! ! ! ! ! ! ! Final!Draft!Report! ECONOMIC ASSESSMENT OF THE ECONOMY – BASELINE STUDY

! ! ! ! ! ! Prepared!for!

! ! Submitted!by!

! August!7,!2015 Welcome to the Brooklyn Chamber of Commerce’s first-ever borough-wide economic analysis. The Brooklyn Chamber commissioned the following report in an effort to not only detail the positive trends in the borough, but to identify areas in need of improvements and the opportunities for growth in our undeveloped and underutilized communities. Brooklyn’s resurgence has caused explosive economic growth, and established the borough as a transcendent brand recognized the world over – but untapped potential is still teeming under the surface. The borough’s economy has undeniably soared to new heights in recent years:

• With 560,000 jobs, it is the second largest employment hub in State behind only Manhattan.

• Employment in Brooklyn grew by approximately 28 percent between 2000 and 2014 – outperforming both the City and State – led by the healthcare, education, retail trade, tourism, and entertainment industries.

• The unemployment rate has experienced 30 months of year-on-year declines, since September 2012.

• Brooklyn-made products are in high demand in countless foreign markets. Despite the flurry of positive activity and successes the borough has experienced, there are still many neighborhoods with tremendous possibility that are being tragically ignored. Brooklyn has become widely identified by the culturally significant neighborhoods of Williamsburg, Dumbo and , but the DNA of the borough is made up of much, much more. Sadly, there are still communities – Brownsville, Cypress Hills, Flatlands and East New York, to name a few – with concentrated poverty and high unemployment rates, mostly due to low educational attainment, and the overall poverty rate is higher than both the State and City. The cost of living in Brooklyn has also skyrocketed, while wages have remained stagnant for the past six years, and the borough has high-income inequality when compared to the rest of . While our successes have been substantial, we cannot allow these glaring disparities to continue. Given the tremendous job growth 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 also must make significant investments in education and workforce training and focus on crafting policies and programs that assist Brooklyn’s primary employers – our small businesses. Brooklyn must be measured by the collective condition of all its communities, and not by the improvements in a select, few areas. Only then can we truly be unified as one borough. This report is a first step. The Chamber invites Brooklyn’s residents, businesses and organizations to use this is a tool to provide us with ideas and suggestions on how to further improve our great borough.

Very truly yours,

Denise Arbesu Carlo A. Scissura, Esq. Chair, Board of Directors President & CEO Table of Contents

I.#EXECUTIVE#SUMMARY# 1# IV.#BROOKLYN’S#LARGEST#INDUSTRIES# 61! Brooklyn’s!Economic!Performance! 1! Health!Care!Industry! 61! What!is!Driving!Job!Growth?! 4! Ambulatory!Health!Care!Services! 62! Brooklyn’s!Largest!Industries! 6! Social!Assistance! 62! Innovation! 8! Retail!Industry! 63! Workforce!Analysis! 8! Retail!Leakage/Surplus!Analysis! 64! # Tourism!&!Entertainment! 65! II.#BROOKLYN’S#ECONOMIC#PERFORMANCE# 10! Food!Services!and!Drinking!Places!(Restaurants!and!Bars)! 66! Population! 11! Performing!Arts!and!Spectator!Sports! 67! Jobs! 13! Accommodations! 68! Wages! 16! Innovation!and!Technology!Sector! 71! Private!Sector!Performance! 18! # Personal!Income! 20! V.#INNOVATION# 72! Unemployment! 23! Innovation!Indicators! 72! Labor!Market!Integration!with!Larger!Region! 25! Patents!Granted! 72! Poverty! 25! Terminal!Degrees! 73! Inequality! 27! Science!Workers! 73! Residential!Real!Estate! 28! Number!of!Entrepreneurs! 74! Commercial!Real!Estate! 30! Small!Businesses! 74! Retail!Real!Estate!Market! 33! Young!Businesses! 75! # Innovation!Profiles! 76! III.#ANALYSIS#OF#BROOKLYN’S#INDUSTRIES# 36! # Industry!Mix!and!Specialization! 37! VI.#WORKFORCE#OVERVIEW# 80! Industry!Job!Growth!and!Its!Components! 39! Worforce!Quality!Indicators! 80! Job!Growth!Projections! 46! Size!and!Growth!of!Labor!Force! 80! Wages!by!Industry! 48! Demographic!Trends!–!Prime!Age!Workforce! 80! Putting!It!All!Together! 51! Educational!Attainment! 81! # High!School!Graduation!and!Dropout!Rates! 82! # Highcskilled!Immigration! 83! I. EXECUTIVE SUMMARY !

During the last decade, Brooklyn has steadily evolved into an internationally stagnant wage growth, which need to be addressed in order for Brooklyn to recognized global brand as a destination for the creative class and a base continue to experience sustained long-term economic growth. for the innovative economy. This cultural emergence has been widely 1 The following paragraphs present a brief summary of the indicators. More discussed and covered in national and global media. detailed analysis, accompanied by graphs and more complete data, is Brooklyn’s emergence as a global brand and cultural icon has been presented in Chapter II. accompanied by equally impressive economic growth. The Brooklyn Chamber of Commerce (BCC) has been examining some of these economic Population: Brooklyn is the place to be trends in its quarterly Labor Market Review and The New York State Comptroller recently produced an economic snapshot of the Brooklyn As of 2014, Brooklyn had 2.62 million residents, making it New York State’s Economy, which discusses Brooklyn’s thriving economic environment. Other largest county and fourth largest city in the U.S. after Chicago. It is often said groups, such as the Brooklyn Tech Triangle Task Force have evaluated the that people vote with their feet and people are voting for Brooklyn. Between economic impact of specific sectors of the economy. 2006 and 2014 Brooklyn gained more than 186,000 net new residents. Brooklyn’s population growth has outpaced the rest of the city, state, and At the request of the Brooklyn Chamber of Commerce (BCC), the Land Econ country by a significant margin. For example, Brooklyn’s population growth Group and Washington Square Partners (the project team), conducted this rate between 2006 and 2014 was more than twice the rate of growth of the study to further the understanding of recent trends and dynamics of the local state. economy - its strengths and weaknesses - and provide a basis for identifying the borough’s opportunities and challenges for future growth. To achieve Brooklyn’s population growth is primarily driven by a combination of natural this, the project team interviewed local businesses and conducted a detailed population growth and an influx of foreign migrants. Between 2011 and analysis of long-term economic trends based on economic data covering the 2014, for example, net foreign migration to Brooklyn increased by 74 period from 2000 to 2014. percent. The goal of the study is to enable anyone interested in the local economy to understand its potential. The project team and the BCC will conduct future Jobs: Brooklyn is an important employment center undergoing studies to examine some of the key trends identified in this analysis in more impressive expansion detail. This analysis proceeds by uncovering the Brooklyn economy one During 2014, Brooklyn averaged nearly 568,000 jobs, making it the second layer at a time. largest employment center in the state after Manhattan. To put the number of jobs in perspective, Brooklyn has more jobs than eight individual U.S. Brooklyn’s Economic Performance States (WY, VT, AK, SD, DE, ND, MT, and RI), and comparable to some large central cities in the U.S., such as Austin, Boston, Philadelphia, San Francisco, and Seattle. Chapter II of this report provides an overview of Brooklyn’s economic performance through an examination of aggregate economic indicators, such While the size of the job market is impressive, the real strength of the as job creation, wages, income, unemployment, poverty, and real estate Brooklyn job market are its resiliency and impressive growth. Since 2000, trends. These indicators provide compelling evidence of Brooklyn’s Brooklyn has consistently outperformed the city and state in job growth, and economic strength, its remarkable economic performance, and expanding managed to avoid significant job losses during recessionary periods. market potential. However, some indicators reveal poverty, inequality, and Brooklyn’s growth was particularly impressive after the Great Recession of

! 1# 2009. More importantly, the economy has strong momentum. In 2014, retail leakage analysis, highlight Brooklyn’s remarkable performance, its Brooklyn experienced the fastest increase in jobs (5.8 percent) in more than market potential, and ability to support additional economic activity. a decade, significantly outpacing the city and state averages (3.3 and 1.9 percent, respectively). Unemployment: Positive trends, but still work to do

Relative2Job2Growth The unemployment rate has improved significantly since peaking at 11.1 percent in January of 2010. In fact, Brooklyn experienced 28 months of year- 128% on-year declines in unemployment dating back to September 2012. During 2014, the unemployment rate in Brooklyn averaged 7.7 percent. 2000

108% Despite steady declines, Brooklyn’s unemployment rate remains slightly 110% above city and state averages. Among the city’s Boroughs, only the Bronx 104% 100% has a higher unemployment rate. This appears to be a long-term trend.

Indexed2to2year2 98% Brooklyn’s chronically high unemployment relative to the city and state is partly due to demographics. Brooklyn has relatively high shares of

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 demographic groups that have historically experienced high unemployment Brooklyn New2York2City New2York2State rates, such as those with low educational attainment. Nearly half (47.2

percent) of Brooklyn adults 25 and older have an educational attainment of high school degree or less. By comparison, these groups accounted for 43.9 Personal Income: A huge and growing market and 41.2 percent of the city and state’s population, respectively. Brooklyn’s total personal income highlights its economic power and potential. However, as highlighted in Chapter VI, Brooklyn is undergoing a In 2013 Brooklyn residents earned nearly $110 billion in personal income; transformation of its workforce, which may help to reduce the chronic gap in approximately 23 percent of the city’s and 10 percent of New York State’s the unemployment rate. For example, between the graduating classes of total personal income. Brooklyn (Kings County) is the 11th largest county in 2010 to 2014, Brooklyn’s high school graduation rates increased by five the U.S. in terms of total personal income; ahead of places such as Boston, percent, college readiness increased by four percent, and dropout rates fell Miami, Philadelphia, and San Francisco. by three percent. Additionally, from 2000 to 2012, the cohort of Brooklyn On a per capita level, Brooklyn’s personal income ($42,306) trails the city residents aged 25 to 34 increased the most of any borough, and 43.8 ($57,290) and state ($54,462), but is comparable to the U.S. as a whole percent of this cohort had at least a college degree. Assuming that these ($44,765). Growth trends in per capita income, however, show that Brooklyn continue and that job opportunities continue to be available, further is quickly closing the gap with the rest of the city and the state. Between improvements in educational attainment could help to reduce Brooklyn’s gap 2000 and 2013, real per capita incomes in Brooklyn increased 20 percent - in unemployment with the rest of the city. faster than any other Borough in the city and nearly twice the rate of increase of the state as a whole. While growth in real per capita income has Housing Production: Booming but not keeping up with demand slowed since 2009, Brooklyn continued to grow at a healthy pace (1.2 percent per year), on par with the state, and faster than all Boroughs in NYC Brooklyn’s tremendous population and job growth has translated into except Manhattan. increased demand for services and products, including housing. The market responded accordingly and Brooklyn has led the city in housing production Since personal income is a proxy for consumer demand (i.e., spending over the past 14 years. Between 2000 and 2014, Brooklyn accounted for 30 capacity), these trends coupled with other indicators, such as growth in the percent of all housing units produced in New York City. number of business establishments per capita, as well as the findings of the

! 2# Housing production in Brooklyn peaked between 2005 and 2008, at the apex Retail Real Estate Market: Growing presence of regional and national of the housing market frenzy, when nearly 42,000 residential building permits retailers were issued in Brooklyn. Housing production plummeted following the Retail in Brooklyn is expanding as evidenced by the increase in the number collapse of the U.S. housing market, with less than 8,000 residential building of retail corridors and the rents on those strips. Throughout the borough, the permits issued between 2009 and 2012. Data for the two most recent years rapidly expanding retail scene reflects the trends in population growth, indicate a resurgence in housing production. In 2013, Brooklyn experienced employment growth, a large student population, and an increase foot traffic its largest one-year increase in the number of residential building permits as a secondary effect of the growth in the hospitality industry. issued in 14 years. In 2014, approximately 7,500 building permits were issued in Brooklyn, surpassing 2004 levels, but still significantly below the These trends have also attracted an increasing number of national and peak of 12,700 issued in 2008. international retailers who want to tap the Brooklyn market. Nordstrom, Sephora, Banana Republic and Uniqlo are just a few of the retailers that This resurgence is good news for Brooklyn, since housing production has an have set up shop in recent years. effect on related local industries, such as banking, the mortgage sector, raw materials, construction, manufacturing and real estate. More importantly, In spite of this growth, Brooklyn is still significantly under-retailed when increased housing production ameliorates the seemingly insatiable demand compared to other major retail markets in the country and region and there is for housing. However, surging home prices and rents in Brooklyn are opportunity for continued growth. evidence that housing production has not kept up with the demand. Brooklyn’s home prices and rents are the fastest rising in the City. Median Wages: Stagnant and trailing the rest of city and state home prices increased 44 percent between 2004 and 2014, compared to less than 30 percent for Manhattan. Median rental prices increased 26 In 2014, average annual wages in Brooklyn were approximately $41,083, percent between March 2012 and March 2015 compared to a 13 percent significantly lower than the city and state. A certain level of wage differential increase in Manhattan. relative to Manhattan is expected due to Wall Street wages and general agglomeration economies, which drive up wages across all industries in Manhattan. However, even when Manhattan wages are excluded, the gap Commercial Real Estate Market: Increased demand and price between Brooklyn and the rest of the city and state remains significant. As working in Brooklyn becomes increasingly attractive, available office Brooklyn’s average wages are 13 and 18 percent lower than the rest of city space is increasingly limited and office vacancy rates for and state, respectively. The wage gap between Brooklyn, other Boroughs, have stayed in the single digits. At the same time, rents are increasing due and the State could be due to the relatively high unemployment rate in both to a more competitive market and the introduction of high-rent Brooklyn or, more troubling, differences in labor quality. This topic needs rehabilitated space. further research.

For the first time since the 1980s, new office space is being developed and it Additionally, wages have been relatively stagnant across all industries, is not limited to Downtown Brooklyn. Sunset Park, DUMBO, Vinegar Hill and particularly since 2009. This trend is notably troubling and puzzling in the Williamsburg are attracting their own share of office workers, some of whom face of significant job growth and declines in unemployment. However, this is are setting up shop in former industrial areas. a nationwide trend and is not unique to Brooklyn. Sustained job growth and improvements in labor force trends, should help reduce the wage gap. Brooklyn already experienced a 1.5 percent increase

in real wages in 2014 – the highest increase in 15 years. This provides some hope that wages may finally start a long-overdue recovery. This indicator should be closely watched going forward.

