyn. Between 2010 and 2016, the percentage of seniors that continued to be active in the labor force increased from 11.2 to 14.9 percent a rate of increase significantly higher than the rest of the city and state. Seniors are particularly burdened by housing costs in Brooklyn; 55.3 percent of senior households pay over 30 percent of their income on rent or mortgage; a higher share than the city and state. Brooklyn seniors have very high rates of poverty (36.6 percent), well above the general population (31.9 percent). While that is a general trend nationwide, Brooklyn seniors also have high poverty rates relative to seniors elsewhere in the city (29.9 percent) and state (19.8 percent). In 2016, more than 33,000 private sector jobs (5.6 percent of all private sector jobs) in Brooklyn were performed by seniors. Brooklyn s Home Sharing Market The number of private sector jobs in Brooklyn performed by seniors increased by 126 percent from 2001 to By comparison, overall job growth during this period was 49 percent. Brooklyn seniors earn approximately $9 billion in income per year. That income supports nearly 55,000 jobs in Brooklyn and contributes more than $7 billion to the local domestic product per year. Brooklyn contained 22,000 unique listings in 2016, hosting 548,000 guests that paid a total of $144,000,000 to their Brooklyn hosts. Visitors spend a daily average of $202, most of which is used in neighborhood in which they stay. Airbnb listings are largely outside of areas with concentrated numbers of hotels, limiting hotel competition and bringing tourism to new neighborhoods. Impact of Senior Citizens in Brooklyn, 2015 Total Per Capita Income $8.9 billion Effect on Local Economy Jobs 54,260 Output $7.2 billion 5

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12 II. BROOKLYN S ECONOMIC PERFORMANCE Population WILL BROOKLYN BE THE THIRD LARGEST CITY IN THE U.S. BY 2020? If Brooklyn were an independent city, it would be the fourth largest city in the U.S., behind New York City itself, Los Angeles, and Chicago. However, as the 2016 Economic Assessment pointed out, due to long term demographic trends, it is plausible that Brooklyn could surpass Chicago and become the third largest city as early as The graph below shows how Brooklyn has been closing in on Chicago. Per the 2016 estimates by the U.S. Census, Brooklyn is now approximately 75,000 residents short of surpassing Chicago as the third largest city. To put this number in perspective, that is less than the number of residents that Brooklyn added in the five year period between 2011 and Based on these trends, it is plausible for Brooklyn to surpass Chicago as the third largest city in the U.S. by the 2020 Census. The U.S. Bureau of the Census estimates Brooklyn s population as of July 2016 at approximately million. That is an increase of approximately 4,200 (0.16%) new residents since However, it should be noted that annual changes are not considered exact because of the variability in the estimates program. 1 Nonetheless, Brooklyn s population has been increasing robustly since 2006, reflecting the desirability of the borough as a place to live. Between 2010 and 2015, Brooklyn was the fastest growing borough in both percentage and absolute terms, adding more than 126,000 new residents and accounting for more than 35% of total population growth in New York City during this period. The rate of growth since 2010 in New York City and Brooklyn has not been seen since the 1920 s. 2 Millions The Race for Third: Estimates Chicago Source: US Census Bureau. 7

13 Jobs Brooklyn's impressive job growth continues. In 2016, Brooklyn hosted 587,871 jobs. That is an increase of 4.6 percent (almost 26,000 net new jobs) over the previous year. To put those numbers in perspective: In percentage terms, Brooklyn's 4.6 annual job growth in 2016 was the second fastest in the state and the fastest among New York City boroughs. In absolute numbers, in the state of New York, only Manhattan (39,000) added more jobs. It is the seventh consecutive year of robust job growth. Brooklyn has outpaced the rest of the city and state in the rate of job creation. In 2016, Brooklyn s rate of growth (4.6%) was more than twice the city's (1.9%) and more than three times the rate of the state. One potential cause for concern is that despite sustained robust growth, Brooklyn has now experienced two years of declining rates of growth. The annual rate of growth was 5.7 percent in 2014, 5.6 percent in 2015, and 4.6 percent in Of particular concern is the decline of 100 basis points in However, this dynamic is not unique to Brooklyn. Growth is still robust and significantly higher than the city and state, and the decline in growth rates is not unique to Brooklyn, as the city and state are also experiencing declines. As shown in the next section, healthy job growth in New York City is projected through 2024, particularly in industries that have a large footprint in Brooklyn, such as Health Care & Social Assistance, Tourism & Entertainment, and emerging industries such as Technical, Scientific, and Professional Services, and Administrative and Waste Services. BROOKLYN S IMPRESSIVE JOB GROWTH RUN CONTINUES. IN TERMS OF PRIVATE SECTOR EMPLOYMENT, BROOKLYN WAS THE FASTEST GROWING COUNTY IN NEW YORK STATE IN BROOKLYN HAS OUTPERFORMED THE CITY AND STATE IN JOB CREATION IN SIX OUT OF THE PREVIOUS SEVEN YEARS. 3.4% 0.5% 3.6% 2.7% 2.8% Annual Job Growth 4.0% 2.6% 2.5% 2.0% 1.8% 1.7% 5.7% 5.6% 3.5% 2.8% 2.0% 2.0% 4.6% 1.9% 1.5% Brooklyn Rest of NYC Rest of State Source: New York State Department of Labor and LEG. As shown below, job growth in Brooklyn in 2016 was driven largely by growth of the Health Care and Social Assistance industry, which accounted for more than half (nearly 15,000 or 57 percent) of net new jobs created. Nonetheless, most industries in Brooklyn experienced robust growth ranging from 2 to 5 percent in One potential cause for concern is that five industries experienced job losses. Some, such as Finance & Insurance, Whole Sale Trade, and Manufacturing experienced significant job losses of 3 to 4 percent. The next chapter investigates industry trends taking into account various factors to examine whether the trends observed in 2016 are outliers or parts of longer term trends. 8

14 Unemployment At 4.9 percent, Brooklyn s unemployment rate is the lowest it has been since Brooklyn's unemployment rate of 4.9 percent is very close to 4.7 percent, the figure that the Federal Reserve believe to be full employment. Achieving full employment is one of the main policy goals of the federal government. Full employment can be particularly beneficial for wages, since employers tend to increase wages to attract much needed labor; in Brooklyn, that was the case in 2014 and However, full employment also means potentially increasing prices, especially for sources with limited local supplies such as housing. In Brooklyn, net effective median rent increased slightly from $2,738 to $2,755 between November 2016 and November THIS SUMMER, BROOKLYN ACHIEVED ITS LOWEST UNEMPLOYMENT RATE IN A GENERATION, REACHING ALMOST FULL EMPLOYMENT LEVELS. 14.0% 12.0% Brooklyn's Historic Unemployment Rate 12 Month Average BROOKLYN'S UNEMPLOYMENT RATE HAS CONVERGED TO THE NATIONAL AVERAGE. Mar ' % 9.1% 8.0% 6.0% 7.1% 4.0% 2.0% 0.0% Mar '14 Jun '14 Sep '14 Unemployment Rate Convergence (12 month average) Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar '16 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 4.9% 4.7% Jun ' % 8.0% 6.0% 4.0% 2.0% Jul '01 5.8% Jul '07 5.2% 0.0% Jan '91 Jul '94 Jan '98 Jul '01 Jan '05 Jul '08 Jan '12 Jul '15 Source: U.S. Department of Labor Jun '17 4.9% In the 2015 baseline analysis, we reported that although Brooklyn had significantly reduced unemployment, its rate still lagged behind the city, state, and U.S. by a significant margin as much as 200 basis points. However, Brooklyn's rapid pace of growth means that that gap has now been practically eliminated. Brooklyn s unemployment rate is now on par with the city, state, and national averages. Source: New York State Department of Labor and LEG We cannot take the unemployment rate in isolation to measure the vitality of the labor market. For example, one of the central economic problems of the U.S. economy since the Great Recession is the number of adults, especially prime aged men, who are out of the work force entirely and aren t even looking for a job a measure known as the labor participation rate or the rate of working age adults who are part of the labor force. So, while the unemployment rate has been declining in the US, the labor participation rate has actually been declining from 65 percent to 63.7 percent. That is not the case in Brooklyn, where the labor participation increased from 60.6 percent to 63.3 percent while unemployment was decreasing dramatically. While labor participation rate numbers are still low in a historical context, it is nevertheless an incredible achievement for Brooklyn. 9

