Post-War Decline and New York City’s Recovery

Despite the prosperity brought to New York [1] by World War II, the state reached its economic peak relative to the rest of the country around 1940. Thereafter, certain trends already in effect began to undermine both New York and the entire Northeast. These trends would not become visible for many years, but they were there, slowly eating away.

In 1880, 16 percent of all U.S. production workers lived in the New York Metropolitan Region. By 1900, that figure had fallen to 14 percent, and by 1990, it had fallen to four percent. Between 1956 and 1985, the New York City [2] region lost over 600,000 industrial jobs, while upstate lost hundreds of thousands more.

Some companies left the region due to demographic shifts toward the South and West, others due to technological changes that allowed them to decentralize. Still others fled from the rising cost of doing business in New York.

In 1959 Nelson A. Rockefeller was elected governor of New York. An ambitious man with grand visions, Rockefeller greatly expanded the state university system and built Albany [3]’s impressive, futuristic Empire State Plaza [4]. By the time Rockefeller left office in 1973, however, the state budget had grown 400 percent from its 1959 level and the state debt had increased 14 times over.

During this same period, New York’s once-thriving port also declined. The advent of container ships—which require large dockside cranes for loading—spelled its death. New York’s old shipyards simply did not have the space needed to maneuver the cranes.

With these economic shifts came considerable social unrest. Urban race riots and antiwar demonstrations rocked the state. In 1969 the Woodstock Music and Arts Festival drew young people from all over the country to a dairy farm in the Catskills [5]. In 1971 a deadly uprising at Attica prison left 43 inmates and guards dead. Between 1950 and 1970, over one million families left New York City in the “Great White Flight.”

On the up side, New York City [2]’s cultural scene was thriving. The Guggenheim Museum [6] opened in 1959, followed by Lincoln Center [7] in the mid-1960s. Broadway [8] was producing one great hit after another, including My Fair Lady and West Side Story. “Culture had become a commodity,” wrote historian Harold Syrett, “and New Yorkers were its largest producers. Most other Americans had to be content with being consumers.”

Things finally came to a head in New York City in 1975. Cultural attractions aside, the city was all but bankrupt. Banks shut off credit, and the city, in desperation, turned to the federal government for help. The famous Daily News headline “Ford to City: Drop Dead” caustically summed up Washington’s stony response.

The city was temporarily rescued by the Municipal Assistance Corporation, put together by financier Felix Rohatyn and Gov. Hugh Carey to issue city bonds and thereby borrow money. Washington was impressed enough by this effort to finally extend the city a short-term loan of $2.5 billion.

The city’s recovery was further aided in 1978 by the election of Mayor Ed Koch. A one-time liberal from the Bronx [9] via Greenwich Village [10], Koch helped set the city back on track through budget cuts and austerity programs. Brash, shrewd, and outspoken, Koch managed to play the city’s various interest groups off one another to the general public’s advantage, winning the respect of many New Yorkers in the process. Much of the 1980s construction boom, which included Trump Tower and the World Financial Center, was attributed to his efforts. Unfortunately, so was the city’s steadily increasing homeless population.

Upstate, however, the economic picture remained gloomy. More jobs were lost throughout the 1970s and again in the early 1990s as companies moved from the Northeast to the South and West. Many New Yorkers blamed these industrial losses on the state’s steep tax rate—among the highest in the nation—but the truth was, and is, that no amount of tax cuts can make New York [1] the state it once was. The emergence of the Pacific Rim, the shift in the nation’s demographics, and the rise of a global economy have irrevocably altered New York’s economic position.