! 3# Poverty: Despite significant improvements, it remains a challenge Brooklyn added approximately 91,000 net new jobs between 2009 and 2014. This was primarily due to job growth in three industries – Health Care and Poverty can have a profound negative effect, not only on the individuals Social Assistance, Retail Trade, and Tourism and Entertainment – which directly affected by it, but also on the economic prosperity of a community as accounted for more than 60,000 net new jobs, approximately two-thirds of a whole. the total growth. It is not surprising that employment growth has been highly Long-term poverty trends in Brooklyn are positive. Between 2000 and 2013, concentrated in these industries. Employment in these industries is highly Brooklyn experienced the largest decline (in percentage points) in poverty correlated with personal consumption expenditures. Therefore, as Brooklyn’s among New York City boroughs; from 25.1 to 23.3 percent. Between 2012 population and income levels increased, these industries experienced and 2013, poverty in Brooklyn decreased from 24.3 to 23.3 percent, the substantial job growth. largest decline among New York City Boroughs, and in stark contrast with However, while employment growth has been concentrated in the three the rest of the state where poverty increased. largest industries, most industries in Brooklyn also experienced growth. In Despite these positive long- and short-term trends, poverty in Brooklyn fact, only one industry (Finance & Insurance) experienced mild job losses, remains high relative to the rest of the city and state. In 2013, approximately and job growth was flat in only three industries (Government, Manufacturing, 23.3 percent of the population in Brooklyn lived below the poverty level; and Transportation and Warehousing). The industries that experienced compared to 20.9 percent in the city and 16 percent in the state. Poverty in moderate to substantial job growth, besides the three largest industries, Brooklyn is particularly acute for certain demographic groups, such as include: PSTS (Professional, Scientific, and Technical Services), Blacks, Latinos, and adults with high school or lower educational attainment, Administrative and Support and Waste Management and Remediation and is geographically concentrated in certain neighborhoods: Borough Park, Services, Educational Services, Construction, Real Estate and Leasing, Brownsville/Ocean Hill, and East New York/Starrett City. Information, and Management of Companies and Enterprises. These industries combined gained more than 26,000 net new jobs between 2009 Inequality: Work to do and 2014. Inequality indices, such as the Gini Coefficient and the ratio of household Brooklyn’s robust job growth in industries besides Health Care and Retail income at the 80th percentile to income at the 20th percentile, indicate that Trade is notable for two reasons: Brooklyn has high-income inequality compared to the rest of the city (with 1) Industries, such as Tourism & Entertainment, PSTS, Admin. the exception of Manhattan, which has very high indices of inequality), the Support and Waste Management, and Management of Companies state and the country as a whole. and Enterprises are industries in which Brooklyn has relatively low specialization (as measured by the Location Quotient). Therefore, What is Driving Job Growth? above average growth in these industries is an indication that Brooklyn’s economy is diversifying; and,

The third chapter provides a bird’s eye view of the employment landscape by 2) Job growth in many of these industries is not as dependent on surveying the various components of Brooklyn’s industry growth. personal consumption expenditures. This indicates that, while strong consumer demand is one of the primary local competitive Job growth is highly concentrated in the largest industries, but most advantages driving growth, it is not the only unique competitive industries are growing, which indicates further diversification of the advantage. A growing skilled workforce may be a stronger factor local economy influencing the growth of these industries.

! 4# Job growth is driven by Local Competitive Advantages creating cutting edge technology, students are getting firsthand experience at the computers and lab benches critical to innovation. The shift share analysis presented in Chapter III shows that job growth in Brooklyn was largely due to local competitive factors as opposed to 5) Accessibility. Brooklyn’s excellent transit and transportation network improving economic conditions nationwide. The shift share analysis is one of the Borough’s primary competitive advantages providing decomposes job growth into Expected Effect (job growth due to overall strong linkages to the international, national, and regional economy. growth in the national economy and industry-specific performance) and Many of Brooklyn’s major employers – both historical and newly Local Competitive Effect (job growth due to competitive advantages unique arrived – chose their locations because of the transportation to Brooklyn). This analysis shows that the Local Competitive Effect accounts system. In the near and short-term development and employment for more than half of jobs created in nine of the twelve industries that growth is likely to continue to concentrate in areas with superb exhibited significant growth in Brooklyn between 2009 and 2014. transit access, such as Downtown Brooklyn and Atlantic Yards. However, potential challenges may arise as those areas are built What are some of Brooklyn’s competitive advantages? out and growth expands into areas of Brooklyn not already served by considerable public transit infrastructure. Strong leadership and 1) Strong demand conditions. As previously stated, strong population good planning is needed in order to ensure that accessibility and income growth translates into disposable income, which drives continues to be one of Brooklyn’s competitive advantages going demand for products and services. Brooklyn’s strong population forward. and income growth will continue to support industries, such as Health Care and Social Services, Retail Trade, Tourism and 6) High quality living environment. This competitive advantage is Entertainment, and Other Services, which are highly dependent on highly correlated with strong demand and workforce quality. A high personal consumption expenditures for job growth. quality living environment draws people, including highly skilled workers, who in turn increase consumption expenditures. An in- 2) Quantity and quality of the labor force. Brooklyn’s workforce is depth analysis of the living environment factors that make Brooklyn young with a growing proportion of prime-age population, between attractive is beyond the scope of the analysis in this report, the ages of 25 and 54, which demonstrate the highest labor however, the fact that some of Brooklyn’s neighborhoods are participation rates and the greatest resilience to employment consistently rated as some of the most attractive in New York City cycles. The workforce is well educated and in recent years, provides evidence of Brooklyn’s high quality living environment. Brooklyn has become very attractive to highly educated migrants from abroad with advanced degrees. Positive job growth outlook due to a) industry mix and b) local 3) Educational and Research Infrastructure. Brooklyn is home to 20 competitive advantages higher education institutions, many of which are cluster around Brooklyn’s industry mix gives the Borough’s economy a positive outlook for Downtown. These institutions enroll more than 120,000 students. long-term job growth. Brooklyn has a high concentration of jobs in several There is also a solid educational infrastructure below university industries that are expected to experience robust growth in the state. In level, with programs, such as P-Tech and K-12 STEM, which seek particular, Brooklyn’s leading sectors – Health Care and Social Assistance to improve the skills and better prepare the workforce of tomorrow. and Tourism and Entertainment – are well positioned to experience robust 4) Furthermore, Brooklyn is home to two stand-out incubators growth statewide. In addition, further growth in consumer demand will attracting world-wide attention for their university roots. Downstate’s support other strong industries, such as Retail Trade, and Other Services. Biotechnology Incubator and NYU-Polytechnic’s Urban Future Lab. Moreover, further strengthening of Brooklyn’s workforce and expansion of Their university connections mean that as resident firms are commercial space will support further growth of numerous emerging

! 5# industries in Brooklyn. In general, sustained growth in key industries, Management and Recording coupled with Brooklyn’s competitive advantages indicate that the Borough is Remediation well positioned to continue experiencing robust growth in the short- and Services near-term. To ensure long-term, sustained economic growth some of the challenges highlighted in Chapter II will need to be addressed. Moderate Growth Industries Industry Categorization Small and medium size industries, which have grown at a moderate The analysis in Chapter III permits us to segment industries into four pace and are expected to continue growth at a moderate pace.! categories based on their characteristics along multiple dimensions, o Wholesale o Information including employment size, wages, specialization, mid-term growth Trade (Except Motion performance, and opportunities for expansion. Based on these factors, Picture and Sound industries are segmented as follows: o Real Estate Recording) and Leasing

Growth-Driving Industries

Large industries, which are responsible for most of the growth recently Industries Under Pressure experienced in Brooklyn. These industries are also expected to continue growing at a robust pace. Small and medium sized industries with declining or stagnant job growth and not so positive outlook.! o Health Care & o Tourism & Social Services Entertainment o Manufacturing o Transportation and Warehousing o Retail Trade o Educational o Finance & Services Insurance

Emerging Industries Brooklyn’s Largest Industries Relatively small industries, which have experienced significant growth and are also projected to continue growing at a robust pace. Chapter IV takes a closer look at Brooklyn’s three largest industries: Health o Professional, o Management Care, Retail, and Tourism and Entertainment. The three industries account Scientific, and of Enterprises for over half of all employment in Brooklyn. Health care is the dominant Technical sector, encompassing nearly twice the share of total employment in Brooklyn o Other Services Services than is found in New York City, New York State, or the country as a whole. o Construction o Administrative and Health Care Support and o Motion Picture Waste and Sound Brooklyn has a number of large and well-established health care employers that provide the outsized number of health care-related jobs in the borough.

! 6# This reflects the health care and social assistance industry’s tendency In spite of all this growth, Brooklyn is still significantly under-retailed in towards large employers, as the health care industry accounts for only 13 comparison to the top 50 largest retail markets in the country. On average, percent of the businesses in Brooklyn, but fully 33 percent of the jobs. These these markets have 55 square feet of retail space per capita, while Brooklyn businesses are also geographically dispersed with many located in outlying has only 23 square feet of space per person. As a more local comparison, areas of Brooklyn. Despite the large share of employment contributed by the Brooklyn’s population is almost equal to that of Long Island, but has only a health care industry, it has managed sustained annual growth at a relatively fraction of the retail square footage. Furthermore, the retail leakage analysis high rate; nearly double that of the state over the past four years. In presented in Chapter IV indicates that there is approximately $5 billion in particular, the ambulatory health care services subsector has posted even annual retail leakage as Brooklyn’s consumer demands are not being met greater growth during this period. Employment in the subsectors of social locally across many different retail categories. This figure does not include assistance and nursing and residential care facilities has kept pace with the an additional $1.1 billion leakage in the Food Services and Drinking Places overall growth, while hospitals have declined. subsector. These figures point to opportunities for this sector to expand to meet unmet demand. Retail Tourism and Entertainment The retail sector is a large and diverse industry in Brooklyn, with a wide range of niche businesses and employers. From 2009 through 2014, Brooklyn’s share of tourism and entertainment jobs is also growing faster Brooklyn’s overall rate of employment growth in the sector was 2.9 times that than those in New York City as a whole. Overall, tourism and entertainment of New York State as a whole. Retail subsectors posting unusually large employment in Brooklyn grew at an average annual rate 2.6 times that of the annual growth rates include non-store retailers and furniture and home state between 2009 and 2014. This advance was supported by robust sector furnishings. Employment in the subsector of non-store retailers, electronic growth in every major category, including food services and drinking places, shopping and mail-order houses, more than quadrupled employment amusements and recreation, performing arts and spectator sports, and between 2009 and 2015. Other retail sectors that have shown significant accommodations. growth include electronics and appliances, food and beverage (grocery The growth of the restaurant and bar industry (Food services and drinking stores), and miscellaneous stores. The significant growth across the retail places) is particularly noteworthy as it accounted for more than 80 percent of spectrum reflects support for a wide range of retail businesses and a thriving employment growth in the industry. Between 2011 and 2014, the borough commercial culture. added 640 bars and restaurants - more than Manhattan, which added only Growth in this sector has been fueled by strong population and employment 581. But it is not only in terms of quantity that the bar and restaurant sector growth, a large student population, and growth in the hospitality sector due in Brooklyn is thriving. Brooklyn is home to the only two- and three-star rated to a large and growing offering of tourist and entertainment attractions. restaurants in NYC outside of Manhattan and no other borough outside of These factors, led to numerous national retailers opening their first store in Manhattan has more Michelin star-rated restaurants. While Manhattan Brooklyn including Apple, Madewell, Alamo Drafthouse Cinema, Whole continues to dominate the Michelin list, the 2015 edition highlights Brooklyn’s Foods, Uniqlo and Lululemon. In addition, other retailers and restaurants arrival with eight of the 20 new star-rated restaurants in NYC. have expanded in Downtown Brooklyn, including Nordstrom Rack, H&M, These developments have firmly established Brooklyn as a food mecca. Sephora, Shake Shack, Gap Factory Store, and Banana Republic Outlet. However, despite Brooklyn’s enviable emergence of the bar and restaurant This growth has had a significant impact on the commercial real estate options, it still trails the rest of New York State in terms of bar and restaurant market as the number of retail corridors in the Borough increased by more establishment per capita. Moreover, consumer expenditures by Brooklyn than 169 percent from 45 to 121 between 2009 and 2015. residents in bar and restaurants exceeds sales by local establishments by

! 7# $1.10 billion. These trends point toward significant opportunities for further Brooklyn is also breeding a large number of entrepreneurs. The number of growth. unincorporated self-employed individuals in Brooklyn increased by more than 5,500 between the periods 2008-2010 and 2011-2013, while those in The categories of accommodations, performing arts and spectator sports, the rest of New York City decreased by approximately the same number. and amusements and recreation, while proportionally small employment The unincorporated self-employed exhibit a distinct combination of cognitive sectors, have grown tremendously since 2009. and non-cognitive traits, which make them more successful as entrepreneurs, and as such they represent a good proxy for Innovation entrepreneurship. Their growth, therefore suggests that Brooklyn is a magnet for growth-creating innovators. This chapter aims to provide an overview of the many and varied innovative Last but not least, relatively high proportions of total jobs in Brooklyn are in ventures that can be found in Brooklyn. While these businesses may have new and small firms. For example, 41 percent of jobs in Brooklyn are in firms only been established for a few years and be small employers individually, with under 50 employees compared to only 31 percent of jobs in the state. their combined impact is great and offers a promising future for Brooklyn’s Also, approximately 15 percent of jobs in Brooklyn are in young firms (1-3 economic, social and cultural growth. Innovative businesses take risks to years) compared to 8% of the state employment. Small and new businesses introduce revolutionary products or technologies and create new markets. to show high probabilities of innovation than larger, more established Because innovative businesses can be so varied, there are few statistical businesses. indicators that capture this component of the economy fully. Some indicators These indicators provide a broad picture of innovation in Brooklyn. However, that provide a broad picture of innovation were selected, including: patents as innovation comes in many forms and shapes, there are few indicators that issued, adults with advanced degrees (e.g., Ph.D., MD., MBA, MFA, etc.), can used to accurately measure the level of innovation in Brooklyn. science and engineering workers, number of entrepreneurs, and number of Therefore, to more fully explore this landscape in Brooklyn, businesses that small and new firms. These indicators highlight Brooklyn’s high level of exemplify some of the characteristics of innovation have been identified and innovative spirit. For example, while Brooklyn has a significantly smaller job profiled to illustrate the range and opportunities they present. base than Manhattan, it issues a similar number of patents on a per worker basis. Also, the number of patents per worker issued in Brooklyn grew by 98 percent between 2009 and 2013 – compared to 90 percent in New York City Workforce Analysis and 56 percent in the state. This chapter examines the workforce characteristics of Brooklyn. The The increasing number of adults with advanced degrees (Ph.D., MD., MBA, workforce is the most important resource of any economy. A large, highly etc.) also highlights Brooklyn’s creative potential. While Brooklyn’s share of educated and skilled workforce increases the productivity of local 25 and older population with graduate and professional degrees in 2013 was businesses, and attracts new businesses to the area. just under that of New York City and New York State, it has grown tremendously. From 2005 to 2013, the population with advanced degrees in During 2014, Brooklyn averaged a labor force of 1.22 million - approximately Brooklyn grew by an impressive 46 percent, compared to approximately 20 30 percent of New York City’s total labor force. Brooklyn’s labor force has percent for the city and state. been growing rapidly. Between 2009 and 2014, Brooklyn’s labor force grew by more than 100,000 accounting for nearly 63 percent of the net labor force Brooklyn has also attracted a large number of adults with science and growth in New York City. engineering degrees. This segment of the population grew by 26 percent in Brooklyn between 2009 and 2013 compared to 18 and 15 percent for the Not only is the labor force growing rapidly, but general characteristics of rest of the city and state, respectively. Brooklyn’s population point toward significant changes in the composition of

! 8# the labor force. For example, Population growth trends show a rising share of prime-age population, defined as those 25 to 54 years old, which are an important segment of the labor force, due to higher labor force participation rates and greater resilience to employment cycles and economic downturns.