15 WHILE THE UNEMPLOYMENT RATE HAS DROPPED SIGNIFICANTLY, BROOKLYN S LABOR PARTICIPATION RATE HAS INCREASED SIGNIFICANTLY. THIS HIGHLIGHTS THE STRENGTH OF THE BROOKLYN LABOR MARKET. 65.0% 60.0% 55.0% 50.0% 60.6% Labor Participation Rate Population 16 years and older 65.0% 63.3% 63.6% 62.8% 63.5% 63.5% 63.7% Brooklyn NYC NYS US Source: New York State Department of Labor and LEG. Averages can be deceiving. For example, the average masks variation across industries. Looking at wages by industry, it appears that wages in Brooklyn have been dragged down by declines in Health Care and Social Assistance, Brooklyn's largest industry sector, which accounts for almost a third of annual wages in the county. Wages are decreasing in the Health Care and Social Assistance industry due to a shift in the provision of health care in Brooklyn and across New York City. Because of improved technology, medical facilities are better equipped to treat patients with lower skilled workers. Just ten years ago, many patients would need hospital care from highly trained nurses and doctors. Today, the same medical services are shifting towards outpatient services, ambulatory care facilities, and home care aid procedures to increase efficiency and reduce labor costs. Highly trained medical professionals wages are not decreasing, but rather the shifting nature of the industry results in an increase in less skilled workers who earn lower wages, bringing the average wage for the industry employee lower. Without the declines in health care industry wages, Brooklyn would have experienced a 1 percent increase in real wages, which is still low, but is twice as high as the increase at the state level AVERAGE ANNUAL WAGES IN BROOKLYN REMAIN BELOW THE CITY AND THE STATE. HOWEVER, THE CITY S AND STATE S AVERAGE WAGES ARE HIGHLY SKEWED UPWARDS BY WALL STREET. WHEN EXCLUDING MANHATTAN WAGES, THE GAP BETWEEN BROOKLYN AND THE REST OF THE CITY AND STATE IS REDUCED. Private Sector Wages, 2016 Wages As previously shown, Brooklyn's unemployment rate is at a historic low even in the face of increasing labor participation rates. Both of these indicators highlight the vitality of the local economy. We posited that the economy may even be near full employment. However, we cannot yet declare victory. The best sign that the economy has reached full employment is when wages start to climb at a strong rate (roughly 2 3 percent per year in real terms). There was some promise in 2014 and 2015 when real wages in Brooklyn increased. However, average wages in Brooklyn stagnated in 2016, showing practically no change from the previous year. While troubling, this trend is not sufficient to cause panic. Productivity growth nationwide is weak, which suggests weak real wage growth is to be expected. However, for Brooklyn, the trend is somewhat troubling because while Brooklyn s average wage growth is slowing down, wages are increasing in other boroughs and in the rest of the state. For example, in 2016, average real wages increased 2.0 percent in the Bronx, 2.2 percent in Queens, and 1.6 percent in Staten Island. The average wage in the state, excluding Brooklyn and Manhattan, increased by 0.2 percent not an impressive rate, but still positive. $41,491 $89,101 $47,664 Brooklyn NYC NYC (Excluding Brooklyn and Manhattan) Source: New York State Department of Labor and LEG. $69,099 NYS $50,949 NYS (Excl. Brooklyn and Manhattan) 10

16 FOLLOWING TWO YEARS OF GROWTH (INCLUDING THE LARGEST INCREASE SINCE 2004), AVERAGE WAGES IN BROOKLYN STAGNATED IN THIS STAGNATION OCCURRED AS AVERAGE WAGES IN ALL OTHER BOROUGHS (EXCEPT MANHATTAN) INCREASED BY A HEALTHY MARGIN. IN ADDITION, AVERAGE WAGES STATEWIDE INCREASED, ALBEIT WEAKLY. 3.0% 2.0% 1.0% 0.0% 1.0% 2.0% Private Sector Real Wage Growth, % Brooklyn 2.1% NYC (Excluding Brooklyn and Manhattan) 0.2% NYS (Excl. Brooklyn and Manhattan) Source: New York State Department of Labor, U.S. Bureau of Labor Statistics, and LEG. * Real Wages equal nominal wages adjusted by the Consumer Price Index for Urban Wage Earners and Clerical Workers. UNLIKE 2015 WHEN REAL WAGES INCREASED ACROSS ALL INDUSTRIES IN BROOKLYN, IN 2016, VARIOUS INDUSTRIES EXPERIENCED DECLINES. THE MOST NOTABLE DECREASE IS IN HEALTH CARE AND SOCIAL ASSISTANCE, WHICH ACCOUNTS FOR A LARGE SHARE OF WAGES IN BROOKLYN. IF WAGES IN THIS INDUSTRY HAD NOT DECLINED, GROWTH OF OVERALL AVERAGE WAGES IN BROOKLYN WOULD HAVE BEEN POSITIVE (1%). Real Wage Growth in Brooklyn by Industry: Sorted by increase in 2016 Average Annual Wages Annual Increase Mgmt. of Companies and Enterprises $71,692 $80, % Tourism and Entertainment $24,996 $27, % Retail Trade $30,252 $31, % Other Services (incl. Public Administration) $27,851 $28, % Educational Services $40,861 $41, % Administrative and Waste Services $30,807 $31, % Transportation and Warehousing $37,782 $38, % Construction $59,657 $60, % Finance and Insurance $87,429 $88, % Manufacturing $41,117 $41, % Total, All Private Industries $41,594 $41, % Wholesale Trade $50,325 $50, % Professional and Technical Services $63,734 $63, % Real Estate and Rental and Leasing $44,798 $44, % Health Care and Social Assistance $40,551 $39, % Information $81,407 $74, % SOURCE: NEW YORK STATE DEPARTMENT OF LABOR AND LEG WAGES ARE SHOWN IN REAL TERMS (I.E., NET OF INFLATION). 11

17 III. ANALYSIS OF BROOKLYN S INDUSTRIES The previous chapter provided a broad overview of Brooklyn s economic performance. In this chapter, we focus on employment, job growth (historic and projections), and wages by industry to better understand how the Brooklyn economy works, what its strengths and weaknesses are, and where its hidden potential lies. We use a variety of tools widely used in economic development analysis designed to enable anyone interested in their local economy to make a first cut at understanding its potential. 3 The factors analyzed as part of this analysis include: Industry Mix & Specialization (as measured by Location Quotients) Employment Growth and its Components (Shift share analysis) Projected Job Growth (based on citywide forecasts) Wages Levels and Growth This analysis permits us to answer some of the following questions: How does the local economy compare to the city and state economy? Which industries make the regional economy unique? What industries have been growing/declining? Are industry growth/declines in employment due to industry wide trends, general economic growth, or due to unique local factors? The data analyzed is used to catalog the industries into four main categories: Growth Inducing: Large industries, which are responsible for most of the growth recently experienced in Brooklyn. Emerging: Relatively small industries that have experienced significant growth and are projected to continue growing. Moderate Growth: small and medium size industries, which have grown at a moderate pace and are expected to continue growing at a moderate pace. Under Pressure: small and medium sized industries with declining or stagnant job growth and not very optimistic growth projections. It is important to recognize that this analysis is at the two digit NAICS industry level. This means that the data represent broad categories of industry aggregation. Such level of aggregation hides finer industry detail. For example, an industry may be cataloged as an Under Pressure. However, there may be some subsectors of this industry which are thriving and may belong in another category. Nevertheless, the two digit analysis is useful because the subsectors included within each industry group have inherent, similar input structures, labor skills, and production processes. This permits us to draw generalized conclusions about their prospects for growth. Detailed industry descriptions along with examples of Brooklyn companies are presented in Appendix A. Industry Mix and Specialization Industry Mix There have been few changes to Brooklyn's industry mix since This is not surprising given that changes in industry mix tend to happen slowly over time. Nevertheless, there are a few trends that indicate potential permanent changes in the composition of the local economy. The most significant trends are: 1) The three largest industries in Brooklyn, Health Care and Social Assistance, Retail Trade, and Tourism and Entertainment continue to dominate employment in Brooklyn, accounting for nearly 55 percent of total private employment. Health Care and Social Assistance, and Tourism and Entertainment increased their shares from 32.3 to 32.9 percent, and 8.9 to 9.2 percent, respectively. However, despite sustained job growth, the share of employment in Retail dropped from 13.6 to 12.7 percent. On a per square foot basis, Brooklyn is under retailed relative to Manhattan. Growth in Brooklyn s retail sector is slow not only due to retail diminishing across the country, but it is also suffering because of several local factors. First, prices for retail spaces have sharply increased. Brooklyn has a need for more service oriented retail, but local services are having difficulty keeping up with land prices. Second, Brooklyn is competing for tenants with Manhattan, where the market for national retailers is more established and more mature. These retailers do not feel as if their consumer is active enough in Brooklyn. Third, traffic patterns are not as dense in Brooklyn as they are in Manhattan, creating concern for retailers in terms of how much critical mass they are able to capture. Despite a slow retail market, Brooklyn has potential to grow in underserved neighborhoods such as Red Hook, where retail could see a surge if transportation options are expanded. 2) Construction surpassed Educational Services in terms of employment and is now the 4th largest employer in Brooklyn. Employment in Educational Services continued to grow at a robust pace (8 percent over the two year period), but it simply could not keep up with the breakneck pace (12 percent) of the Construction industry. This may be a temporary trend, as 12

