Dec. 20, 2005 -- The New York City Office of the Comptroller estimates that on any given day in December, the city generates $1.5 billion in economic activity. For 2005, it's estimated that New York will trigger about $450 billion in economic activity, about 2 percent to 3 percent of the nation's gross domestic product.
The strike that 33,000 members of Transport Workers Union Local 100 began today is estimated to cost $1.6 billion the first week, with costs highest on the first day. The office does not break down lost revenue for different sectors, such as retail, food and financial services.
Most of the economic loss comes from canceled activities, which results in losses from ticket and food sales, canceled conferences and shorter workdays, according to the Comptroller's Office. Another big loss builder is productivity declines, as people take more time to get to work, leave work earlier to get home or take vacation.
According to the office's figures, today's net cost is $400 million. The most serious damage occurs on the strike's first day because many people will just take the day off and hope it is no more than a one-day strike.
The next three days are projected to carry a net average cost of $300 million per day. The office expects that many people will figure out how to get to work, and that businesses will implement telecommuting options and make other adjustments. But given the proximity to the holidays, many people will decide to take off and many will not travel into the city for holiday purposes.
Should the strike continue, its net cost is expected to be $100 million for the weekend. Economic activity declines on the weekend, and because this weekend includes both Hanukkah and Christmas, it will be much slower anyway. By next week, the net effects will be considerably less. Many people will already be off Monday and on vacation the rest of the week. The Comptroller's Office expects a net cost of $200 million for Monday.
Who Will Suffer?
Retailers in particular will be hit hard, especially those who base a lot of their yearly sales on holiday spending, such as caterers whose events might be canceled, the office said.
A lot of spending will shift to other areas in the suburbs of New York and New Jersey. As one economist put it, people who were planning on shopping in SoHo will shop at the Short Hills Mall in New Jersey instead. "Best way to think about it," said economist Diane Swonk, "it's squeezing New York at a critical time and will push spending out to the surrounding areas."
Some groups are expected to profit from the strike as sales of bikes, scooters and in-line skates soar. Metro Bicycles on the Upper West Side sold 15 bikes in a half-hour today. The shop reported that it usually sold kids' bikes this time of year but is now selling more adult bikes.
Telecommunications and conferencing firms might benefit as employers seek ways to allow workers to stay home. And transportation providers like cabs, vans and parking lots should see a business boom.
The Comptroller's Office noted the three things that make this strike different from the one 25 years ago. First, more women are in the labor force, and that affects how families can deal with the strike, and there's a two-hour delay for schools to start. Second, the economy is different, with more office jobs and fewer manufacturing jobs than in 1980. Finally, people can telecommute.