The educational attainment of the labor force is also changing. In general, the educational attainment of Brooklyn’s populace is bifurcated, presenting opportunities and challenges. On the one hand, the share of adults with college and advanced education is comparable to New York City and state, and higher than the country as a whole. More importantly, trends show that Brooklyn is making significant gains in the number of skilled workers. For example, the share of adults with advanced degrees is increasing faster than the city, state, and the U.S. Brooklyn’s level of educational attainment has been boosted by foreign migrants, a higher proportion of whom have advanced degrees than the existing population of the borough as a whole.

The other end of the educational attainment spectrum presents some challenges to Brooklyn as a relatively high proportion of adults have less than a high school education. However, between the graduating classes of 2010 to 2014, Brooklyn’s high school graduation rates increased by five percent, college readiness increased by four percent and dropout rates fell by three percent. Overall, Brooklyn’s growing young, highly educated and skilled workforce is a strong positive indicator of greater economic opportunity for the region.

! 9# II. BROOKLYN’S ECONOMIC PERFORMANCE !

What is it and why does it matter? from job and wage growth to measures of poverty and inequality. The Economic performance is critical to every country, region, city, and indicators could be expanded in future research by the Brooklyn Chamber of neighborhood. A strong, vibrant economy leads to more jobs, higher wages, Commerce. business profits, tax revenues, and in general, more opportunities for For all indicators included in this analysis, Brooklyn is benchmarked against economic advancement and improved standards of living for all various jurisdictions to provide the reader with a better sense of the relative stakeholders. Making a positive contribution to the economic performance of circumstances found in Brooklyn. The comparison jurisdictions consist of Brooklyn is the ultimate goal of the Brooklyn Chamber of Commerce and its other boroughs, the city as whole, the state, or the nation, depending on members. data availability.

How do we measure Economic Performance? The indicators are typically evaluated for three periods: The economic performance of a region is usually measured in terms of the Long-term: 2000-2014. This period includes two recessionary periods: (1) achievement of objectives that are important to the members of the the Dot-Com Bust from March 2001 through November 2001 and (2) the community, including residents, business people, and policymakers. These Great Recession from December 2007 through June 2009. It provides a objectives can be long term or short term, and can include economic picture of how resilient the Brooklyn economy is during recessionary periods objectives, such as employment growth and social objectives like equality as well as its performance during expansionary periods. and diversity. An assessment of economic performance of a region Mid-term: 2009-2014. This period highlights the behavior of the economy evaluates how well an economy is performing against these objectives. following the most significant economic contraction of the US economy since To assess economic performance, analysts typically employ a wide range of the Great Depression. socio-economic indicators. These socio-economic indicators measure Short-term: 2013-2014. This period provides a snapshot of the economy in variables that directly or indirectly shed light on whether the community’s the short-run, which is important in order to identify trends as early as objectives are being met (i.e., whether economic performance is weak or possible, which may have longer term implications.2 strong). Tracking of these indicators over time, on the other hand, sheds light on whether economic performance has improved or deteriorated. The Summary information provided by these indicators is important because it allows stakeholders to identify weaknesses and opportunities in the local economy These indicators confirm the public’s perception that Brooklyn is undergoing and to develop effective strategies or interventions to meet the socio- a transformation. Brooklyn’s economy, which is already large, is growing economic objectives of the community. even larger. Brooklyn is outpacing the rest of the city and state in population, job, and income growth, as well as housing production. These factors, along The Indicators with other dimensions explored in the rest of the report, point toward a bright future for the local economy. Washington Square Partners and the Land Econ Group selected a wide range of indicators to evaluate Brooklyn’s economic performance. These There are however, some soft spots in the economy, such as poverty, indicators are comprehensive, but not all-encompassing, nor final. However, inequality, and a tight housing market, which could spell trouble for the they do encompass a wide range of objectives that may be important to economy, particularly in the long run. The good news is that Brooklyn borough residents, businesses, and policy makers. These indicators range

! 10# already shows very positive trends in these indicators and appears to be Brooklyn experienced a mild population decline during the first half of the moving in the right direction. last decade, but experienced phenomenal growth since 2006.

Population Relative3Population3Growth 108% People vote with their feet, choosing to live in areas that are attractive, safe, 106% 106% and with an ample supply of employment opportunities. Therefore, 104% 104% population growth reflects a city’s quality of life and economic opportunities. 102% 101% 100% How is Brooklyn Doing? 100% 98% 99% 100% The U.S. Bureau of the 96% Census estimates Brooklyn’s NYC/Population/2014 94% population as of July 2014 at (millions) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 approximately 2.622 million. Brooklyn New3York3City New3York3State This makes Brooklyn the most populous County in Manhattan Source: U.S. Census Bureau and LEG. New York State. If it were an 1.64 Brooklyn 19% 2.62 independent city, Brooklyn Between 2006 and 2014, Brooklyn added more than 186,000 residents. 31% would be the fourth largest During this period, Brooklyn was the fastest growing borough in percentage city after Chicago. Brooklyn’s and absolute terms accounting for more than 37 percent of total population population in 2014 was larger 2.32 Bronx growth in New York City. than that of 16 individual 27% Staten/ 1.44 smallest U.S. states. BROOKLYN!IS!THE!FASTEST!GROWING!BOROUGH!IN!NEW!YORK!CITY!IN!TERMS!OF! Island 17% POPULATION.!BETWEEN!2006!AND!2014!IT!ADDED!NEARLY!186,000!RESIDENTS! New York City as a whole 0.47 ACCOUNTING!FOR!37!PERCENT!OF!TOTAL!POPULATION!GROWTH!IN!NEW!YORK! experienced a slight rise in 6% CITY.! population in the early 2000s, ! followed by a decline leading to a trough in 2006. This was true in New York State to an extent, but was amplified in Brooklyn, which declined to below its year 2000 population by 1.3 percent. From that trough, all three areas experienced significant growth through 2014, but none as dramatic as Brooklyn’s, swinging over seven percent from its low in 2006 to 2014.

! 11# ! BROOKLYN’S!POPULATION!GROWTH!SINCE!2006!IS!MORE!THAN!TWICE!THE! Could Brooklyn become the Third Largest City in the U.S.? STATE’S.!! If Brooklyn were an independent city, it would be the fourth largest city in the Population+Growth 2006<2014 U.S. behind New York City (all other boroughs), Los Angeles and Chicago. However, since 2006, Brooklyn’s population has experienced rapid 7.6% 6.9% population growth (approximately 1 percent per year) while Chicago’s 6.2% population remained more or less steady (0 percent growth). As shown 3.4% below, if these growth rates were to continue, Brooklyn’s population could surpass Chicago’s within the next 5 years and become the third largest city in the country.

Given the current popularity of Brooklyn and Chicago’s woes, it may seem a Brooklyn NYC NY+State U.S. foregone conclusion that this will take place within the next 5 to 10 years. Source: U.S. Census Bureau and LEG. However, can we expect Brooklyn’s current rapid pace of population growth

and Chicago’s stagnant growth to continue for the next 5, 10 or 30 years? Brooklyn’s population growth is driven primarily by a combination of natural According to forecasts by the Chicago Metropolitan Agency for Planning population growth and an influx of foreign migrants. Between 2011 and 2014 (CMAP), the population of Chicago will not remain stagnant and may annual net foreign immigration to Brooklyn increased 74 percent, from experience growth through 2040. In fact, since 2010, Chicago has already 14,000 to 24,400. During the same period, domestic migration out of shown mild, but positive population growth following decades of declines. Brooklyn, in numbers that, in most years, exceeded those of incoming Meanwhile forecasts by the New York City Department of City Planning foreign migrants, resulted in negative net migration. show a more moderate pace of growth in Brooklyn over the next 30 years than what has been observed since 2006. As shown below, under these BETWEEN!2011!AND!2014,!ANNUAL!NET!FOREIGN!IMMIGRATION!TO!BROOKLYN! official growth forecasts Brooklyn’s population would remain the fourth INCREASED!BY!74!PERCENT,!FROM!14,000!TO!24,400.! largest city behind Chicago. Foreign#and#Domestic#Migration#in#Brooklyn However, CMAP’s projections may turn out to be too optimistic and 40 projections by New York City’s Planning Department could underestimate 3 24# Brooklyn’s growth. This is not unlikely, particularly in the short run. If both 20# 21# 20 14# forecasts are off by 5 percent or more in the long run, Brooklyn could indeed become the third largest city in the U.S. before 2040. 0 Whether this occurs will depend on numerous factors, including consumer’s fickle preferences, and the market and policy responses to the seemingly (20) (16) (20) (20) insatiable demand for housing in Brooklyn. It will also depend on trends in

Flow#of#people#in#thousands Chicago. Finally, yet importantly, it will also depend on the population growth (40) (33) 2011 2012 2013 2014 in Houston (Texas), which could conceivably surpass Chicago and Brooklyn and become the third largest city in the U.S.4 Net#Foreign#Immigration Net#Domestic#Migration Net#Migration

Source: US Census Bureau

! 12#

How is Brooklyn Doing? Population5Estimates5and5Forecasts During 2014, Brooklyn averaged nearly 568,000 jobs accounting for nearly 3.4 Estimates <<< >>>Forecast 14.3 percent of all jobs in the city and 6.4 percent of jobs in the state. If 3.2 Brooklyn were an independent city, it would be the city with second largest Millions job-base in the state after Manhattan. While those figures are impressive, 3.0 the pace of job creation in Brooklyn is the real superlative. Between 2000 2.8 and 2014, total employment in Brooklyn grew by approximately 28 percent. 2.6 By comparison, the number of jobs in the city and state grew only 10 and 4

2.4 percent, respectively. During this period, Brooklyn’s average annual growth rate (1.7 percent) was nearly three times as high as the city’s growth rate 2.2 (0.6 percent) and more than seven times as high as the New York state’s 2.0 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30 '32 '34 '36 '38 '40 growth rate (0.3 percent). Chigago Brooklyn Brooklyn’s pace of job creation has been particularly impressive since the Chicago5CMAP5Forecast Brooklyn5NYC5Planning5Dept.5Forecast end of the Great Recession. Between 2009 and 2014, employment in Chicago5with5No5Growth Brooklyn5with51%5annual5growth Brooklyn gained significant momentum growing at approximately 3.6 percent Source: US Census Bureau, Chicago Metropolitan Agency for Planning, New York per year. Between 2009 and 2014, Brooklyn generated nearly 91,000 net City Department of City Planning, and LEG. new jobs, accounting for nearly a quarter of net new jobs created in New York City. Brooklyn’s short-term performance is especially impressive. In Jobs 2014, it added more than 30,000 net new jobs. This was Brooklyn’s biggest job increase in more than a decade; a 5.8 percent increase over 2013. In fact Kings County (Brooklyn) was the fastest growing county in the U.S. The number of jobs available in a region is one of the principal indicators of among counties with more than 500,000 jobs. economic activity and economic opportunities available to residents. Job estimates are particularly important for smaller geographical regions where Brooklyn’s impressive job growth could be attributed to numerous factors, direct estimates of output (domestic product) are not readily available or are such as population growth, specialization in expanding industries, availability less reliable. From a regional perspective, more jobs typically equals more of qualified workers, etc. This report examines some of these factors. economic activity (i.e., output). From an individual or household’s However, population growth alone cannot explain Brooklyn’s tremendous job perspective, more jobs equal greater opportunities for economic growth, since the pace of job growth has exceeded population growth by a advancement. significant margin. For example, the rate of population growth between 2009 and 2014 was only 1.1 percent per year. It is also interesting to note that large firms, those with more than 500 employees, and small firms, those with fewer than 20 employees, provide the majority of Brooklyn’s jobs.

! 13# BROOKLYN!(KINGS!COUNTY)!IS!THE!SECOND!LARGEST!EMPLOYMENT!CENTER!IN! SINCE!2000,!BROOKLYN!HAS!CONSISTENTLY!OUTPERFORMED!THE!CITY!AND!STATE! NEW!YORK!CITY!AND!FOURTH!LARGEST!IN!THE!STATE!BY!COUNTY.!! IN!JOB!GROWTH.!EQUALLY!IMPORTANT,!BROOKLYN’S!ECONOMY!HAS!BEEN! ! RESILIENT!DURING!ECONOMIC!RECESSIONS!AVOIDING!SIGNIFICANT!JOB!LOSSES.! IF!IT!WERE!AN!INDEPENDENT!CITY,!BROOKLN!WOULD!BE!SECOND!LARGEST! EMPLOYMENT!CENTER!IN!THE!STATE.! Relative3Job3Growth:32000<2014 ! Indexed3to3year32000 BROOKLYN!HAS!MORE!JOBS!THAN!SOME!SMALL!STATES!IN!THE!U.S.,!SUCH!AS!WY,! VT,!AK,!SD,!DE,!MT,!ND,!AND!RI.5!! 130% 128%

120% Jobs%in%New%York%State%by%County,%2014 108% 108% 110% 110% County Jobs 100% 104% New%York%County%(Manhattan) 2,494,990 100% 101% 98% Suffolk%County 634,844 90% Nassau%County 604,644 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Kings%County%(Brooklyn) 567,643 Brooklyn New3York3City New3York3State Queens%County%(Queens) 552,848 Recessionary3periods Source: New York State Department of Labor and LEG. Source: New York State Department of Labor and LEG. ! !

! 14# BROOKLYN’S!JOB!GROWTH!HAS!BEEN!PARTICULARLY!IMPRESSIVE!SINCE!THE!END! OF!THE!GREAT!RECESSION.!BETWEEN!2009!AND!2014!THE!PACE!OF!JOB!GROWTH!