18 construction tends to be highly cyclical and therefore more susceptible to fluctuations in the real estate market. Educational Services on the other hand, is not. If the economy were to cool down, Educational Services may overtake construction again. 3) Administrative and Waste Services surpassed Other Services and is now the 6th largest industry. Both industries are growing at a very strong pace (16 and 14 percent over the twoyear period, respectively) and both may move up even higher in the industry rankings. 4) Professional Technical Services surpassed Manufacturing employment, and is now the 9th largest employer in Brooklyn. Manufacturing continues to bleed jobs, while PSTS continues to grow at a healthy rate. Over the next few years, employment in Manufacturing may stabilize, but it may continue to move down the ranking as other industries, such as Finance and insurance and Real Estate, Rental, and Leasing continue to grow at over three percent per year. However, while Brooklyn s large scale manufacturing is declining, modern small scale manufacturers are blossoming in Brooklyn at an increasing rate. Industry Specialization We use location quotients (LQ s) to identify industry specialization in Brooklyn, measuring how concentrated an industry is in Brooklyn compared to a larger geographic area in this case, the U.S. An LQ of 1 indicates the local share of employment in Brooklyn for a particular industry is equal to the U.S., and is usually thought of as "self sufficient" (i.e., the industry produces sufficient goods or services to meet the needs of the local residents). An LQ of less than 1 indicates that Brooklyn is less specialized in that particular industry. Industries with very low LQs are usually thought of as "import industries," or, industries that do not produce sufficient goods/services to meet local demand (i.e., local consumers must buy from outside the region). An LQ greater than 1 indicates that Brooklynl is more specialized in that industry relative to the U.S. economy. Industries with very high LQs are thought of as exporting industries (i.e., they produce more than the local market consumes and therefore sell goods or services outside the region.) Export industries are important because they bring money into the region, rather than simply circulating money that is already in the region. LQ's are used to Identify industries that make the Brooklyn economy unique. Identify the export orientation (i.e., import vs. export) of an industry. Identify emerging export industries beginning to bring money into Brooklyn. Identify endangered export industries that could erode the region s economic base. EMPLOYMENT IS HIGHLY CONCENTRATED. THE THREE LARGEST INDUSTRIES ACCOUNT FOR MORE THAN HALF OF TOTAL EMPLOYMENT. THE HEALTH CARE & SOCIAL ASSISTANCE INDUSTRY IS PARTICULARLY LARGE. Share of Total Private Employment by Industry Brooklyn 2014 and 2016 Finance and Insurance Real Estate and Rental and Leasing Transportation and Warehousing 2.9% 2.8% 4.8% Health Care and Manufacturing 3.4% Social Assistance* 3.9% Professional and 3.5% 3.5% 3.1% 2.9% 32.9% Technical Services 3.6% 3.9% Wholesale Trade 4.1% 32.3% 3.7% 4.6% 4.8% Other Services, Ex. 4.9% 4.8% Public Admin* 5.1% 13.6% 5.0% 5.0% 8.9% Administrative and Waste Services* 5.0% 12.7% Educational 5.1% Services 9.2% Retail Trade Construction* Other Industries [1] Tourism & Entertainment [2]* Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes Management of Companies and Enterprises, Unclassified, Utilities, Information, Agriculture, Forestry, Fishing and Hunting, Mining, Quarrying, and Oil and Gas Extraction. [2] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services) * Identifies industries that gained share between the two periods. 13

19 The following table breaks down industries in Brooklyn according to their level of specialization per their LQ. Industry LQ s are calculated by comparing an industry s share of employment in Brooklyn with its share of national employment. For example, Health Care accounts for 32.87% of all jobs in Brooklyn, but only 15.67% of all national jobs. Therefore, Brooklyn s LQ for Health Care is 2.10 (32.8%/15.67%), meaning that Health Care is just over two times more concentrated in Brooklyn than it is nationally. Of course, identifying which industries have a high or low location quotient is of interest, but that information is more useful when paired with other information, such as size of industry or wage levels. For that reason, a multi factor comparison of each industry is presented below. For now, we will point out that the LQs indicate that the Brooklyn economy is becoming more diverse. Industries with low specialization, such as Other Services, Information, Tourism & Entertainment, Professional and Technical Services, and Management of Companies and Enterprises, are increasing their share of employment in Brooklyn. The industries that have become less specialized in Brooklyn during this period are industries that have been struggling for some time, such as Transportation and Warehousing, Wholesale Trade, and Manufacturing. Surprisingly, Finance and Insurance also became less specialized. Educational Services and Health Care & Social Assistance also lost some share during this period, but these are industries that have very high specialization, so the mild declines did not have a very significant impact. They continue to be strong players in the local economy. BROOKLYN HAS A HIGH CONCENTRATION OF EMPLOYMENT IN HEALTH CARE AND SOCIAL SERVICES, EDUCATIONAL SERVICES, AND OTHER SERVICES (EXCEPT PUBLIC ADMIN.) RELATIVE TO THE STATE AND U.S., BROOKLYN ALSO HAS RELATIVELY HIGH LOCATION QUOTIENTS RELATIVE TO THE CITY IN RETAIL, CONSTRUCTION, WHOLESALE TRADE, AND MANUFACTURING, INDICATING THAT THE BOROUGH PLAYS AN IMPORTANT ROLE IN THESE INDUSTRIES WITHIN THE REGIONAL ECONOMY. Brooklyn's Industry Specialization (Relative to U.S.) Sorted by LQ in 2016 Location Quotients High Specialization Industries Change Educational Services Health Care and Social Assistance Real Estate and Rental and Leasing Other Services, Ex. Public Admin Self Sufficient Industries Retail Trade Construction Transportation and Warehousing Wholesale Trade Low Specialization Industries Information Tourism & Entertainment [1] Administrative and Waste Services Finance and Insurance Professional and Technical Services Manufacturing Management of Companies and Enterprises Source: U.S. Bureau of Labor Statistics and LEG. 1) Includes Arts, Entertainment, and Recreation, as well as Accommodation and Food Services 2) Includes Agriculture, forestry, Fishing and Hunting, Quarrying, and Oil and Gas Extraction, Utilities, and Unclassified. 14

