Andy Henderson landed his dream job as a Broadway photographer in late March, just months after he and his wife moved from Rockwall, Texas, a small city outside Dallas, to a tiny studio apartment in Harlem. Two days and one photo shoot later, it was over.
The coronavirus crisis had arrived in New York City, and Gov. Andrew Cuomo said that all nonessential businesses must close to combat the pandemic. The 24-year-old Henderson not only lost the Broadway job and another managing a photo studio, but his freelancing work also dried up. His wife, Kenzie, 23, lost her rehearsal-studio job.
“It all fell apart in a week. We lost all of our income. We’re not sure how we’re going to get the rent paid,” Henderson said. The couple rented a car and drove to family in Texas as they ride out the coronavirus. They’re hopeful they can return, but they’re not sure when and to what. “We finally got our dream, and we don’t want to let that go,” he said. “But we’re just not sure.”
In one month, New York City has become the epicenter of the novel coronavirus outbreak in the U.S. Responsible for nearly a 10th of overall U.S. economic output, the city of more than eight million is all but frozen, as the restaurants and shops that line its streets are shuttered. Cars and taxis are empty, and lights are out across Broadway. Even the New York Stock Exchange, a symbol of American financial might, has shut its trading floor.
What is happening in New York City’s five boroughs and suburbs is both informative for other metropolitan areas across the country bracing for the stealthily spreading virus and indicative of how the U.S. economy will fare through the widespread business shutdown and beyond.
It’s often underappreciated how concentrated the U.S. economy is in metropolitan areas, says Ryan Severino, chief economist at Jones Lang LaSalle. “You start adding New York City to L.A. and Chicago and other major cities, very quickly you get to a majority of the U.S. economy,” he says.
To that point, the American Enterprise Institute noted in December that the six biggest U.S. metro areas produced $5.1 trillion of economic output in 2018, or a quarter of total GDP, and together would have ranked as the third-largest economy in the world. Two dozen metro areas accounted for roughly half of America’s 2018 GDP.
While it is too soon to gauge the economic hit to New York City, its experience so far shows there are risks to letting the contagion spread for too long before taking aggressive action. In some places, such as California and Texas, stay-at-home orders came earlier in their outbreaks and have been stricter.
What New York does have going for it, Severino says, is that the outbreak struck relatively early. While the economic toll will be acute, the city may emerge from it sooner than other parts of the country. But that depends on how well the shutdown works and lasts, and so far there’s no end in sight.
Cities with similar characteristics, even if to a lesser extent, can heed lessons from New York as the virus continues to spread, Severino says. “Dealing with it painfully upfront might help in the long run.”
While New York has a history of resiliency amid adversity—the recovery from the Sept. 11 terrorist attacks and the devastation of Hurricane Sandy among recent examples—there are elements of city life that make the coronavirus hit more brutal, both from a health and an economic perspective. There’s a population density and reliance on public transit unlike those of other American cities, and the wealth gap is greater in Manhattan than in any other urban area: The top 1% make 113 times as much as the bottom 99%, according to the Economic Policy Institute.
And there are limits to how far resolve can go during an extraordinary crisis with an uncertain timeline. It remains to be seen how many businesses survive the crisis and how many displaced workers can be absorbed by other industries. “There are always opportunities,” Severino said, but given the costs associated with retraining and potentially moving for work, “the question is, Do people have the ability to make change?”
Luca Di Pietro, the owner of five small neighborhood restaurants across New York City, let go of 95 employees—nearly all of his staff—when restaurants were ordered on March 16 to close regular service. He and his wife began raising donations for meals they are preparing and delivering to hospital workers. They’ve rehired 30 people and now serve 1,000 meals a day.
“This was out of necessity. We were bleeding, and it has kept the lights on and is a chance to survive,” Di Pietro said of his work-around. “But I wouldn’t be surprised if this goes on for months.” Already, he’s dealing with a shuttered bread vendor and with vegetable deliveries that have shrunk to twice a week. And with rents for his restaurants ranging from $13,000 to $35,000 a month, he said, “we don’t know what the world will look like after this.”
Job growth in New York City outpaced the nation’s in every year since the end of the last financial crisis through 2018, according to the most recent data from the state comptroller. Behind the boom: leisure and hospitality, the fastest-growing sector that accounted for about a fifth of all jobs added during that stretch. Those jobs, usually low-paying, were hit hardest and fastest by the coronavirus ambush, but the pain is quickly spreading.
More than 10 million Americans have been laid off in recent weeks, and doesn’t include the many who still can’t file for benefits because of overwhelmed state offices. Henderson, the photographer, said it took him 96 calls to reach a person able to help after days of New York’s website crashing. It took a month for Gabi Donchez, a 28-year-old Brooklyn resident, to get an unemployment check after she lost her marketing job due to event cancellations that began in February.
Economists predict at least 20 million in coronavirus-related layoffs by the end of April, a figure that has no historical reference and will no doubt leave many Americans out of work well after the virus dissipates.
The federal government is trying to help, passing late last month a $2 trillion relief package of aid for business and workers, but the rollout has been chaotic. Some small-business owners say it’s been difficult to learn details of the Cares Act’s provisions, which include nearly $350 billion in two-year loans for businesses with fewer than 500 workers, and gain access to the funds.
Di Pietro, the restaurateur, says he’s been unable to get tax accountants or other professionals to advise on the Small Business Administration’s coronavirus-relief program. In the meantime, he adds, “I’d rather do the work than wait for government money that may or may not come.”