IN!BROOKLYN!WAS!THREE!TIMES!AS!HIGH!AS!THE!STATE.!IN!2014,!BROOKLYN! ADDED!MORE!THAN!30,000!NET!NEW!JOBS.!BROOKLYN’S!HIGHEST!ONEcYEAR! INCREASE!IN!JOB!CREATION!IN!MORE!THAN!A!DECADE.!! BECAUSE!OF!ITS! Jobs@Average@Annual@Growth@Rate Brooklyn's%Share%of%New% IMPRESSIVE!JOB!GROWTH,! York%City's%Employment BROOKLYN’S!IMPORTANCE! 5.8% AS!A!JOBcCENTER!IS! STEADILY!INCREASING.! 14.3% ! 13.4% 3.6% 3.3% 12.3% 2.2% 1.7% 1.9% 1.2% 0.6% 0.3% Year%2000 Long0Term Medium0Term Short0Term 200002014 200902014 201302014 Year%2009

Brooklyn New@York@City@Region New@York@State Year%2014 ! Source: New York State Department of Labor and LEG. Source: New York State Dept. of Labor and LEG. ! IN!2013,!FIRMS!IN!BROOKLYN! BETWEEN!2009!AND!2014,! 2013*Share*of*Brooklyn*Employment*by* Brooklyn's4Share4of44Net4 BROOKLYN!GENERATED!NEARLY! Firm*Size WITH!MORE!THAN!500!AND! New4Jobs4Created4in4NYC4 91,000!NET!NEW!JOBS.! FEWER!THAN!20!EMPLOYEES! ! ACCOUNTED!FOR!68!PERCENT! between420094and42014 OF!TOTAL!EMPLOYMENT.!! 0"19 ! 500+ 29.6% 38.0% Brooklyn 90,984 23% 20#49 10.6% Rest4of4NYC 50#249 310,745 250#499 15.3% 77% 6.6% ! Source: QWI Explorer application, U.S. Census Bureau ! Source: New York State Dept. of Labor and LEG.

! 15# ! EMPLOYMENT!IN!THESE!LARGEST!AND!SMALLEST!FIRMS!HAS!ALSO!GROWN!AT!THE! How is Brooklyn Doing? FASTEST!RATE!BETWEEN!2003!AND!2013.! Average Wages Brooklyn(Employment(by(Firm(Size In 2014, average annual wages in Brooklyn were approximately $41,083 250 compared to $84,752 average in New York City, and $65,899 in the whole state. Average wages for the city and the state, however, are skewed by 200 high wages in Wall Street, which concentrate primarily in Manhattan.8 When Thousands Manhattan wages are excluded, the gap between Brooklyn and the rest of 150 the city and state is smaller but still significant; Brooklyn’s average wages are 12 and 18 percent lower than the rest of city and state, respectively. 100 There are many possible reasons why average wages are lower in Brooklyn.

Number1of1Employees 50 For example, the industry mix in Brooklyn may be skewed toward lower- wage industries. This explanation is plausible given that some of Brooklyn’s 0 largest industries, such as retail and accommodation and food services have 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 relatively low average wages. Industry mix does not provide a full 0>19 20>49 50>249 250>499 500+ explanation, however, as Brooklyn’s average wages are lower than other Source: QWI Explorer application, U.S. Census Bureau boroughs even for higher-wage industries, such as Health Care and Construction.

Another plausible explanation for Brooklyn’s relatively low wages is that Wages there is a larger surplus of labor in Brooklyn. For example, in 2014 there were approximately 95,000 unemployed people in Brooklyn compared to Wages, the monetary compensation (or remuneration) paid by an employer 60,000 in the Bronx and 55,000 in Manhattan. According to the laws of to an employee in exchange for work done, is an important indicator of the supply of demand, employers have less pressure to raise wages in order to local economy for numerous reasons. For example, wages represent the attract employees. It follows then that wages should increase as 6 largest portion of total income earned in the U.S. Economic theory states employment opportunities increase and unemployment decreases. that in an economy in equilibrium, the wage of a worker equals what that worker can produce. Therefore, wages are often used as a proxy for productivity. More generally, wage growth is important because it highlights dynamics in the labor market. As the Wall Street Journal writes, “Wage growth provides a clean, clear picture of the health of the citizenry. If wages are rising at a healthy clip, it speaks to a healthy labor force. If wages are not growing, it speaks to a labor force under pressure. An economy as dependent upon consumer spending as the U.S. can’t remain strong if wages aren’t growing.”7

! 16# BROOKLYN!HAS!LOWER!AVERAGE!ANNUAL!WAGES!THAN!THE!CITY!AND!THE!STATE.! were unable to reduce wages during the recession, and they must now work HOWEVER,!THE!CITY’S!AND!STATE’S!AVERAGE!WAGES!ARE!HIGHLY!SKEWED! off a stockpile of pent-up wage cuts.”9 A related alternative explanation is UPWARDS!BY!WALL!STREET.!EXCLUDING!MANHATTAN!WAGES!REDUCES!THE!GAP! that the Great Recession created a large pool of available workers (i.e., BETWEEN!BROOKLYN!AND!THE!REST!OF!THE!CITY!AND!STATE.! unemployed). Therefore, employers do not have to raise wages in order to hire qualified people. Average7Annual7Wages,72014 There are currently numerous efforts to address wage stagnation. For $84,752 example, increases in the state and federal minimum wages are being $65,899 considered in the state legislature10 and in congress11. Various large, $46,871 $49,996 private sector employers, such as Walmart, Ikea, The Gap, Costco, and $41,083 health insurance company Aetna have raised their minimum wages above the federal minimum wage. These efforts provide welcome relief to employees, particularly those at the low end of the wage spectrum.

For non-minimum wage jobs the best prescription for wage growth, if Daly Brooklyn NYC NYC7(excl. NY7State NY7State7(excl. and Hobjin are correct, is employment creation. Wage growth will follow Brooklyn7and Brooklyn7and when the labor markets have fully returned to normal (i.e., full Manhattan) Manhattan) employment).12 In this regard, Brooklyn’s impressive job growth should help Source: New York State Department of Labor and LEG. turn around recent trends in wage growth (or lack thereof). In fact, real wages increased by 1.5 percent in 2014. This is the highest increase since at least 2000 and is the first time since 2004 that wages increase by more Wage Growth than one percent.

Wage growth in Brooklyn, like the rest of the nation, can be divided into two Brooklyn has shown a little improvement in real wage growth, but there is periods. Before 2009, nominal wages in Brooklyn grew at largely the same still significant work to be done. The focus on job creation in growing fields pace as inflation. After 2009, following the Great Recession, wage growth will be critical to increasing the average wage and city and state policies to stagnated failing to keep up with inflation (i.e., real wages declined). encourage job creation will play a role in this effort. The decline in average real wages since 2009 in Brooklyn can be partially explained by the type of job growth experienced. Between 2009 and 2014, Brooklyn added approximately 91,000 net new jobs. Almost 38 percent of this job growth occurred in retail and the tourism and entertainment industries, which have relatively low annual wages. But more generally, wages remained flat or stagnant across all industries, including moderate wage industries. For example, an additional 30 percent of net job growth occurred in the health care industry, which has moderate annual wages, but has experienced declines in average real wages since 2009.

The issue of wage stagnation despite considerable increases in the number of jobs is not a problem unique to Brooklyn. It is a nationwide trend that puzzles economists. May Daly and Bart Hobjin at the San Francisco Federal Reserve, posit that one reason for this phenomenon is that “…many firms

! 17# ! REFLECTING!NATIONWIDE!TRENDS,!REAL!WAGE!GROWTH!IN!BROOKLYN! How is Brooklyn Doing? STAGNATED!SINCE!2009.!WAGES!WILL!START!TO!INCREASE!AS!UNEMPLOYMENT! The role of the private sector is particularly prominent in the Brooklyn CONTINUES!TO!DROP.!THERE!WAS!ALREADY!A!1.5!PERCENT!INCREASE!IN!REAL! economy. Given the high concentration of city government jobs in WAGES!IN!2014.!! Manhattan, there are relatively few of these jobs in Brooklyn and the private Relative4Growth4in4Average4Real4Wages* sector accounts for more than 93 percent of jobs in the borough. Therefore, 2000@2014 the private sector employment and wage trends largely mirror the trends for 110% total employment in Brooklyn, described above.

105% During 2014, Brooklyn averaged approximately 532,000 private sector jobs 101% accounting for nearly 15.2 percent of private sector jobs in the city and 7.1 100% 98% percent of private sector jobs in the state. As previously stated, if Brooklyn 100% 99% 100% were an independent city, it would be the second largest private sector 95% 96% employment center in the state after Manhattan. 90% 93% Average wages in the private sector trail the rest of the city and state; unlike government jobs where average wages are more uniform across the state. 85% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 As previously stated, wage growth in Brooklyn has been relatively stagnant. Brooklyn City State However, as shown below, private sector wages have experienced a more positive trend than public sector average wages, which have been steadily Source: New York State Department of Labor, U.S. Bureau of Labor Statistics, and declining since the early 2000s. LEG. * Real Wages equal nominal wages adjusted by the Consumer Price Index for Urban A new metric, not previously discussed, is the number of business Wage Earners and Clerical Workers. establishments. This metric is normalized (i.e. divided by number of

residents) in order to permit comparison across jurisdictions. As shown below, Brooklyn trails the city and state in terms of number of businesses Private Sector Performance per 1,000 residents. However, Brooklyn has outpaced the rest of the city and the state in the growth of net new establishments, particularly since 2009. In The private sector, as an engine of economic growth, plays a key role in the the five-year period between 2009 and 2014, Brooklyn added more than economic performance of any region. A thriving private sector leads to job 9,600 new business establishments; approximately 35 percent of total net growth, infrastructure investment, increased tax revenues, poverty reduction, new establishments in New York City. This is more than the net new income generation, and overall increased living standards. Achieving establishments added during the nine-year period between 2000 and 2009, sustained economic growth, therefore, depends in large part on creating a when Brooklyn added 8,000 new business establishments. In 2014, dynamic economic environment that is supportive of local entrepreneurs, Brooklyn experienced the fastest increase in the number of new attracts new companies into the region, retains and grows existing establishments in more than 14 years adding more than 2,300 net new companies, and is, in general, conducive to private sector growth and overall establishments (4.3 percent growth). business activity.

! 18# BROOKLYN!(KINGS!COUNTY)!HAS!THE!THIRD!MOST!PRIVATE!SECTOR!JOBS!IN!THE! PRIVATE!SECTOR!AVERAGE!ANNUAL!WAGES!IN!BROOKLYN!ARE!LOWER!THAN!THE! STATE,!BY!COUNTY.!IF!IT!WERE!AN!INDEPENDENT!CITY,!BROOKLYN!WOULD!BE!CITY! REST!OF!NEW!YORK!CITY!AND!BELOW!THE!STATE!AVERAGE.! WITH!THE!SECOND!LARGEST!PRIVATE!SECTOR!JOB!BASE!IN!THE!STATE!AFTER! MANHATTAN.! Average-Annual-Wages-by-Borough:-2014 Private(Sector(Share(of(Total(Employment New(York(State's(Largest(Counties(in(2014,(ranked(by(private(sector(employment Total* Private*Sector* Private*Sector*

County Employment Employment Share* $118,453 $68,598 $68,305 $67,207- $63,232 $60,698 $60,436 New(York(County 2,494,990 2,060,552 82.6% (19) $58,717- $46,073 $45,150 $41,654 Suffolk(County 634,844 535,393 84.3% (14) $39,590 Kings(County 567,643 531,802 93.7% (1) Nassau(County 604,644 526,810 87.1% (8) Queens(County 552,848 517,239 93.6% (3) Brooklyn The-Bronx Manhattan Queens Staten-Island New-York-State Sources: NY Bureau of Labor Statistics, Land Econ Group, Inc. Private-Sector Public-Sector-Wages * Number in parenthesis indicates statewide rank of private sector share ! Source: New York State Department of Labor and LEG. PRIVATE!SECTOR!ACCOUNTS!FOR!MOST!OF!THE!JOBS!IN!BROOKLYN.!IN!FACT!THE! ! PRIVATE!SECTOR’S!SHARE!OF!TOTAL!JOBS!IS!THE!HIGHEST!IN!THE!STATE.! WAGE!GROWTH!IN!BROOKLYN!HAS!BEEN!DRAGGED!DOWN!BY!WAGE!DECLINES!IN! PUBLIC!SECTOR!WAGES.!PRIVATE!SECTOR!WAGES!SURPASSED!INFLATION! Private+Sector's+Share+of+Total+Employment,+2014 THROUGH!2009!BEFORE!STAGNATING.! Relative4Growth4in4Average4Real4Wages* Brooklyn42000C2014 110%

105%

93.7% 86.6% 84.6% 100% 100% 100% 94% 95%

Brooklyn New+York+City New+York+State 90% Source: New York State Department of Labor and LEG. 90% 85% 89% ! 80% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Private4Sector Government

Source: New York State Department of Labor and LEG.

! 19# BROOKLYN!LAGS!BEHIND!THE!CITY!AND!STATE!IN!BUSINESS!DENSITY.!HOWEVER,! BUSINESS!ESTABLISHMENT!GROWTH!HAS!BEEN!STEADILY!ACCELERATING.!IN!2014! THE!GAP!IS!CLOSING.!SINCE!2000,!BROOKLYN!HAS!OUTPACED!THE!CITY!AND!STATE! BROOKLYN!EXPERIENCED!THE!BIGEST!INCREASE!IN!NUMBER!OF!BUSINESS! IN!THE!GROWTH!OF!NEW!BUSINESS!ESTABLISHMENTS.!! ESTABLISHMENTS!IN!MORE!THAN!A!DECADE!–!MORE!THAN!2,300!NET!NEW! ! ESTABLISHMENTS! Number4of4Private4Sector4Business4Establishments4 Average>Annual>Growth>in>Number>of>Private>Sector> per41,0004Residents Business>Establishments 30.5 4.3% 30.2 3.8% 26.2 27.4 3.1% 21.4 2.7% 2.3% 15.6 15%$increase 11%$increase 2.0% 1.4% 1.4% 1.1% 37%$increase

Long.Term Medium.Term Short.Term Brooklyn New4York4City New4York4State 2000.2014 2009.2014 2013.2014 2000 2014 Source: New York State Department of Labor and LEG. Brooklyn New>York>City New>York>State

! Source: New York State Department of Labor and LEG. GROWTH!IN!THE!NUMBER!OF!BUSINESS!ESTABLISHMENTS!HAS!BEEN! PARTICULARLY!ROBUST!SINCE!2009.!IN!THE!4cYEAR!PERIOD!BETWEEN!2009!AND! 2014,!BROOKLYN!ADDED!NEARLY!THE!SAME!NUMBER!OF!ESTABLISHMENTS!AS! Personal Income DURING!THE!9cYEAR!PERIOD!BETWEEN!2000!AND!2009.!