20 Industry Job Growth and Its Components As shown on the following page, with the exception of Manufacturing and Whole Sale Trade, all of the industries in Brooklyn have grown at a remarkable rate. It is very impressive that five industries have grown at rates higher than five percent per year since 2012, and an additional eight industries have grown at rates between three and five percent. We have established that Brooklyn is growing at an extraordinary pace. However, so is most of the U.S. economy. So, how much of that job growth seen in Brooklyn is a result of unique regional factors, rather than national trends? An analysis of job growth by industry in addition to a shift share analysis of the Brooklyn economy tells us that more than 50 percent of the job growth in Brooklyn is due to local competitive advantages. We know that between 2012 and 2016, Brooklyn added nearly 104,000 net new jobs. If Brooklyn had just followed national trends it would have added only 48,000 new jobs. Therefore, local advantages stimulated Brooklyn to more than double its expected job growth. With these levels of growth, it is not surprising that nearly all industries in Brooklyn outperformed national trends. Eight industries can attribute more than half of their job growth to local competitive advantages. Only Manufacturing, Transportation & Warehousing, and Wholesale Trade underperformed national industry trends. These trends indicate that the observed job growth in Brooklyn is due, not just to the overall health of the national economy, but rather due to strengths, or competitive advantages, of the local economy. Brooklyn s Competitive Advantages If, as highlighted above, a significant portion of employment growth is driven by local competitive advantages, then what are these advantages? Regional economic development literature identifies five primary regional competitive advantages: 4 Demand conditions (population potential and income level, respectively); Quantity and quality of the labor force; Educational and research infrastructure; Accessibility (solid transportation networks and integration with larger region); and Living environment (cultural services and physical factors, which includes everything from public safety to the strong presence of the creative class) 15

21 Job Growth in Brooklyn by Industry Sorted by compound annual growth rate Compound Annual Growth Rate Net new jobs Health Care and Social Assistance 8.3% 14,742 Other Services, Ex. Public Admin Transportation and Warehousing Tourism & Entertainment [1] Professional and Technical Services Educational Services Construction Administrative and Waste Services 5.1% 4.4% 4.2% 3.9% 3.6% 3.2% 2.3% 1, , , Real Estate and Rental and Leasing Retail Trade 1.1% 0.5% Management of Companies and Enterprises 1.3% 40 Information 1.8% 174 Finance and Insurance Wholesale Trade 2.9% 3.2% Average for private sector 4.6% Manufacturing 3.8% 5.0% 0.0% 5.0% 10.0% 807 5, ,000 10,000 15,000 20,000 16

22 Job Growth in Brooklyn by Industry Sorted by compound annual growth rate Compound Annual Growth Rate Net new jobs (in 1,000s) Tourism & Entertainment [1] 9.9% 16.9 Information 9.2% 2.9 Administrative and Waste Services 7.7% 7.5 Construction Professional and Technical Services 5.4% 6.4% Health Care and Social Assistance 4.8% 33.0 Other Services, Ex. Public Admin 4.3% 4.5 Management of Companies and Enterprises 3.7% 0.4 Retail Trade 3.7% 10.0 Real Estate and Rental and Leasing 3.6% 2.3 Transportation and Warehousing 3.5% 2.6 Finance and Insurance 3.4% 2.0 Educational Services 3.2% 3.5 Manufacturing 0.6% Average for private sector 5.0% 0.5 Wholesale Trade 0.3% % 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Thousands Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services). Figure does not show NAICS 99 (Unclassified), NAICS 22 (Utilities), NAICS 11 (Agriculture, Forestry, Fishing and Hunting), and NAICS 21 (Mining, Quarrying, and Oil and Gas Extraction). 17

23 Competitive Local Effect on Job Growth % of job growth due to local advantages Breakdown of Net New Jobs Other Services, Ex. Public Admin 100% 4.5 Information 90% 2.9 Tourism & Entertainment [1] 71% 16.9 Finance and Insurance Administrative and Waste Services Retail Trade Educational Services Professional and Technical Services 66% 65% 58% 55% 50% Health Care and Social Assistance 40% 33.0 Real Estate and Rental and Leasing Construction Management of Companies and Enterprises 30% 28% 37% Transportation and Warehousing Manufacturing Wholesale Trade 1% 0% 0% 0% 50% 100% Thousands Expected Effect Net New Jobs due to Local Effect Net New Jobs Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services). Figure does not show NAICS 99 (Unclassified), NAICS 22 (Utilities), NAICS 11 (Agriculture, Forestry, Fishing and Hunting), and NAICS 21 (Mining, Quarrying, and Oil and Gas Extraction). 18

24 Job Growth Projections Citywide employment projections between 2014 and 2024 are presented on the following page by industry. While these projections are not specific to Brooklyn, they highlight industrywide employment trends, which can be used to evaluate opportunities for growth in Brooklyn, to develop strategies to put Brooklyn in a position to capture a larger share of the projected employment gains, and to stave off projected employment losses in any particular industry. The citywide employment projections bode well for Brooklyn. Brooklyn's largest and third largest industries (Health Care and Social Assistance and Tourism and Entertainment) are projected to experience robust growth in absolute and percentage terms. In addition, industries that are emerging in Brooklyn, such as Professional and Technical Services, Administrative and Waste Services, Management of Companies and Enterprises, and Other Services, are expected to grow at a healthy pace. Retail Trade and Education Services are industries that are projected to grow at more moderate rates and could be a cause for concern. Slow growth of Retail Trade is particularly troubling for Brooklyn because it is the county's second largest employer. While the challenges of the industry are not unique to Brooklyn, local policymakers and stakeholders should be proactive to address the challenges faced by the industry. Job growth in Brooklyn s Education Services sector has the potential to outperform projections. With the incoming tuition free Excelsior program 5 and the looming influx of students into Brooklyn, colleges will need to employ more faculty and staff members. With more universities and students than Cambridge, Massachusetts, Brooklyn s universities have the potential to collaborate with one another in an effort to build pipelines from high school to college that can guide more people towards areas of need in the education services sector. Because Brooklyn s universities focus on different, specific academic subjects, there is less competition among them. Aligning the Brooklyn s universities could provide more and better opportunities for Brooklyn residents to enter the industry and create pathways to employment. Manufacturing is the only industry projected to lose jobs over the next decade. However, manufacturing data does not pick up all small scale manufacturers, who are moving to Brooklyn at increasing rates, and some sub industries within manufacturing, such as Food and Beverage Manufacturing, Fabricated Metal Products, and to a lesser extent, Electrical Equipment, Appliance, and Component Manufacturing, are well positioned to grow. Smallscale manufacturers, also known as light manufacturers, are setting up shop in Brooklyn at an increasing rate due to government relocation incentives, out of borough rent pressures, employee convenience, manufacturing hubs such as Industry City, technology such as 3 D printing (which allows more to be built in less space), and the opportunity to brand one s product as, Brooklyn Made. Light manufacturing and the innovation economy are becoming important pathways to the middle class, as there are many opportunities for employees to grow their technical and creative skills, and create small businesses. However, many companies within the light manufacturing sector believe the city is not supportive enough in creating academic linkages that can connect Brooklynites to acquire the skills necessary to start their own businesses. In addition to the citywide employment projections, we also analyzed what would happen if job growth in Brooklyn continued for the next five years at the same growth rate as between 2011 and If the five year growth rate is maintained, over 150,000 new jobs could be created by This job growth, however, is not a given because the past five years have featured a historically high rate of job growth. For the growth rate to continue, regional and national economic trends would need to remain positive and policy makers would need to put forth a continued effort to attract new employers and encourage existing employers to expand. The analysis does illustrate the potential for even grewater job creation if Brooklyn s momentum can be sustained over a prolonged period. BROOKLYN S INDUSTRY MIX GIVES THE BOROUGH S ECONOMY A POSITIVE OUTLOOK FOR LONG TERM JOB GROWTH. BROOKLYN HAS A HIGH CONCENTRATION OF JOBS IN SEVERAL INDUSTRIES THAT ARE PROJECTED TO EXPERIENCE ROBUST GROWTH IN THE CITY. IN PARTICULAR, BROOKLYN S LEADING SECTORS HEALTH CARE AND SOCIAL ASSISTANCE AND TOURISM AND ENTERTAINMENT ARE WELL POSITIONED TO EXPERIENCE ROBUST GROWTH. STRONG STATEWIDE JOB GROWTH PROJECTIONS IN BROOKLYN S EMERGING INDUSTRIES, SUCH AS PROFESSIONAL, SCIENTIFIC, AND TECHNICAL SERVICES, ADMINISTRATIVE AND SUPPORT SERVICES, WASTE MANAGEMENT AND REMEDIATION SERVICES, MANAGEMENT OF ENTERPRISES, AND OTHER SERVICES (EXCEPT PUBLIC ADMINISTRATION), BODES WELL FOR INDUSTRY DIVERSIFICATION IN BROOKLYN. 19

