Industrial Restructuring in the New York Metropolitan Area

ndustrial restructuring is the ongoing process of reallocating workers among jobs in the economy as industries expand and contract. The New York metropolitan area economy underwent a significant amount of restructuring during the first half of the 1990s as a variety of factors—including new products, increased competition from other areas, and deregulation and fiscal problems—caused area firms and entire segments of industries to make permanent adjustments to employment levels. Downsizings, the sharp reductions in staffing by firms, were a prominent feature of the process. The area’s steep 1989-92 downturn prompted many of these downsizings, but their persistence well into the recovery period contributed to a weakening job picture for several major sectors in the first half of the 1990s, particularly for manufacturing, finance, insurance, communications, chemicals, and the public sector. Industrial restructuring is not new to the metropolitan area; jobs in manufacturing have been giving way to employment in the service sector since the late 1960s, and back-office functions have been on the move to other regions for more than a decade. In addition, bouts of restructuring naturally accompany periods of economic instability. The fact that employment downsizings have, however, continued well past the start of the area’s economic recovery in 1992 raises questions about the fundamental soundness of the metropolitan economy. Moreover, the downsizings have been more pervasive in the 1990s than in the past, affecting a wide range of metropolitan area industries and increasing the risk of job loss for a significant fraction of the area’s work force. This paper analyzes the industrial restructuring process in the New York metropolitan area in the first half of the 1990s.1 It shows that the restructuring was accompanied by a decline in the labor force, particularly in New York, where the decline persisted through the first half of the 1990s. The analysis also shows that a significant part of I