Income level of residents is an important indicator of local economic Net/New/Business/Establishments/in/New/York/City performance because it is a proxy for consumer demand (i.e. spending capacity). In general, higher levels of income lead to stronger spending 2009+2014 9,640 17,809 27,449 which boosts the overall economy. On the other hand, decreases in income 35% 65% generally mean consumers spend less, which can have negative implications for the economy. However, income level is an important 2000+2009 8,037 11,146 19,183 42% 58% indicator of local economic performance, not only because of what it tells us about consumer demand, but also because it has been shown to positively Total.NYC Brooklyn Rest/of/NYC correlate with other socio-economic factors, such as health and education, Source: New York State Department of Labor and LEG. which affect quality of life. Therefore, income is also used, more generally, as a proxy for living standards within a region.

How is Brooklyn Doing?

Brooklyn’s aggregate income is impressive.13 In 2013 Brooklyn residents earned nearly $110 billion in personal income; approximately 23 percent of the city and 10 percent of New York State’s total personal income. In terms

! 20# of personal income, Brooklyn (Kings County) is the 11th largest county in the Brooklyn’s long-term trends in personal income are also positive. Between U.S.; ahead of places such as Boston (Middlesex County, MA), Miami 2000 and 2013, real (i.e., inflation adjusted) per capita personal income (Miami-Dade, FL), San Francisco (San Francisco County, CA), and increased by 20 percent; nearly twice the rate of increase for the state and Philadelphia (Philadelphia County, PA). In fact, Brooklyn’s personal income the city as a whole. Growth of personal income in Brooklyn decelerated is larger than that of 20 individual U.S. states and the combined personal slightly following the Great Recession, but continued to grow at a steady income of three states with the smallest personal income (Alaska, Wyoming, pace matching the state’s rate of growth. Meanwhile per capita personal and Vermont). income in Queens, the Bronx and stagnated.

Brooklyn’s annual per capita income is relatively robust at $42,306; BROOKLYN’S!PER!CAPITA!PERSONAL!INCOME!IS!NEAR!THE!US!AVERAGE,!BUT! comparable to the U.S. at $44,765. While Brooklyn’s per capita income TRAILS!THE!CITY!AND!STATE.!HOWEVER,!THE!CITY!AND!STATE!ESTIMATES!ARE! significantly below the averages for New York City and New York State as a SKEWED!BY!VERY!HIGH!INCOME!INDIVIDUALS!LIVING!IN!MANHATTAN.! whole, estimates for New York City are skewed by very high income BROOKLYN’S!ANNUAL!PER!CAPITA!INCOME!IS!COMPARABLE!TO!THE!REST!OF!THE! individuals based in Manhattan and the state’s estimate is skewed by very CITY!AND!STATE!WHEN!MANHATTAN!IS!EXCLUDED.!! high income individuals based in Manhattan, Westchester County, and Average7Annual7Personal7Income7,72013 Nassau County. Excluding these jurisdictions from the estimates, the city’s and state’s per capita estimates are comparable to Brooklyn. $57,290 $54,462 WITH!$110!BILLION!IN!PERSONAL!INCOME,!BROOKLYN!ACCOUNTS!FOR!23%!OF!THE! $42,306 $41,858 $44,351 $44,765 CITY’S!AND!10%!OF!THE!STATE’S!TOTAL!PERSONAL!INCOME.!! Total:Personal Income,:2013 (in:Billions) Brooklyn Staten:Island $110 The:Bronx Brooklyn NYC NYC7(Excl. NY7State NY7State U.S. $24 10% $47 Manhattan) (Excl.7High 5% 10% Income Rest:of:State Brooklyn Counties*) $589 Rest:of: Queens $110 Source: U.S. Bureau of Economic Analysis and LEG. 55% NYC $372 $103 23% *Excluding New York (Manhattan), Westchester, and Nassau Counties. 21% 35% Manhattan $198 41%

New:York::State:Total:=:$1,070 New:York:City:Total:=:$482 Source: U.S. Bureau of Economic Analysis and LEG.

! 21# IN!TERMS!OF!PERSONAL!INCOME,!BROOKLYN!IS!THE!11TH!LARGEST!COUNTY!IN! REAL!PER!CAPITA!INCOMES!IN!BROOKLYN!INCREASED!BY!20%!BETWEEN!2000!AND! THE!U.S.!AHEAD!OF!PLACES,!SUCH!AS!BOSTON,!MIAMI,!PHILADELPHIA!AND!SAN! 2013!c!FASTER!THAN!ANY!OTHER!BOROUGH!IN!THE!CITY!AND!NEARLY!TWICE!THE! FRANCISCO.!IN!FACT!BROOKLYN’S!PERSONAL!INCOME!IS!LARGER!THAN!THAT!OF!20! RATE!OF!INCREASE!OF!THE!STATE!AS!A!WHOLE.! INDIVIDUAL!STATES.!! Personal)Income,)2013 Growth3in3Real3Per3Capita3Income* U.S.)Counties)with)largest)personal)income Comparison)with)U.S.)States 120% Rank%and%County%(central%city%included) (in%Billions) Geography (in%Billions) 120% 1 Los)Angeles,)CA 466.1 Brooklyn 109.7 2 Cook,)IL)(Chicago) 260.3 Nevada 109.5 3 Harris,)TX)(Houston) 230.5 Arkansas 108.6 110% 4 New)York,)NY)(Manhattan) 197.8 Utah 106.3 100% 5 Orange,)CA)(Anaheim,)Santa)Ana,)Long)Beach) 169.8 Mississippi 101.4 100% 6 San)Diego,)CA 165.0 Nebraska 88.1 7 Maricopa,)AZ)(Phoenix) 160.5 New)Mexico 75.0 8 Santa)Clara,)CA)(Silicon)Valley/San)Jose) 130.6 New)Hampshire 67.5 90% 9 King,)WA)(Seattle) 128.3 West)Virginia 65.9 10 Dallas,)TX 120.6 Hawaii 63.5 80% Relative3Growth3(Indexed3to32000) 11 Kings,)NY)(Brooklyn) 109.7 Idaho 58.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12 Miami\Dade,)FL 104.4 Maine 54.4 13 Middlesex,)MA)(Boston) 103.3 Rhode)Island 49.4 3.0% 14 Queens,)NY 103.3 D.C. 48.7 2.4% 15 Nassau,)NY 98.1 Delaware 41.5 2.5% 16 Alameda,)CA)(Oakland) 87.4 Montana 40.0 2.0% 17 Suffolk,)NY 85.4 South)Dakota 38.9 1.4% 1.3% 18 Tarrant,)TX)(Fort)Worth) 84.9 North)Dakota 38.5 1.5% 1.2% 1.2% 1.2% 19 Fairfax,)Fairfax)City)+)Falls)Church,)VA 83.8 Alaska 36.9 0.9% 1.0% 0.8% 20 Broward,)FL)(Fort)Lauderdale) 80.5 Wyoming 30.8 0.7% 0.6% 21 Palm)Beach,)FL ) Vermont 28.5 0.5% 0.3% 0.4%

Source: U.S. Bureau of Economic Analysis and LEG. Average3Annual3Growth 0.0% * In contrast with NYC counties, most counties in this list are composed of multiple long3term mediumRterm jurisdictions each with its mayor and council. Los Angeles County for example has 2000R2013 2009R2013 more than 80 cities.

Brooklyn Manhattan Queens The3Bronx Staten3Island New3York3City New3York3State

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics, and LEG. * Real per capita income equal nominal per capita income adjusted by the Consumer Price Index (All Urban Consumers) REAL!PER!CAPITA!INCOME!IN!BROOKLYN!HAS!CONTINUED!TO!INCREASE!AT!AN! IMPRESSIVE!RATE!EVEN!AFTER!THE!GREAT!RECESSION,!WHEN!INCOME!GROWTH!IN! OTHER!PARTS!OF!THE!CITY!SINGFICANTLY!SLOWED!DOWN.!

! 22# Unemployment BROOKLYN’S!UNEMPLOYMENT!RATE!DECLINED!SIGNIFICANTLY!SINCE!PEAKING!AT! 11.1%!IN!JANUARY!OF!2010,!BUT!IS!STILL!WELL!ABOVE!THE!15cYEAR!LOW!(FOR!THE! MONTH!OF!JANUARY)!OF!5.6%!OBSERVED!BEFORE!THE!GREAT!RECESSION.! The unemployment rate (the percentage of unemployed workers in the total labor force) is one of the main statistics used to track the economic health of Historic$Unemployment$Rate$In$Brooklyn a region. When a worker becomes unemployed, not only does her family Not$Seasonally$Adjusted Jan$'15 12.0% Jan$'10,$10.8% lose her wages, but the economy as a whole loses the economic output that 7.3% the worker could produce. When qualified workers seeking jobs are unable 10.0% Jan$'07,$5.6% to find them, a valuable economic resource is wasted. 8.0%

More importantly, the loss in purchase power of the unemployed worker can 6.0% trickle down the economy reducing employment opportunities for others. 4.0% Additionally, unemployed people earn no wages and, as a result, can suffer 2.0% from a whole host of social problems. 0.0% Jul$'02 Jul$'07 Jul$'12 Jan$'00 Jan$'05 Jan$'10 Jan$'15 Jun$'00 Jun$'05 Jun$'10 Oct$'03 Oct$'08 Oct$'13 Apr$'01 Apr$'06 Apr$'11 Sep$'01 Feb$'02 Sep$'06 Feb$'07 Sep$'11 Feb$'12 Dec$'02 Dec$'07 Dec$'12 Aug$'04 Aug$'09 Aug$'14 Nov$'00 Nov$'05 Nov$'10

How is Brooklyn Doing? Mar$'04 Mar$'09 Mar$'14 May$'03 May$'08 May$'13 Trends in the unemployment of Brooklyn’s residents largely mirror state and Source: U.S. Bureau of Labor Statistics and LEG. nationwide trends. Brooklyn residents experienced their lowest ! unemployment rate (5.6 percent) in January of 2007, which was followed by BROOKLYN!HAS!EXPERIENCED!28!MONTHS!OF!YEARcONcYEAR!DECLINES!IN! steady increases during and after the Great Recession.14 Unemployment in UNEMPLOYMENT!SINCE!SEPTEMBER!2012.! Brooklyn peaked in January 2010 at 11.1 percent. Unemployment remained Brooklyn's-Year!on!Year-Change-in-Unemployment-Rate relatively high through the middle of 2012 and has since recovered to (Change-in-porcentage-points-compared-to-same-month-the-previous-year) approximately 7.3 percent as of January 2015. Since September of 2012, 5.0% Brooklyn residents have experienced nearly continuous year-on-year declines in monthly unemployment. 4.0% 3.0% Despite significant improvements, Brooklyn has slightly higher than average unemployment relative to the city and the state. Brooklyn averaged 7.7 2.0% percent in unemployment in 2014; compared to 7.2 and 6.2 percent for the 1.0% city and state, respectively. The Brooklyn Labor Market Review published by 0.0% the Chamber of Commerce in May of 2004, points out that “Brooklyn’s !1.0% Jul-'02 Jul-'07 Jul-'12 Jan-'00 Jan-'05 Jan-'10 Jan-'15 Jun-'00 Jun-'05 Jun-'10 Oct-'03 Oct-'08 Oct-'13 Apr-'01 Apr-'06 Apr-'11 Sep-'01 Feb-'02 Sep-'06 Feb-'07 Sep-'11 Feb-'12 Dec-'02 Dec-'07 Dec-'12 Aug-'04 Aug-'09 Aug-'14 Nov-'00 Nov-'05 Nov-'10 unemployment rate has remained the second highest [after the Bronx] in Mar-'04 Mar-'09 Mar-'14 May-'03 May-'08 May-'13 15 New York City over the past decade.” !2.0%

Not surprisingly, unemployment is highest for adults with limited educational !3.0% attainment. The unemployment rate is nearly twice as high for adults with Source: U.S. Bureau of Labor Statistics and LEG. only a high school degree or less compared to adults with college degrees. Also, unemployment affects Blacks, people of mixed race, and people who identify as “Other Race” at a higher rate. The unemployment rate for Blacks is particularly high at more than 14 percent.

! 23# DESPITE!STEADY!DECLINES,!BROOKLY’S!UNEMPLOYMENT!RATE!REMAINS!SLIGHTLY! ABOVE!CITY!AND!STATE!AVERAGES.!AMONG!THE!CITY’S!BOROUGHS,!ONLY!THE! Unemployment0Rate0by0Eductional0Attainment BRONX!HAS!A!HIGHER!UNEMPLOYMENT!RATE.! 2013 13.4% 12.7% 12.7% Average4Annual4Unemployment4Rate:42014 12.6% 10.5% 10.2% 10.1% 10.1% 9.0% 9.0%

9.8% 8.0% 7.2%

7.7% 5.5% 5.1%

7.2% 7.2% 4.5% 6.1% 6.4% 6.2% 6.2% 3.8%

Less0than0High0School High0School Some0College0or Bachelor's0degree0or Associates0Degree higher

Brooklyn The4Bronx Manhattan Queens Staten NYC New4York U.S. Brooklyn NYC New0York0State U.S. Island State Source: U.S. Bureau of Labor Statistics and LEG.

! Unemployment>Rate>by>Race>and>Ethnicity UNEMPLOYMENT!BY!EDUCATIONAL!ATTAINMENT,!RACE!AND!ETHNICITY!IN! BROOKLYN!LARGELY!MIRRORS!STATE!AND!NATIONWIDE!TRENDS:1!IT!IS!HIGHER! 2013 15.2 14.4 14.2

AMONG!THOSE!WITH!LIMIITED!EDCUATION!ATAINMENT!(LESS!THAN!HIGH! 14.1 13

SCHOOL)!AND!MINORITIES!(BLACK,!OTHER!RACE,!AND!TWO!OR!MORE!RACES).! 12.3 11.9 11.1 11 10.6 HOWERVER,!BROOKLYN’S!UNEMPLOYMENT!IS!ALSO!RELATIVELY!HIGH!FOR! 10.5 9.8 GROUPS!SUCH!AS!WHITES!AND!ASIANS!AND!PEOPLE!WITH!BACHELOR!DEGREES.! 9.2 7.8 7.8 7.5 7.2 7.2 7 6.8 6.7 6.7 6.5 6.2

White Black Asian Other Two>or>More Hispanic

Brooklyn NYC New>York>State U.S.

Source: U.S. Census Bureau and LEG.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1!Data!by!educational!attainment!and!race/ethnicity!are!from!the!U.S.!Census’!American! Community!Survey!and!therefore!not!directly!comparable!to!the!estimates!presented! elsewhere!in!this!section.!