25 New York City Job Growth Projections by Industry: Sorted by compound annual growth rate Compound Annual Growth Rate Net new jobs (in 1,000s) Construction 2.56% 37.2 Tourism & Entertainment [1] Professional and Technical Services 2.21% 2.19% Health Care and Social Assistance 2.16% Administrative and Waste Services 1.76% 41.8 Management of Companies and Enterprises 1.67% 12.6 Other Services, Ex. Public Admin 1.64% 36.3 Educational Services 1.36% 61.0 Real Estate and Rental and Leasing Transportation and Warehousing 1.02% 0.99% Retail Trade 0.99% 36.0 Finance and Insurance 0.58% 19.5 Information 0.39% 7.4 Wholesale Trade 0.26% Average for All Industries 1.4% 3.9 Manufacturing 0.54% % 0.00% 1.00% 2.00% 3.00% Thousands Thousands Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services). Figure does not show NAICS 99 (Unclassified), NAICS 22 (Utilities), NAICS 11 (Agriculture, Forestry, Fishing and Hunting), and NAICS 21 (Mining, Quarrying, and Oil and Gas Extraction). 20

26 Potential Job Growth in Brooklyn by Industry Sorted by gross five year growth rate Five Year Growth Rate Net new jobs Tourism & Entertainment [1] 62% 33,263 Information 51% 5,262 Administrative and Waste Services 41% 11,995 Agriculture, Forestry, Fishing, and Hunting 37% 41 Professional and Technical Services 33% 7,024 Construction 32% 9,533 Other Services, Ex. Public Administration 24% 7,140 Retail Trade 23% 17,053 Health Care and Social Assistance 21% 41,281 Educational Services Real Estate and Rental and Leasing 21% 20% 6,119 3,469 Transportation and Warehousing 13% 2,575 Finance and Insurance 12% 1,976 Management of Companies and Enterprises Manufacturing 9% 5% Average for private sector 26% 281 1,035 0% 12% 24% 36% 48% 60% 72% Thousands Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services). Figure does not show NAICS 99 (Unclassified), NAICS 22 (Utilities), NAICS 11 (Agriculture, Forestry, Fishing and Hunting), and NAICS 21 (Mining, Quarrying, and Oil and Gas Extraction). 17

27 Wages by Industry Mid term ( ) wage growth in Brooklyn is not as grim as short term wage growth. Brooklyn experienced two years of real wage growth in 2014 and 2015, including the biggest increase since As a result, mid term real wage growth averaged 0.9 percent. It is not an impressive number, but a welcome respite in an era of stagnant real wages nationwide. As shown on the following page, most industries, including low wage and high wage industries, experienced job growth between 2012 and Two particularly positive developments for Brooklyn are: Meanwhile, average wages in Hospitals increased at a strong 3.1 percent per year during this period. More than 50 percent of employment in Brooklyn is in industries with below average wages. However, as previously mentioned, Tourism & Entertainment experienced very strong growth and Retail Trade experienced relatively high wage growth. High wage industries with strong wage growth, such as Information, and Professional and Technical Services have experienced robust job growth and are part of Brooklyn s diversifying job market. Within the Information industry, wage growth was driven by the Publishing sub industry and Other Information Services, which saw real wages grow 8.3 percent and 7.2 percent per year, respectively. Tourism & Entertainment, which has the lowest average wages, experienced a very healthy growth in wages. Except for Accommodation, all Tourism and Entertainment sub industries experienced very strong real wage growth during this period. Real wage growth by sub industry is as follows: o Performing Arts & Spectator Sports 13.6% o Museums, Parks and Historical Sites 2.6% o Amusement, Gambling & Recreation 4.1% o Accommodation 0.3% o Food Services and Drinking Places 3.6% Retail trade, which also has relatively low wages experienced healthy real wage growth. Real wage growth was experienced across all retail sub industries, from Clothing and Accessories to Non Store Retail. Only one sub industry, Motor Vehicle and Parts Dealers, experienced a decline in real wage growth during this period. Despite these positive trends there are a few items to watch carefully: Average wages in Health Care and Social Assistance, Brooklyn s largest industry, have been declining even as the industry continues to create jobs and overall unemployment continues to fall. Declines have been driven by shrinking average wages in the Ambulatory Health Care Services sub industry (NAICS 621). Wages in other sub industries, such as, Nursing and Residential Care Facilities, and Social Assistance have barely kept up with inflation, due to the shifting nature of the Health Care industry as described on page

28 Brooklyn Wages and Real Wage Growth by Industry Sorted by average annual wage in 2016 Average Annual Wages in 2016 Avg. Annual Growth Finance and Insurance 88, % Management of Companies and Enterprises 80, % Information 74, % Professional and Technical Services 63, % Construction 60, % Wholesale Trade 50, % Real Estate and Rental and Leasing 44, % Educational Services 41, % Manufacturing 41, % Health Care and Social Assistance Transportation and Warehousing 39,536 38, % 1.1% Average for private sector 0.9% Administrative and Waste Services 31, % Retail Trade 31,115 Average for private sector $41, % Other Services, Ex. Public Admin 28, % Tourism & Entertainment [1] 27, ,000 40,000 60,000 80, , % 4.0% 2.0% 0.0% 2.0% 4.0% 6.0% Source: U.S. Bureau of Labor Statistics and LEG. [1] Excludes NAICS 99 (Unclassified), NAICS 22 (Utilities), NAICS 11 (Agriculture, Forestry, Fishing and Hunting), and NAICS 21 (Mining, Quarrying, and Oil and Gas Extraction). [2] Groups in NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 (Accommodation and Food Services). 23

29 Conclusions While Manhattan is still the economic center of New York City, Brooklyn has arrived as the most populous and fastest growing borough, continuing to outpace the rest of the city and state in job creation and growth. In the not so distant past, Brooklyn was known for back office and manufacturing jobs. Now, companies like JP Morgan Chase are moving hundreds of front line employees from Manhattan to Brooklyn. While finance and tech job growth may receive more headlines, retail and construction, two sectors that provide important entry ways into the workforce are experiencing momentous employment and wage growth. Policymakers should be aware of the importance of these sectors to the overall economy. However, wages have been relatively stagnant, thus, Brooklyn needs to focus on its high wage sectors, and address issues limiting wage growth if it is to continue building momentum. The previously provided industry statistics are useful for comparing industries along one specific dimension of performance. However, a more useful analysis is to evaluate individual industries across multiple dimensions to make inferences about overall, relative performance. Based on this analysis, Brooklyn industries are segmented into four categories: 6 Health Care & Social Services Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Strong Moderate Largest industry in Brooklyn with 193,200 Jobs. Accounts for a third of private sector jobs in Brooklyn. Average annual wages of $39,500 are on par with the average wage in Brooklyn ($41,500). However, local industry wages trail the city and state. Also, wages have declined by almost 1% per year between 2012 and Wage declines are concentrated in the Ambulatory Health Care and Services. Wages in other subindustries, such as, Nursing and Residential Care Facilities, and Social Assistance have barely kept up with inflation. GROWTH-DRIVING INDUSTRIES These are industries that represent a large portion of Brooklyn s employment share, are highly specialized or concentrated in Brooklyn (i.e. have a high location quotient), experienced strong mid term growth, and are projected to experience significant growth in the state of New York through Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) High Strong Despite a mild decline in specialization between 2009 and 2016, it remains a highly specialized industry in Brooklyn with a location quotient of 2.10 Largest job creator in Brooklyn in absolute numbers. It added almost 33,000 new jobs between 2012 and In percentage terms it grew at very respectable 4.8 percent per year, near the average for all industries in Brooklyn (5%). Most of the observed job growth is due to overall trends in the general economy and the industry. However, Brooklyn s Health Care and Social Assistance industry is outperforming nationwide trends. Forty percent of the observed growth is due to local competitive advantages. Opportunities for expansion (Projected citywide growth ) Moderate High It is expected to add the most jobs to the NYC economy; nearly 172,100 net new jobs through That is an annual growth of 2.16 percent per year. 24