! 24# Poverty

Labor Market Poverty can have a profound negative effect, not only on the individuals Integration with directly affected by it, but also on the economic prosperity of a community as Larger Region a whole. Poverty is associated with a myriad of negative socio-economic outcomes in a person’s life, such as poor health, low productivity, increased

criminal activity, low educational attainment, and reduced participation in the Brooklyn’s labor market workforce. These negative effects on the human capital, in turn, can have is deeply integrated with negative consequences on the local and national economy by limiting an the larger region. individual’s ability to remain healthy and contribute talents and labor to the According to the U.S. economy, leading to decreases in output. Moreover, high rates of poverty Census Bureau, can also strain government resources. Approximately 37 percent of residents How is Brooklyn Doing? both live and work in Brooklyn. There have been long-term downward trends in poverty in Brooklyn. Poverty has declined significantly from its peak of 31.6 percent in 1993.18 In fact, Of 770,000 people employed in Brooklyn, 53 percent commute from outside between 2000 and 2013, Brooklyn experienced the largest decline (in the borough.16 A long-standing concern for Brooklyn employers is the tight percentage points) in poverty among New York City boroughs; from 25.1 to integration between Brooklyn and neighboring boroughs, most significantly 21.1 percent, significantly closing the gap with the rest of the city. Manhattan. Brooklyn businesses have noted that proximity to Manhattan However, rates of poverty remain high relative to the rest of the city and the attracts a significant portion of the better-qualified Brooklyn workforce, and state. In 2013, approximately 23.3 percent of the population in Brooklyn lived at the same time applies upward pressure on housing prices, straining the 17 below the poverty level; compared to 20.9 percent in the city and 16 percent finances of entry-level and semi-skilled workforce. in the state. It will be interesting to track how commute patters have changed since 2011 Poverty in Brooklyn affects certain economically traditionally disadvantaged in the face of Brooklyn’s recent surge in job and population growth. demographic groups, such as Blacks, Latinos, and adults with educational attainment (high school or lower). However, poverty in Brooklyn also affects Brooklyn(Commute(Patterns(2011 higher proportions of Whites, Asians and adults with education higher than high school. Live%and%Work%in%Brooklyn 364,701 Live%in%Brooklyn,%Work%Outside 617,691 Poverty in Brooklyn is seen throughout the borough but concentrates in Live%Outside,%Work%in%Brooklyn 403,937 certain neighborhoods such as Borough Park, Brownsville/Ocean Hill, and East New York/Starrett City. Net%Job%Outflow 213,754 The great recession had a significant, negative impact on poverty across the

Source: U.S. Census Bureau, On The Map Application and LEHD Origin-Destination nation. In New York State, the poverty rate increased from 13.6 to 16 Employment Statistics percent from 2008 to 2013. The recession did not spare Brooklyn and poverty increased from 21.1 to 23.3 percent during this period. However, the borough experienced the lowest increase in poverty among New York City

! 25# Boroughs. In fact, between 2012 and 2013 poverty in Brooklyn decreased THE!POVERTY!RATE!INCREASED!NATIONWIDE!IN!THE!WAKE!OF!THE!GREAT! from 24.3 to 23.3 percent, the largest decline among New York City RECSSION.!BROOKLYN!WAS!NOT!SPARED,!BUT!THE!INCREASE!IN!POVERTY!(IN! Boroughs, and in stark contrast with the rest of the state where poverty has PERCENTAGE!POINTS)!HAS!BEEN!MORE!TAMED!THAN!THE!REST!OF!THE!CITY!AND! continued to increase. STATE.!! ! Relatively high poverty rates present a challenge to Brooklyn, the city, and POVERTY!IN!BROOKLYN!AFFECTS!CERTAIN!TRADITIONALLY!ECONOMICALLY! the state as a whole. Numerous citywide programs provide a safety net and DISADVANTAGED!DEMOGRAPHIC!GROUPS,!SUCH!AS!BLACKS,!LATINOS,!AND! have had a positive effect on poverty alleviation. This safety net needs to ADULTS!WITH!LIMITED!EDUCATIONAL!ATTAINMENT!(HIGH!SCHOOL!OR!LOWER).! continue, and be strengthened, but also additional opportunities need to be HOWEVER,!POVERTY!IN!BROOKLYN!ALSO!AFFECTS!HIGHER!PROPORTIONS!OF! created to allow people to move beyond poverty and towards self- WHITES,!ASIANS!AND!ADULTS!WITH!EDUCATION!HIGHER!THAN!HIGH!SCHOOL.! sufficiency. Poverty

BROOKLYN’S!POVERTY!RATE!REMAINS!ABOVE!AVERAGE.!HOWEVER,!BETWEEN! 2000!AND!2013,!BROOKLYN!EXPERIENCED!THE!LARGEST!DECLINE!IN!THE! PERCENTAGE!OF!POPULATION!LIVING!BELOW!POVERTY!LEVEL.! White Black Asian Other

25.1% 23.3% 21.1% 21.2% 20.9% 18.2% Poverty0Rates0by0Educational0Attainment,02013 16.0% 15.8% 14.6%13.6% 12.4%13.2% 22.6% 15.7% 34.0% 15.2% 29.5% 11.1% 8.8% 5.5%

Brooklyn New6York6City New6York6State US Less0than0high0School High0School Some Bachelor0Degree0or 2000 2008 2013 College/Associate Higher Source: U.S. Census Bureau and LEG. Degree Brooklyn New0York0State ! #

! 26# POVERTY!IN!BROOKLYN!SPREADS!OUT!THROUGH!THE!BOROUGH!BUT!IS! Inequality PARTICULARLY!CONCENTRATED!IN!CERTAIN!NEIGHBORHOODS!SUCH!AS!BOROUGH! PARK,!BROWNSVILLE/OCEAN!HILL,!AND!EAST!NEW!YORK/STARRETT!CITY.!! Income inequality has been shown to negatively correlate with life expectancy, math skills, literacy, trust, and social mobility, and to positively Poverty Rates* in NYC by Neighborhood, 2008-2012 correlate with less desirable socio-economic outcomes, such as imprisonment, and obesity.19 These effects severely limit the development of human capital leading to lower economic performance. Furthermore, inequality has been shown to negatively affect economic growth.20

For these reasons, Federico Cingano at the Organization for Economic Co- operation and Development (OECD), points out that policies that reduce income inequality, not only improve key social outcomes, but also sustain long-term growth. Cinganos’ research suggests that redistributive policies aimed at reducing inequality need not undermine growth.21

How is Brooklyn Doing? We examined two commonly used metrics to assess inequality in Brooklyn: the Gini index22 and the ratio of household income at the 80th percentile to income at the 20th percentile (P80/20 index).23 All else equal, higher Gini and P80/20 indexes indicate higher levels of inequality. Both indicators point toward relatively high inequality in Brooklyn compared to the rest of the city (with the exception of Manhattan, which has very high indices of inequality), the state and the country as a whole.24

While an in-depth analysis of inequality, its consequences, and potential solutions is beyond the scope of this study, it is an important issue and identifying effective solutions requires further analysis. For example, it needs to be established whether inequality in Brooklyn is primarily from disparities at the bottom of the income or at the top. Recent research suggests that lowering inequality by reducing income disparities at the bottom of the income distribution has a greater positive impact on economic performance than if the focus were on reducing top inequality. If that is the case then, policies that focus on the poorest households may be more effective than a focus on top incomes.25

Source: NYC Office of the Mayor, “The CEO Poverty Measure 2005-2012”, April 2014. *The Office of the Mayor uses a slightly different definition of poverty. Therefore, the numbers shown in this figure are not directly comparable to the American Community Survey numbers used in the rest of this section.

! 27# ACCORDING!TO!TWO!DIFFERENT!MEASURES!OF!INEQUALITY!(THE!GINI!INDEXT!AND! THE!RATIO!OF!HOUSEHOLDS’!INCOME!AT!THE!80TH!PERCENTILE!TO!INCOME!AT!THE! Residential Real Estate 20TH!PERCENTILE)!THE!DISTRIBUTION!OF!INCOME!IN!BROOKLYN!IS!MORE!UNEQUAL! RELATIVE!TO!THE!STATE!AND!OTHER!BOROUGHS!IN!THE!CITY,!EXCEPT! Housing production is an important indicator of the vitality of a regional MANHATTAN.! economy. In a strong economy, people are more likely to purchase new GINI5Coefficient,52013 homes; conversely, in a weak economy, people are less likely to buy new homes. According to Indiana University, “the housing market is generally 0.6012 seen as one of the first economic sectors to rise or fall when economic 0.5197 0.5472 conditions improve or degrade, and housing permits and starts can be early 0.4956 0.5098 0.4811 0.4484 0.4579 indicators of activity in the housing market.” In general, new residential housing construction leads to other types of economic production. For example, housing production has an effect on related industries, such as banking, the mortgage sector, raw materials, employment, construction, manufacturing and real estate. Many of these industries are local-based. Housing production is also an indication of the attractiveness of a region. Brooklyn The5Bronx Manhattan Queens Staten NYC New5York United People typically choose to move to attractive locations where jobs are Island State States plentiful and quality of life is high. Source: U.S. Census Bureau and LEG

How is Brooklyn Doing? Ratio1of1Household1Income1at1the180th1Percentile1 People vote with their feet and they are voting for Brooklyn. As explained above, not only is Brooklyn is the largest borough in the city (and largest to1Income1at1the120th1Percentile county in the state) with 2.62 million residents, it also the fastest growing 2009I20131average borough in New York City in terms of population. This increase in population 8.6 translates into a significant increase in housing demand.

6.4 6.4 Developers have responded to the increase in demand by significantly 5.5 increasing the number of housing units. Brooklyn has led the city in housing 4.8 5.1 production over the past 14 years. Between 2000 and 2014, Brooklyn accounted for 30% percent of all housing units produced in New York City. Housing production in Brooklyn peaked in 2008 at the apex of the housing market frenzy. In the four-year period between 2005 and 2008, nearly 42,000 residential building permits were issued in Brooklyn. However, Brooklyn The1Bronx Manhattan Queens Staten1Island New1York housing production plummeted following the collapse of the U.S. housing State market. During the four-year period between 2009 and 2012, less than 8,000 Source: http://www.countyhealthrankings.org and LEG. residential building permits were issued in Brooklyn. Data for the two most recent years indicate a resurgence in housing production. In 2013, Brooklyn experienced its largest one-year increase in the number of residential building permits issued in the past 14 years. In 2014, approximately 7,500

! 28# building permits were issued in Brooklyn, surpassing 2004 levels, but still BROOKLYN!HAS!LED!ALL!BOROUGHS!IN!GROWTH!OF!RESIDENTIAL!UNITS!BEFORE! significantly below the peak of 12,700 issued in 2008. AND!AFTER!THE!GREAT!RECESSION.!ACCOUNTING!FOR!NEARLY!30%!OF!ALL! RESIDENTIAL!BUILDING!PERMITS!IN!THE!CITY!BETWEEN!2000!AND!2014.!! Although the data does not permit a breakdown of rental vs. owner- occupied, the most recent wave of residential construction in Brooklyn Residential*Buildign*Permits*by*Borough appears to be tilted toward rental projects. This is partly due to cheaper land Number*of*units,*2000:2014 prices (compared to Manhattan where high-end condos make better Period Brooklyn The.Bronx Manahattan Queens Staten.Island NYC financial sense), but also due to tighter lender requirements for condo 2000:2008 65,896 29,512 62,916 50,579 16,268 225,171 financing in the wake of the collapse of the U.S. housing market.26 2009:2014 21,662 10,902 17,221 16,503 4,244 70,532 Total 87,558 40,414 80,137 67,082 20,512 295,703 Despite a boom in housing production between 2005 and 2008, and a %*of*Total 30% 14% 27% 23% 7% 100% resurgence in 2013 and 2014, housing supply has not kept up with demand in Brooklyn. As a result, prices have increased significantly. As of the fourth Source: U.S. Census State of the Cities Data Systems and LEG. quarter of 2014, the median home price in Brooklyn was $585,000; the ! second highest in the city. Not only are Brooklyn’s home prices high, but IN!2013,!BROOKLYN!EXPERIENCED!ITS!LARGEST!ONEcYEAR!INCREASE!(IN!ABSOLUTE! they are rising the fastest in the city. While price increases can be good for NUMBERS)!IN!THE!NUMBER!OF!RESIDENTIAL!BUILDING!PERMITS!ISSUED!IN!THE! the local economy (by inducing investment in housing production and PAST!13!YEARS.!! 27 increasing household wealth of homeowners) , they could affect long term ! growth particularly as increases price many would-be buyers out of the MORE!THAN!7,500!BUILDING!PERMITS!WERE!ISSUED!IN!2014,!SURPASSING! market. HOUSING!PROUDUCTION!LEVELS!IN!2004.!HOWEVER,!HOUSING!PROUCTION!IS! STILL!LESS!THAN!HALF!THAN!AT!THE!PEAK!OF!2008.! RealtyTrac, a real estate information company, examined data through October 2014 and concluded that Brooklyn, where a resident would need to Annual2Residential2Building2Permits2in2Brooklyn devote 98 percent of the median income to afford the payment on a median- Residential2Units2in21,000's priced home, was the least-affordable market of the 475 U.S. counties 12,744 28 examined. According to the same study, Brooklyn is one of 12 submarkets 10,930 Multifamily2 that now have a higher median home price than the peak of the 2005-2008 9,191 9,028 Share2of2 property bubble. It is not only home prices that have been rapidly increasing. Bldg.2Permits 7,551 6,825 Between March 2012 and March 2014, the median rent in Brooklyn 6,054 6,140 5,247 increased 26 percent; compared to 13 in Manhattan. These are indications 29 of a market under intense pressure. 2,904 2,973 3,353 2,093 1,522 1,003 Housing market pressure can be ameliorated with increased housing 66% 61% 77% 76% 85% 89% 92% 96% 97% 96% 90% 97% 98% 98% production. New York City’s Mayor, Bill de Blasio, has called for the 93% construction of 160,000 market rate and 80,000 units of new affordable 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 housing over the next 10 years in New York City. This is welcome news, but Multifamily Single2Family2&2Duplex Total %2multifamily it remains to be seen whether this level of housing production is possible Source: U.S. Census State of the Cities Data Systems and LEG. and, if it is viable, if it will be sufficient to stabilize prices and rents. There is a lot of pent-up demand due to the drop in housing production between 2009 and 2012, which coincided with large numbers of new residents moving in.