30 Tourism & Entertainment Indicator Measure Description Construction Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Strong Third largest industry in Brooklyn with 53,900 Jobs. Accounts for almost a tenth (9.2 percent) of private sector jobs in Brooklyn. Very Low Moderate Very Strong Average annual wages of $28,000 are the lowest in Brooklyn among all industries. However, it experienced the second largest real wage increase in Brooklyn since 2012; growing approximately 5.2 percent per year. Specialization is relatively low with a location quotient of However, that is up from 0.53 in Also, strong growth projections, and Brooklyn s competitive advantages are likely to lead to higher specialization in this industry. Second largest job creator in Brooklyn in absolute numbers. It added almost 16,900 new jobs between 2012 and It is the fastest growing industry in Brooklyn in percentage terms, growing at 9.9 percent per year between 2012 and Most importantly, more than 70 percent of the observed job growth is due to local competitive advantages. Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Strong High Moderate Very Strong Surpassed the Educational Services industry to become Brooklyn s fourth largest industry with 29,900 Jobs. Accounts for more than 5 percent of private sector jobs in Brooklyn. It has relatively high average annual wages of $60,100 per year; the highest among blue collar industries and almost 45 percent above private sector average wages in Brooklyn. While real wage growth has been a respectable 1.5 percent per year, it still lags many other industries in Brooklyn (5th slowest growth rate) It has a location quotient of 0.92, which means that its share of employment largely mirrors the country as a whole. On a regional basis, however, the industry is likely to be highly specialized, as many NYC construction companies are located here and provide services to Manhattan and other boroughs. Added 6,600 net new jobs to the local economy. That is the fifth most among all industries in Brooklyn. In percentage terms it grew at a very impressive rate of 6.4 percent per year. Opportunities for expansion (Projected citywide growth ) Very Strong It is projected to be the second faster growing industry in absolute terms, adding nearly 100,000 net new jobs through It is projected to experience the second strongest annual growth rate in NYC with an annual growth of 2.21 percent through Opportunities for expansion (Projected citywide growth ) Very Strong Local competitive advantages account for 30 percent of total job growth, which is remarkable given how fast the industry has been growing nationwide (4.6 percent per year). It is projected to experience the fastest annual growth rate in NYC with an annual growth of 2.56 percent through 2024, adding approximately 37,200 net new jobs in NYC. 25

31 Retail Trade Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Opportunities for expansion (Projected citywide growth ) Strong Brooklyn s second largest industry with 74,800 jobs. Accounts for almost 13 percent of private sector jobs in Brooklyn. Low Moderate Strong Weak to Moderate Low Third lowest average wages in Brooklyn at $31,100, below the $41,500 average for all private sector industries. However, real wages have been increasing at a robust 2.2 percent per year. It has a location quotient of.97, which means that its share of employment largely mirrors the country as a whole. Added 10,000 net new jobs to the local economy. That is the third most among all industries in Brooklyn. Only Health Care and Tourism & Entertainment added more jobs. In percentage terms, although it has been growing at very respectable 3.7 percent per year, it still falls below the average of 5 percent per year for all industries. Local competitive advantages account for more than half (58%) of the net new jobs in this industry. Projected growth is a sluggish 1 percent per year; below average of 1.4 percent for all private sector industries, and less than half of projected growth for many other industries. Nonetheless, the industry is projected to add approximately 36,000 net new jobs in NYC through EMERGING INDUSTRIES As the category name implies, these are nascent industries, which thus far have a limited presence in Brooklyn. However, they exhibit strong mid term growth in Brooklyn, and longterm growth potential statewide. These industries present opportunities to diversify the Brooklyn economy going forward. Professional, Scientific and Technical Services Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Opportunities for expansion (Projected citywide growth ) Moderate Strong It accounts for 3.6 percent of jobs in Brooklyn with 21,400 average jobs in It recently surpassed Manufacturing to become the tenth largest industry in Brooklyn. Fourth highest average annual wages in Brooklyn at $63,000. Well above the average of $41,500 for all industries. Real wages have been increasing at an impressive 3.1 percent per year. Low It has a low Location Coefficient of 0.5. However, it is slowly increasing (up from 0.44 in 2009). Moderate Strong Grew at a very robust 5.4 percent per year. Added 4,100 net new jobs to the local economy. That is a significant number for a relatively small industry. Local competitive advantages account for half of net new jobs in Brooklyn. Strong It has a projected annual growth rate of 2.19 percent, compared to 1.4 percent for average for all industries in NYC. Projected to add approximately 91,900 net new jobs in NYC through

32 Administrative and Waste Services Indicator Measure Description Other Services, Excluding Public Administration Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Strong Moderate Low It accounts for 5 percent of jobs in Brooklyn with 29,400 jobs in It recently surpassed Other Services to become the sixth largest industry in Brooklyn. Fourth lowest average annual wages in Brooklyn at $31,500; nearly $10,000 below the average wage for all private sector industries. Wages have been increasing at a moderate 1.6 percent per year, which is above the 0.9 percent average for all industries. It has a low location quotient (0.67). However, that is up from 0.64 in Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Strong Low Technically, it is the 7 th largest industry in Brooklyn, accounting for 4.9 percent of job. However, with approximately 29,100 jobs, it s only 400 jobs below Educational Services, the fifth largest industry. Second lowest average annual wages in Brooklyn at $28,500; well below the average wage for all private sector industries ($41,500). However, wage growth has been strong. Wages have been increasing at a robust 2.1 percent per year in real terms. That is nearly twice times the average for all industries (0.9 percent). Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Strong Grew at a very impressive 7.7 percent per year. That s the third fastest growth rate in Brooklyn. Added 7,500 net new jobs to the local economy. Specialization (Location Quotient) High It has moderately strong quotient of 1.36; fourth highest among all industries in Brooklyn. It has become significantly more specialized in Brooklyn since 2009, when the LQ was Opportunities for expansion (Projected citywide growth ) Strong Local competitive advantages account for almost two thirds (65 percent) of new jobs. It has an annual growth rate of 1.76 percent, above the average for all industries in NYC (1.4 percent). Projected to add approximately 41,800 net new jobs in NYC through Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Moderate Strong Added 4,500 net new jobs to the local economy. Grew at a very robust 4.3 percent per year. While that is slightly short of the 5 percent average for all industries in Brooklyn, it is nevertheless remarkable because it occurred as the industry was shrinking at approximately 1 percent per year nationwide (i.e., most of the growth is due to local competitive advantages.) Opportunities for expansion (Projected citywide growth ) Strong It is projected to grow at a very steady annual rate of 1.64 percent; slightly above the average of 1.4 percent for all industries in Brooklyn. It is expected to create 36,300 net new jobs through