! 29# Annual2Residential2Building2Permits2in2New2York2City Brooklyn5Median5Home5Prices Residential2Units2in21,000's

33.9 31.6 30.9 31.9 Brooklyn's2 25.2 Share2of2all

21.2 $585,000 20.5 $570,110 $535,000 18.5 18.0 $530,000 16.9 $512,500 $490,000 $485,000 15.1 $475,000 $454,383 $447,174 $405,000 8.9 10.3 6.1 6.7

29% 27% 29% 30% 34% 38% 34% 37% 19% 18% 28% 17% 31% 17% 32% Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Miller Samuel Inc. and LEG. Brooklyn Rest2of2City Source: U.S. Census State of the Cities Data Systems and LEG. Median9Rental9Price9 ! BROOKLYN!EXPERIENCED!THE!HIGHEST!INCREASE!IN!HOME!PRICES!IN!NEW!YORK! CITY!DURING!THE!PAST!10!YEARS.!MOST!OF!THIS!APPRECIATION!OCCURED!AFTER! 13%9 2009!WHEN!HOUSING!PRODUCTION!STALLED!WHILE!DEMAND!CONTINUED!TO! 26%9 increase SURGE.! $3,195 $3,200 $3,395 ! $2,900 $2,893 $2,995 BROOKLYN!HAS!THE!SECOND!HIGHEST!MEDIAN!HOME!PRICES!IN!NEW!YORK!CITY! $2,300 $2,560 Median6Home6Prices (in6Thousands) Brooklyn Manhattan

$998 March92012 March92013 March92014 March92015

$925 %6increase6over62004 Q4 29%

$775 Source: The Elliman Report and LEG.

$585 $447 $405

44% $400 $395 $375 $375 $355 $350 $345 $325 $317 Commercial Real Estate 5% 13% Trends in commercial space provide an indication of regional economic activity. Tightening of the market in the form of increased asking rental rates Brooklyn The6Bronx Manhattan Queens Staten6Island and declines in vacancy suggests strengthening economic activity. Q462004 Q462009 Q462014 Growth6over62004 Increase6over62009 Increases in vacancy and rent decreases reflect slowing demand relative to Source: Miller Samuel Inc. and LEG. supply.

! 30# In addition to vacancy and rental rates, net absorption and new construction Leasing activity is projected to improve in the second quarter of 2015, driven captures the pace of commercial market activity in terms of demand for by Hillary Clinton Campaign Headquarter’s 77,685- square-foot lease in commercial space (both leased and owner occupied space).30 Downtown Brooklyn and WeWork’s 75,228 square foot lease at 77 Sands Street. How is Brooklyn Doing? If as pointed out by Newmark et. al., soft leasing activity is due to space Brooklyn is doing well relative to the other office submarkets outside of constraints, new office projects in the pipeline should ameliorate absorption Manhattan. Over the past decade, the market has shifted from back of and vacancy while continuing to drive up rental rates. house space for larger companies, including many in the financial sector to AVERAGE!ASKING!RENTS!IN!BROOKLYN!HAVE!HELD!STEADY!SINCE!THE!FIRST! smaller businesses in industries such as tech and food. We focus on the QUARTER!OF!2011.!SHORT!TERM!TRENDS!INDICATE!A!SIGNFICANT!TIGHTENING!OF! office market in Downtown Brooklyn as a gauge of the broader market. THE!MARKET!WITH!RENTS!INCREASING!NEARLY!18!PERCENT!BETWEEN!Q1!2014! Downtown Brooklyn represents the largest submarket within Brooklyn and is AND!Q1!2015.! therefore used as barometer for borough-wide trends. Mid- and long-term ! trends in vacancy and rental rates indicate a strong and steadily improving DESPITE!RECENT!INCREASES,!BROOKLYN!CONTINUES!TO!OFFER!MORE!AFFORDABLE! office real estate market. Average asking rents have been steadily RENTS!THAN!MANHATTAN.!VACANCY!RATES!IN!BROOKLYN!ARE!LOWER!THAN! increasing since 2003 (albeit slowly) and vacancy is significantly lower than DOWNTOWN!MANHATTAN!AND!COMPARABLE!TO!MIDTOWN.! its peak of 10.5 percent during the fourth quarter of 2010. Tech and media Quoted'Rents'per'Sq.'Ft.' businesses are increasingly choosing to locate in Downtown Brooklyn. For Office example, MakerBot, a 3D printing company, and Tough Mudder, a fitness $70.00 company, recently moved to MetroTech, which also saw the return of 2,000 $58.46' $60.31' $59.41' $59.64' $55.61' $57.21' $60.00 $52.98' $54.80' JP Morgan Chase employees. Downtown Brooklyn’s office vacancy rate $51.15' $49.13' $46.11' $50.00 $43.40' mid-year 2015, stood about 7% and for the first time since MetroTech was $39.49' $39.84' $40.73' $40.92' 31 $39.09' $39.26' completed in the 1980s, new office space is being developed. $40.00

Shorter-term trends show mixed performance. Rents experienced an $30.00 $35.40' $36.34' $30.84' $31.26' $29.90' $30.93' $31.18' $32.14' $30.96' increase of nearly 18 percent between the first quarter of 2014 and the first $20.00 quarter of 2015. This increase is partly driven by the availability of high-rent, $10.00 rehabilitated space becoming available at Empire Stores and Dumbo $0.00 Heights (see below). However, vacancy increased from 5 percent to 7.3 '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q percent during the same period. Moreover, net absorption has been negative for two consecutive years. Newmark Grubb Knight Frank point out that: Donwtown'Brooklyn Downtown'Manhattan Midtown'Manhattan

“Space constraints limited leasing activity in Dumbo/Downtown Brooklyn for Source: Costar and LEG. the second consecutive quarter. The first quarter totaled 57,530 square feet ! of leasing, down from the 10-year average of 81,517 square feet. In total, OUTSIDE!OF!MANHATTAN,!DOWNTOWN!BROOKLYN!COMMANDS!THE!HIGHEST! 119,396 square feet of leasing activity has occurred over the past six RENTS!IN!NYC!AND!SOME!SURROUNDING!COUNTIES.!ASKING!RENTS!IN!SOUTH!AND! months—a sharp drop-off from 481,309 square feet during the prior six NORTH!BROOKLYN!ARE!ALSO!ABOVE!AVERAGE!COMPARED!TO!OTHER!BOROUGHS.! months, when marque tenants like Etsy, Huge, and WeWork signed deals THIS!IS!AN!INDICATION!OF!THE!STRONG!DEMAND!FOR!SPACE!IN!BROOKLYN! for large blocks of space.”32 RELATIVE!TO!THE!REST!OF!THE!BOROUGHS.!

! 31# NET!ABSORPTION!HAS!BEEN!LESS!THAN!STELLAR.!STRONG!PERFORMANCE!IN!2011! NYC'Boroughs'Quoted'Rental'Rates AND!2012,!WAS!FOLLOWED!BY!NEGATIVE!NET!ABSORPTION!WHICH!REFLECTED! Office'Q1'2015 THE!INCREASES!IN!VACANCY.! $36.34&&&& $36.15'''' Annual)Net)Absorption,)Downtown)Brooklyn $31.90'''' $31.13'''' $30.59&&&& Office)Space)(1000s)Sq.)Ft.) $28.25'''' $27.38&&&& $26.95'''' $26.77'''' $26.67'''' $25.90'''' $25.55'''' $24.77'''' $24.28'''' $24.14'''' $23.19'''' $20.90''''

$19.68'''' 1,449) $17.80''''

474) 345) 425) 232) 46) 47)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009(28) 2010 2011 2012 2013 2014 (41) (95) (239) (313) (40) (421)

(1,112) Staten'Island South'Queens Central'Suffolk Central'Nassau Eastern'Suffolk Eastern'Nassau South'Brooklyn North'Brooklyn Central'Queens Western'Suffolk Western'Nassau Southern'Nassau Northern'Nassau Southeast'Nassau Northeast'Queens

Northwest'Queens Source: Costar and LEG. Downtown'Brooklyn Southwestern'Suffolk

All'Submarkets'Average ! Office Building Pipeline VACANCY!HAS!DECREASED!SIGNIFICANTLY!SINCE!PEAKING!AT!10.5!PERCENT!IN!Q4! According to Costar there has been no new construction of office space in 2010!(NOT!SHOWN!IN!GRAPH).!HOWEVER,!SHORT!TERM!TRENDS!POINT!TOWARD! over 10 years in downtown Brooklyn. Nevertheless, there is a significant INCREASES!IN!VACANCY!FROM!5!PERCENT!TO!7.3!BETWEEN!Q1!2014!AND!Q1!2015.! pipeline of new office projects (mostly renovations and conversions) in Vacancy4Rates Brooklyn, which indicates that developers are responding to increased Office demand. 11.40% 11.20% 12.0% 10.70% 10.4% → In the , where 3.5 million square feet of leasable 9.40% 10.0% 9.00% 8.80% space in 40 buildings over 300 acres is fully occupied by emerging 8.30% 8.30% 10.20% 7.90% 7.60% 7.90% 7.50% 7.70% technology and creative industry firms, a new building is in the works. 8.0% The Brooklyn Navy Yard Development Corporation has partnered with 8.00% 8.0% 8.0% 7.70% 6.0% 7.2% 7.1% 7.3% Boston Properties and WeWork to develop a $380 million project. At 6.2% 675,000 square feet, the building will be one of the largest commercial 4.0% 5.6% 5.0% 4.6% buildings constructed in an outer borough in decades. Anchored by a 2.0% 220,000 square foot lease with WeWork, it is anticipated that the building will house 4,000 jobs when fully occupied. In addition, there is 0.0% an estimated 15-20 million square feet of untapped development rights '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 on the property.33 34 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q → Quinlan Development Group LLC and Building & Land Technology Brooklyn Downtown4Manhattan Midtown4Manhattan bought a 10-story, self-storage facility and plans to convert it into a Source: Costar and LEG. 257,000 square foot office building. The building sits close to an array of

! 32# subway lines, the Long Island Rail Road’s Atlantic Terminal station and Prospect Park, also has experienced the most significant rent increases 35 the Barclays Center. since 2009. From 2014, six corridors expanded, four thoroughfares were → Midtown Equities’ renovation of a 150-year-old coffee warehouse on the divided to account for certain sections commanding higher rents, and 15 saw East River into 380,000 square feet of high-end office and retail space enough of an increase in pricing to jump to the next tier in average price per in a project called Empire Stores is expected to be completed in 2015.36 square foot. → Kushner Companies, Invesco, LIVWRK and RFR Realty’s renovation of The 2015 CPEX Brooklyn Retail Report credits the expansion of the retail six buildings at Dumbo Heights will create a total of 1.2 million square sector to five key trends: feet aimed at technology companies, including 80,000 square feet of ground-floor retail space. The project already inked one of its anchor → Population growth tenants, Etsy, which leased 200,000 square feet for10 years. 37 It is also reported that high-end jewelry retailer Alexis Bittar is moving its office → Employment growth 38 headquarters to the Dumbo Heights campus. → Large footprint of institutions of higher education (i.e., large student population) → Industry City, a late 19th century industrial complex in Sunset Park with waterfront views is slated for a $1 billion makeover that aims to → Growth in the hospitality sector transform the property into a modern hub drawing as many as 20,000 workers in fields such as food, fashion, art, media and e-commerce.39 → Strong offering of tourist and entertainment attractions

→ Additionally, Brooklyn is a step closer to its first speculative, ground-up, These factors have fueled the growth of the retail sector in Brooklyn and state-of-the-art office building in decades. Heritage Equity Partners is helped to attract numerous national and international retailers to the borough planning construction of an eight-story boutique office property with since 2009. Retailers opening their first store in Brooklyn include Apple, floors ranging from 30,000 to 50,000 square feet each, with substantial Madewell, Alamo Drafthouse Cinema, Whole Foods, Uniqlo and Lululemon. retail on the ground-floor. The project will take up an entire city block, In addition, many national retailers and restaurants have expanded in running from North 12th to North 13th streets between Kent and Wythe Avenue avenues in Williamsburg.40 Downtown Brooklyn, including Nordstrom Rack, H&M, Sephora, Shake Shack, Gap Factory Store, and Banana Republic Outlet. The strength of the retail sector in Brooklyn also helped numerous local-bred retailers become Retail Real Estate Market so successful that they are currently expanding their business locally, regionally, and nationally, exporting the “Brooklyn” brand. As an example, 2015 CPEX Brooklyn Retail Report tracks retail activity in Brooklyn, Brooklyn Industries has opened stores in Chicago, and Portland, Oregon specifically the number of retail corridors in the Borough. The 2015 report with further expansion plans in the Northeast, the Pacific Northwest and reveals a dramatic expansion of retail in Brooklyn. Between 2009 and 2015 other major cities around the country. the number of retail corridors in the Borough increased by more than 169 In spite of all this growth, Brooklyn is still significantly under-retailed in percent from 45 to 121 corridors. The expansion of retail has accelerated in comparison to the top 50 largest retail markets in the country. On average, the past year. CPEX identified 27 additional retail corridors from the previous these markets have 55 square feet of retail space per capita, while Brooklyn year’s report to account for the rapidly expanding retail scene in flourishing has only 23 square feet of space per person. As a more local comparison, neighborhoods like , Williamsburg, and Crown Heights – the Brooklyn’s population is almost equal to that of Long Island, but has only a neighborhoods with the greatest number of corridors in the borough. fraction of the retail square footage. However, as noted in the report, “the study reveals a tale of two Brooklyns; Southern Brooklyn [neighborhoods to the south and east of Prospect Park] didn’t undergo as much expansion or appreciation” as those to the north and west of Prospect Park. Northern Brooklyn, the area to the north and west of

! 33# uses, Salmar Properties attracted major retailers to 180,000 square feet of space on the first and second floors. Bed Bath & Beyond, buybuy Baby, Cost Plus World Market and Harmon Face Values will join electronics retailer Micro Center. Saks Fifth Avenue will open its first outer borough location with an Off Fifth discount store on the ground floor.42 In addition to the development of individual stores, there are major retail projects throughout the borough. → City Point (Downtown Brooklyn): Anchoring the eastern end of the Fulton Mall is a 1.9 million square foot mixed use development with over → Gateway Center (East New York): The hugely successful shopping 700,000 square feet of retail. Developed by Acadia Realty Trust and center adjacent to the Belt Parkway is undergoing an expansion that will Washington Square Partners, leases have been signed with Century 21 double its size to 1.2 million square feet. The Related Companies department store, Target and Alamo Drafthouse Cinema. On the originally developed the project in 2002 and brought national chains like concourse level, 26,000 square feet will be devoted to a Brooklyn- Home Depot and Bed, Bath & Beyond to a severely under-retailed centric food hall with a combination of established names and new neighborhood. The expansion has attracted an even greater list of proprietors. The project is slated to open in 2016. 43 familiar brands including Gap, JC Penny, Sports Authority, and Bank of America.41 ! ! → Liberty View Industrial Plaza (Sunset Park): While most of this 1.2 million square foot building is devoted to manufacturing and industrial

! 34# Brooklyn#Retail#Corridor#Map#2015# #

Source: 2015 CPEX Brooklyn Retail Report and LEG

! 35# III. ANALYSIS OF BROOKLYN’S INDUSTRIES !