33 MODERATE GROWTH INDUSTRIES These are small to mid sized industries, which are growing at a steady (low to moderate) pace. These industries are moderately specialized in Brooklyn, with the exception of the Information industry, which has a low LQ, and low to moderate long term prospects statewide. Educational Services Indicator Measure Description Footprint (Jobs in 2016) Strong With 29,500 jobs, it is the 5 th largest industry in Brooklyn, accounting for 5 percent of jobs. Information Indicator Measure Description Footprint (Jobs in 2016) Low It is the second smallest industry in Brooklyn. It accounts for 1.7 percent of jobs in Brooklyn with 9,800 average jobs in Remuneration (Average annual wage in 2016 and real wage growth ) Moderate Average annual wages in Brooklyn at $41,800 are on par with the average for all industries of $41,500. Wages have been increasing at a robust 1.9 percent per year in real terms, more than twice the average for all industries of 0.9 percent. Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) High Third highest average annual wages in Brooklyn at $74,100; nearly twice the average wage for all private sector industries ($41,500). Also, wages have been increasing at a robust 2.9 percent per year in real terms. That is nearly three times the average for all industries (0.9 percent). Moderate Low It has a moderate location quotient (0.72) among all industries in Brooklyn, however that is up from 0.58 in Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) High Strong It has the highest quotient among all industries in Brooklyn (2.18). Grew at 3.2 percent per year. While that is a respectable rate, it falls short of the 5 percent average for all industries in Brooklyn. Added approximately 3,500 net new jobs to the local economy. Outperformed nationwide trends. Local competitive factors account for 55 percent of job growth over this period. Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Strong Grew at a very impressive 9.2 percent per year. That is the second fastest growth rate in Brooklyn. Added 2,900 net new jobs to the local economy. While that is a relatively low absolute number, it is remarkable given that it is comparable to jobs created by industries twice as large. Opportunities for expansion (Projected citywide growth ) Moderate It is expected to grow at annual average of 1.36 percent, on par with the citywide average of 1.4 percent for all industries. In absolute numbers, it is expected to create 61,000 net new jobs through 2024; that is the fourth most by any industry in NYC. Also, it is important to note that nearly 90 percent of job growth is due to local competitive advantages. Opportunities for expansion (Projected citywide growth ) Low It is projected to barely grow at an annual rate of 0.39 percent. It is expected to create 7,400 net new jobs through

34 Real Estate and Rental Leasing Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Low With 17,300 jobs, it is the 4 th smallest industry in Brooklyn, accounting for 2.9 percent of jobs. Moderate Average annual wages in Brooklyn at $44,300 are slightly above the average for all industries of $41,500. High Wages have been increasing at a robust 1.6 percent per year in real terms, above the average for all industries of 0.9 percent. It has very high quotient of 1.67; third highest among all industries in Brooklyn. INDUSTRIES UNDER PRESSURE This category includes industries with low to moderate specialization in Brooklyn, low to moderate mid term performance, and limited long term prospects statewide. The categorization of these industries under this rubric does not imply that these industries will not play an important role in the growth of the Brooklyn economy. It is merely an observation of aggregate level data, which indicate that these industries are facing challenges. Sometimes these challenges are industry wide, sometimes region specific, and sometimes both. Also, as previously stated, this analysis is conducted at the two digit level, which hides subtleties in the industries. There may be some subsectors within these industries that are thriving while others are struggling. A more detailed analysis is outside the scope of this report, but may be warranted in future research by the Chamber or other entities. Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Moderate Strong Grew at 3.6 percent per year. While that is a respectable rate, it is short of the 5 percent average for all industries in Brooklyn. Added approximately 2,300 net new jobs to the local economy. The local industry outperformed nationwide trends. Local competitive factors account for 37 percent of job growth over this period Opportunities for expansion (Projected citywide growth ) Moderate Low It is expected to grow at an anemic annual rate of approximately one percent per year, creating approximately 13,100 net new jobs through

35 Management of Companies and Enterprises Indicator Measure Description Manufacturing Indicator Measure Description Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Opportunities for expansion (Projected citywide growth ) Low High Brooklyn s smallest industry with 3,000 jobs. It accounts for less than one percent (0.51 percent) of employment in Brooklyn. Second highest average annual wages in Brooklyn at $81,000. Nearly twice the $41,500 average for all private sector industries. Average real wages shrunk 2.2 percent per year. However, the baseline is so high that wages remain very high compared to all other industries. Low It has the lowest Location Quotient (0.28) among all industries in Brooklyn. Weak Low On a percentage terms it grew at a respectable 3 percent, below the 5 percent average for all industries. However, it added 400 net new jobs to the local economy. That is the fewest jobs added by any industry in Brooklyn during this period. Local competitive advantages account for almost 30 percent of total job growth, which is modest, but still low compared with other industries in Brooklyn. With an annual growth rate of 1.67 percent, it s close to the average for all industries in NYC. However, a faster growth rate would be expected for such a small industry. Industry is projected to add approximately 12,500 net new jobs in NYC through Footprint (Jobs in 2016) Remuneration (Average annual wage in 2016 and real wage growth ) Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Low Moderate Low Weak Accounts for 3.5 percent of jobs in Brooklyn with 20,400 jobs. It is at risk of dropping from the top 10 largest industries in Brooklyn. It currently holds the 10 th spot. Average annual wages of $41,300 are only slightly below the average for all private sector industries in Brooklyn ($41,500). Real wage growth has been a highlight of this industry with real wages increasing at 2 percent per year, twice the average rate for all industries. It has the second lowest location quotient (0.34) among all industries in Brooklyn a decline from 0.42 in However, within NYC, Brooklyn is highly specialized with a LQ of nearly 2, which means that despite its struggles, Brooklyn is a regional hub for manufacturing. It barely grew at 0.6 percent. That is only one tenth of the 5 percent average for all industries. Between 20 and 2016, Manufacturing added 500 net new jobs to the local economy. That is the second fewest number of jobs added by any industry. Furthermore, this is one of only two sectors where the local sector has underperformed relative to nationwide and industry trends (i.e., local disadvantages slowed down the growth of the industry beyond what we would expect). Opportunities for expansion (Projected citywide growth ) Low It s the only industry in NYC projected to experience job losses in the long term, potentially losing an additional 4,100 jobs through 2024; shrinking at an annual rate of 0.54 percent per year. 30

36 Transportation and Warehousing Indicator Measure Description Finance and Insurance Indicator Measure Description Footprint (Jobs in 2016) Low Accounts for 3.4 percent of jobs in Brooklyn with 20,200 jobs. Footprint (Jobs in 2016) Low Accounts for 3.4 percent of jobs in Brooklyn with 16,300 jobs. Remuneration (Average annual wage in 2016 and real wage growth ) Low Average annual wages of $38,500 are below the average for all private sector industries in Brooklyn ($41,500). It is also one of only three industries in Brooklyn to experience negative real wage growth ( 1.1 percent per year in real terms) Remuneration (Average annual wage in 2016 and real wage growth ) High Highest wages in Brooklyn. The average wage of $88,100 is more than twice the average for all industries in Brooklyn ($41,500). It also experienced the highest real growth rate (5.9 percent) among all industries in Brooklyn. Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Moderate Weak It has moderate location quotient of 0.87; a self sufficient industry. However, that number is down from While its growth rate of 3.5 percent is respectable, it is well below the 5 percent average for all industries in Brooklyn. More importantly, there has been practically zero growth beyond what we would expect given nationwide and industry trends. Specialization (Location Quotient) Recent Performance (Job growth between 2012 and 2016; focus on growth due to competitive effect) Low Weak It has low location quotient of Moreover, that number is down from 0.67 in On a percentage terms it grew at a respectable 3.54 percent, below the 5 percent average for all industries. Added 2,000 net new jobs to the local economy. That is less than 2 percent of the new jobs in Brooklyn during this period. Opportunities for expansion (Projected citywide growth ) Low In absolute terms, it added 2,600 net new jobs to the local economy. While that is not an insignificant number, it is still well below other industries of similar size, such as Professional, Scientific, and Technical Services, which added 4,100 jobs during the same period. It s expected to grow at an anemic annual rate of approximately one percent per year. It is expected to add 12,600 jobs through Opportunities for expansion (Projected citywide growth ) Low It is expected to grow at an anemic annual rate of less than one percent (0.58 percent) per year. It is expected to add 19,500 jobs through While that is a significant number of jobs, it is still well below projected job growth for industries of comparable size. 31

37 IV. IMPACT OF SENIOR CITIZENS Senior Citizens Population Growing With 316,403 people aged 65 and over, Brooklyn has the largest number seniors of the five New York City boroughs. The senior population in Brooklyn accounts for over 12 percent of the total population. Since 2010, the senior population has grown 31,401, or 11 percent. BROOKLYN HAS THE LARGEST NUMBER OF SENIOR CITIZENS, AGED 65 AND OVER, IN NEW YORK CITY. THE NUMBER OF SENIOR CITIZENS HAS BEEN GROWING FASTER THAN THE OVERALL POPULATION. THIS IS A COUNTRYWIDE TREND. IN BROOKLYN THE POPULATION OF SENIORS, AGED 65 AND OVER, HAS GROWN AT OVER TWICE THE RATE OF THE TOTAL POPULATION FOR THE PAST THREE YEARS. 3.0% 2.5% Popula on 65+ Annual Growth Rate 2.0% 1.5% 1.0% 1.4% 1.8% 2.2% 2.3% 2.3% 0.5% 0.0% 0.6% Source: U.S. Census, American Community Survey Brooklyn Rest of NYC Rest of NYS Source: U.S. Census, American Community Survey Like the country as a whole, the senior population has been growing faster and the population is getting older. While the overall population of New York State has grown at a rate of approximately 0.3 percent per year since 2010, the population aged 65 and over has grown at about 2 percent per year. Since 2014, the senior population in Brooklyn, the rest of the City, and the rest of the State grew between 2.2 and 2.6 percent per year. Although the rate of growth has accelerated statewide, this increase has been the most dramatic in Brooklyn. The annual rate of grown has almost quadrupled since 2011 when the senior population grew by just 0.6 percent from the year before. Seniors Staying Active in the Labor Force Longer While their population has been growing in large numbers, seniors are retiring later and have stayed active in the labor force for longer. The share of jobs performed by seniors has also increased dramatically. This indicates that in recent years, seniors are finding Brooklyn to be a more desirable place to live. There has been a clear preference to grow old in their local communities instead of moving away to retirement destinations or institutional homes. This is otherwise known as aging in place. 7 32

38 WORKERS ARE RETIRING LATER IN BROOKLYN. BETWEEN 2010 AND 2016 THE PERCENTAGE OF SENIORS AGED 65 AND OVER THAT CONTINUED TO BE ACTIVE IN THE LABOR FORCE INCREASED FROM 11.2 PERCENT TO 14.9 PERCENT. WHILE THIS TREND WAS ALSO SEEN IN THE REST OF NEW YORK CITY AND THE STATE, THE INCREASE HAS BEEN PARTICULARLY PRONOUNCED IN BROOKLYN. THE NUMBER OF PRIVATE SECTOR JOBS IN BROOKLYN PERFORMED BY SENIORS INCREASED BY 126 PERCENT FROM 2001 TO Jobs in Brooklyn Performed by Seniors 33,213 Popula on 65+ in the Labor Force 24,080 27, % 18.0% 16.0% 14.0% 12.0% 16.1% 15.7% 16.5% 16.0% 11.2% 11.3% 16.7% 17.0% 11.8% 17.0% 17.4% 12.7% 17.2% 17.6% 13.6% 17.5% 18.0% 14.4% 18.1% 18.3% 14.9% 20,587 19,436 17,431 14,685 15,066 15, Source: U.S. Census, Quarterly Workforce Indicators (QWI) Data 10.0% Senior Citizens Financial Vulnerability Brooklyn Rest of NYC Rest of NYS Source: U.S. Census, American Community Survey The significant growth of the Senior Population has been reflected in the job market. Between 2001 and 2016, the number of private sector jobs in Brooklyn performed by seniors increased 126 percent, from 14,685 to 33,213. By comparison, overall job growth during that period was 49 percent. The share of private sector jobs in Brooklyn performed by seniors increased from 3.7 percent to 5.6 percent during this period. In 2016, the median household income of senior headed households in Brooklyn was $30,960, 44 percent lower than that of total households, at $55,150. Approximately 78.3 percent of senior headed households received social security income. The average annual social security income in Brooklyn was $16,634, representing a very significant share of total income for a large number of senior headed households. While finding housing that is affordable in New York City is a challenge for almost everyone, seniors are particularly burdened by housing costs. The chart on the following page shows the percentage of (owner and renter) occupied housing units for which the mortgage or gross rent exceeds 30 percent of household income. 33

39 SENIORS ARE PARTICULARLY BURDENED BY HOUSING COSTS IN BROOKLYN. OVER HALF OF ALL SENIOR HEADED HOUSEHOLDS (55.3 PERCENT) PAY OVER 30 PERCENT OF THEIR HOUSEHOLD INCOME ON RENT OR MORTGAGE. THIS IS HIGHER THAN THE REST OF THE CITY AND THE STATE. 47.8% Rent/Mortgage Burdened Households % 44.6% 49.6% 37.3% 40.2% OVERALL, BROOKLYN HAD HIGHER POVERTY RATES COMPARED TO THE REST OF NEW YORK CITY AND THE STATE IN % 11.1% Poverty Levels % 9.9% 14.0% 8.0% Brooklyn Rest of NYC Rest of NYS Brooklyn Rest of NYC Rest of NYS Head of HH Under 65 Source: U.S. Census, American Community Survey Head of HH 65 and Over Brooklyn had higher poverty rates at both the 100 percent and percent poverty levels compared to the rest of the City and the rest of the State. The senior population in Brooklyn experienced higher poverty levels than people under 65. Below 100% of the Poverty Level Source: U.S. Census, American Community Survey % of the Poverty Level OVERALL, BROOKLYN HAD HIGHER POVERTY RATES COMPARED TO THE REST OF NEW YORK CITY AND THE STATE IN % Poverty Levels of Seniors % 28.4% 29.9% 22.3% 19.8% Brooklyn Rest of NYC Rest of NYS Under and Over Source: U.S. Census, American Community Survey 34

40 Senior Citizens Economic Impact Despite having lower incomes and higher rates of poverty, seniors make significant contributions to the Brooklyn economy. In 2015, the last year for which detailed data is available, Brooklyn seniors had nearly 9 billion dollars in annual income. Those 9 billion dollars supported approximately 55,000 jobs in Brooklyn and generated more than 7 billion dollars in local output. This impact will be even larger going forward, as the number of seniors continues to grow. Impact of Senior Citizens in Brooklyn, 2015 Total Per Capita Income $8.9 billion Effect on Local Economy Jobs 54,260 Labor Income $2.3 billion Value Added $4.2 billion Output $7.2 billion SOURCE: U.S. CENSUS, AMERICAN COMMUNITY SURVEY, IMPLAN, INC., AND LAND ECON GROUP 35

41 V. HOME SHARING IN BROOKLYN Home Sharing Utilization Home Sharing is a growing component of tourism in Brooklyn and a valuable tool of economic empowerment for Brooklyn residents and local businesses. Across 22,000 unique Airbnb listings that hosted at least one trip, Brooklyn hosts were paid a total of $159 million in 2017, with the typical Brooklyn host earning $5,200. This represents just under 10 percent of Brooklyn s median household income ($55,150 as of the 2016 American Community Survey), a significant boost to middle class residents who face rising rents and stagnant incomes. According to Airbnb, nearly 80 percent of hosts in New York City report that home sharing helps them afford to stay in their homes. 8 HOME SHARING PROVIDED THOUSANDS OF BROOKLYN RESIDENTS WITH SUBSTANTIAL SUPPLEMENTARY INCOME IN Home Sharing s Economic Impact Home sharing not only puts millions of dollars into the pockets of resident hosts in Brooklyn, but it also brings the benefits of the tourism industry to local small businesses. In 2017, 647,000 Airbnb guests stayed in Brooklyn, with each guest spending an average of $202 per day. Approximately one third of that spending, a total of $43.5 million, occurs in the neighborhood where the guest stays, boosting the bottom line for community coffee shops, restaurants, and other local retail establishments. Furthermore, 44 percent of Airbnb visitors in New York City report they would not have stayed as long or would not traveled without Airbnb. HOME SHARING VISITORS ARE SPENDING $202 PER DAY IN NEW YORK CITY, 57 PERCENT OF WHICH IS SPENT IN THE NEIGHBORHOOD WHERE THEY STAY. Source: Airbnb Source: Airbnb 36