Moderate Growth: small and medium size industries, which have The previous chapter provided a broad overview of Brooklyn’s economic → grown at a moderate pace and are expected to continue growing at a performance. In this chapter, we focus on employment, job growth, and moderate pace. wages by industry to better understand how the Brooklyn economy works, what its strengths and weaknesses are, and where its hidden potential lies. → Under Pressure: small and medium sized industries with declining or stagnant job growth and not very optimistic growth projections. 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 It is important to recognize that this analysis is at the two-digit NAICS cut at understanding its potential.44 industry level. This means that the data represent broad categories of industry aggregation. Such level of aggregation hides finer industry detail. The factors analyzed as part of this analysis include: For example, an industry may be cataloged as an “Under Pressure”. → Industry Mix & Specialization (as measured by Location Quotients) However, there may be some subsectors of this industry which are actually → Employment Growth and its Components (Shift-share analysis) thriving and may belong in another category. Nevertheless, the two-digit analysis is useful because the subsectors included within each industry → Projected Job Growth (based on Statewide-forecasts) group have inherent, similar input structures, labor skills, and production → Wages Levels and Growth processes. This permits us to draw generalized conclusions about their prospects for growth. This analysis permits us to answer some of the following questions: Detailed industry descriptions along with examples of Brooklyn companies → How does the local economy compare to the city and state economy? are presented in Appendix A. → Which industries make the regional economy unique? Summary → What industries have been growing/declining? This analysis highlights Brooklyn’s reliance on the three largest industries for → Are industry growth/declines in employment due to industry-wide employment growth. Employment growth in Brooklyn has been driven by trends, general economic growth, or due to unique local factors? local competitive factors (especially growing consumer demand). As a result

of Brooklyn’s unique competitive factors, most industries have experienced The section on Employment Growth and its Components also presents a employment growth above the national average. Therefore the economy is brief overview of some of the factors that make the Brooklyn economy quickly diversifying, as growth of smaller industries accelerates. unique (i.e., that give it an edge in continuing to experience sustained economic growth). Brooklyn’s unique competitive factors driving employment growth include growing consumer demand, widening access to world class global and All of the data analyzed is used to catalog the industries into four main regional markets, and providing a quality living environment. Other categories: competitive factors, which are showing significant improvements, are the quality and quantity of the labor force and educational and research → Growth-Driving: Large industries, which are responsible for most of the growth recently experienced in Brooklyn. infrastructure. Further strengthening of these factors will help to ensure sustained long-term growth in the borough. → Emerging: Relatively small industries that have experienced significant growth and are projected to continue growing.

! 36# Industry Mix and Specialization indicates the local area is less specialized than the reference region in that particular industry. A value greater than 1 indicates the local area has a higher concentration of employment in that industry relative to the larger Industry Mix region. 46

Brooklyn’s employment by industry is heavily concentrated in three EMPLOYMENT!IS!HIGHLY!CONCENTRATED.!THE!THREE!LARGEST!INDUSTRIES! industries: 1) Health Care and Social Assistance, 2) Retail Trade and, 3) ACCOUNT!FOR!MORE!THAN!HALF!OF!TOTAL!EMPLOYMENT.!THE!HEALTH!CARE!&! Entertainment and Tourism. These three industries account for more than SOCIAL!ASSISTANCE!INDUSTRY!IS!PARTICULARLY!LARGE.! half of total employment in Brooklyn. Health Care and Social assistance accounts for a particularly large share of local employment; approximately Employment>Distribution>by>Industry 30 percent. While diversification is important for a healthy local economy, 2014 Other'Industries'[1] increasing diversity of employment should not be a goal in itself. More Real'Estate'and'Rental' Health'Care'and'Social' and'Leasing specifically, there should not be a focus on attracting industries not currently Assistance Finance'and'Insurance present in Brooklyn. Instead, there should be a focus on building off the 6% US diversity already present as a way of offsetting the risks from reliance on Transportation'and' 4% 13% Warehousing 2% 6% only a few industries. 3% State 6% Professional,'Scientific,' 15% 2% Moreover, Brooklyn’s relatively high concentration in the health care industry and'Technical'Services 7% Retail'Trade 6% 2% NYC 8% 16% presents challenges and opportunities. On the one hand, lack of economic 4% 11% 3%3% 7% 3% 3% diversity can exacerbate the negative effects of potential external industry 3% 3% Brooklyn 11% shocks on employment security, income and living standards. On the other 4% 30% 9% 4% 9% hand, industry specialization can contribute to business competitiveness Manufacturing 5% 9% 4% 5% 10% through clustering. 2% 5% 13% 5% 5% 5% 6% 8% 10% 11% In the case of Brooklyn, there are various reasons why the benefits of a high 3% Tourism'&' 6% 4% 3% 14% Entertainment'[2] concentration of employment in the Health Care industry may outweigh the 4% Admin.'and'Support' 4% risks, at least in the short- and medium-term. First, the aging of the U.S. and'Waste'Mgnt.'and' 4% Remediation'Services 4% 15% baby-boomers, means that the health care industry is projected to be one of 4% 4% 45 the fastest growing industries in the state through 2022. As shown below, 5% 15% Wholesale'Trade 3% Brooklyn’s economy has already benefited from employment growth in this 2% Construction industry. The industry added nearly 26,000 net new jobs in Brooklyn since Government 2009. Second, the industry’s average income wages are middle-income Other'Services'(except' Public'Administration) Educational'Services wages, providing employment opportunities for middle-income households. Source: U.S. Bureau of Labor Statistics and LEG. [1] Includes Management of Companies and Enterprises, Unclassified, Utilities, Industry Specialization Information, Agriculture, Forestry, Fishing and Hunting, Mining, Quarrying, and Oil and Gas Extraction. We use location quotients (LQ’s) to identify industry specialization in [2] Includes NAICS 71 (Arts, Entertainment, and Recreation) and NAICS 72 Brooklyn. LQ’s quantify how closely the local area's business composition (Accommodation and Food Services) mirrors the structure of the economy of the reference region (e.g., country, state, or metro region). An LQ of 1 indicates the local share of employment in an industry is equal to the reference region’s share. An LQ of less than 1

! 37# High-Specialization Industries Real Estate and Rental and Leasing most likely has a high LQ relative to the state and U.S. due to the standard practice of using rental brokers to be able The location quotients, not surprisingly, confirm Brooklyn’s specialization in to rent an apartment in New York City. Note that the LQ in this industry is Health Care and Social Assistance relative to the city, state, and U.S. In close to one relative to New York City meaning that this industry’s share of economic theory, very high LQ’s are assumed to identify export industries employment is comparable to the city as a whole. (i.e., industries that, in addition to satisfying local demand, also sell goods and services to a significant number of customers outside of the area). Low-Specialization Industries However, in the case of the Health Care Industry in Brooklyn, its high LQ Industries with low specialization in Brooklyn (i.e., low LQs) include: 1) may be due to two factors: Brooklyn’s large population and density Government, 2) Professional, Scientific and Technical Services, 3) Finance (important determinants in the location of health care providers) and its and Insurance, 4) Information, and 5) Management of Companies and proximity to Manhattan (which due to agglomeration economies reduces Enterprises. Brooklyn’s low LQ in these industries is not surprising given that employment in Brooklyn in other industries). This is examined in the next businesses in these industries tend to locate in Manhattan due to section of this report. agglomeration economies. Other Brooklyn industries with a high degree of specialization, relative to the According to economic theory, industries with low LQs may indicate an city, include 1) Retail Trade, 2) Construction, 3) Wholesale Trade, and 4) opportunity to develop businesses in the local area to meet local demand. Manufacturing. It is important to note that, when compared against the state While it may be difficult to complete with the benefits of agglomeration in and the U.S., these industries do not appear to be highly specialized in Manhattan, Brooklyn is already experiencing rapid growth in some of these Brooklyn, particularly manufacturing. This tells us that while it is small industries, specifically 1) Professional, Scientific, and Technical Services, 2) relative to the state and U.S. economy, Brooklyn continues to play an Management of Companies and Enterprises, and to some degree, 3) important role in these industries within the New York City economy. In other Information. As shown in the shift-share analysis, most of the local words, there are unique competitive advantages that make Brooklyn suitable employment growth experienced in these industries is due to Brooklyn’s to provide these goods and services to the region. competitive effect rather than general, industry wide growth. This indicates Other specialized industries, relative to the state and/or U.S., but not relative that Brooklyn has unique competitive advantages that make it suitable for to the city include, Private Sector Educational Services, Other Services these industries to prosper. Therefore, while these industries currently have (except Public Administration), and Real Estate and Rental and Leasing. a relatively low LQ, growth trends point toward an increased role by these industries in the local economy. It is not surprising that Brooklyn exhibits a high LQ relative to the state and U.S. in Educational Services as it is home to 20 campuses, including relatively large institutions of higher education, such as Long Island University, ASA College, Saint Joseph’s College, the Pratt Institute, New York University Polytechnic School of Engineering, and St. Francis College. Together, these schools enroll nearly 40,000 students. Another 17,000 students attend Brooklyn College in Midwood.

! 38# BROOKLYN!HAS!A!HIGH!CONCENTRATION!OF!EMPLOYMENT!IN!HEALTH!CARE!AND! Industry Job Growth and Its Components SOCIAL!SERVICES,!EDUCATIONAL!SERVICES,!AND!OTHER!SERVICES!(EXCEPT!PUBLIC! ADMIN.)!RELATIVE!TO!THE!STATE!AND!U.S.!ALSO,!RELATIVELY!HIGH!LOCATION! QUOTIENTS!RELATIVE!TO!THE!CITY!IN!RETAIL,!CONSTRUCTION,!WHOLESALE!TRADE,! Brooklyn’s pace of job creation has been very impressive, particularly since AND!MANUFACTURING,!INDICATE!THAT!THE!BOROUGH!PLAYS!AN!IMPORTANT! the end of the Great Recession. Between 2009 and 2014, employment in ROLE!IN!THESE!INDUSTRIES!WITHIN!THE!REGIONAL!ECONOMY.!! Brooklyn gained significant momentum growing at approximately 3.6 percent Brooklyn's*Industry*Mix*and*Specialization per year, and adding nearly 91,000 net new jobs. During this period, Aggregated*at*the*two*1.25) which, although small, increased its footprint in Brooklyn significantly, from Moderate

! 39# significant number of net new jobs (800 new jobs). The other three industries → Local Competitive Effect: is the portion of growth that is attributable to experienced mild job losses through 2013 and only recovered in 2014. the competitive nature of the local industries. It is growth that cannot be explained by national trends in that industry or the economy as a A very positive note for Brooklyn is that only one industry, Finance and whole. It is labeled as Local Competitive Effect because it explains Insurance, experienced job losses between 2009 and 2014 and the losses how much of the change in a given industry is due to competitive are so mild that they are probably within the margin of error for the survey. advantages unique to the region. For simplicity, we aggregate the National Growth Share and Industrial Mix Local Competitive Effect effects into a single category labeled as Expected Change. The Expected Change is simply the growth of a particular industry at the national level.47 Having disaggregated employment growth by industry to identify the drivers of the local economy, we go a step further and bifurcate industry EMPLOYMENT!GROWTH!WAS!DRIVEN!BY!HEALTH!CARE!AND!SOCIAL!ASSISTANCE,! employment growth into various factors to identify the industries where RETAIL!TRADE,!AND!TOURISM!AND!ENTERTAINMENT,!WHICH!ACCOUNTED!FOR! employment growth has occurred due to a local competitive effect. MORE!THAN!60,000!NET!NEW!JOBS,!APPROXIMATELY!TWOcTHIRDS!OF!THE!TOTAL.! HOWEVER,!MOST!INDUSTRIES!IN!BROOKLYN!ALSO!EXPERIENCED!GROWTH!IN! Local economies and employment change for a variety of factors. One way ABSOLUTE!AND!PERCENTAGE!TERMS.!STRONG!GROWTH!IN!SMALLER!INDUSTRIES! to identify the factors contributing to growth and change is to use shift-share INDICATES!FURTHER!DIVERSIFICATION!OF!THE!LOCAL!ECONOMY.! analysis. In summary, shift-share analysis decomposes industry employment changes into three contributing factors:

→ National Growth Effect: is the portion of growth that is attributable to overall growth in the national economy.

→ Industrial Mix Effect: is the portion of the change attributed to the performance of the specific economic industry. It equals the theoretical change in the local industry had it increased at the same rate as the industry nationwide, minus the National Growth Effect.

! 40# MediumUTerm5Job5Growth5in5Brooklyn5by5Industry:52009U20145[1] Sorted5by5net5new5jobs5added5since52009

Industries5with5Positive5Job5Growth5(Jobs5in51,000s) Compound Annual5Growth5Rate5 (2009U14)

Health5Care5and5Social5Assistance 145.5 26.0 171.5 3.3%

Tourism5&5Entertainment5[2] 28.4 18.8 47.3 10.7%

Retail5Trade 56.8 15.4 72.2 4.9%

Admin.5and5Support5and5Waste5Mgmnt. 19.0 6.2 25.2 5.8% and5Remediation5Services

Professional,5Scientific, 13.7 5.9 19.6 7.4% and5Technical5Services

Educational5Services 22.4 4.9 27.4 4.0%

Other5Services 22.2 25.6 2.9% (except5Public5Administration) 3.4

Construction 23.8 2.8 26.6 2.3%

Real5Estate5and5Rental5and5Leasing 14.0 2.3 16.4 3.1%

Information 6.7 1.3 8.0 3.6%

Management5of5Companies 1.8 0.9 2.7 8.5% and5Enterprises

Wholesale5Trade 23.8 0.8 24.6 0.7% average all industries5 3.6% Government 35.8 0.1 35.8 0.0%

Manufacturing 20.7 0.0 20.7 0.0%

Transportation5and5Warehousing 18.6 0.0 18.6 Total5Jobs5in52009 Net5Jobs5Added5since52009 Total1Jobs1in12014 0.0%

0 20 40 60 80 100 120 140 160 180 200U5% 0% 5% 10% 15%

Industries5with5Negative5Job5Growth5(Jobs5in51,000s) Compound Annual5Growth5Rate5 (2009U14)

Finance5and5Insurance 15.4 U0.15 Total1Jobs1in12014 Net5Jobs5Lost5since52009 U0.1%

0 20 40 60 80 100 120 140 160 180U5% 0% 5% 10% 15%

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).

! 41# The shift-share analysis highlights the robustness and competitiveness of jobs nationwide, but did not experience similar growth locally due to region- the Brooklyn economy. A significant share of the net job growth experienced specific challenges in these industries. between 2009 and 2014 is due to the competitive effect. All twelve of the industries that experienced moderate to strong job growth in absolute terms “International!firms!want!to!be!in!Brooklyn!because!(a)! in Brooklyn between 2009 and 2014, can attribute some growth due to local they!want!to!be!part!of!Start!Up!NY,!(b)!they!want!to! competitive effect. In other words, all these industries experienced growth due to competitive advantages unique to Brooklyn. In fact, the competitive access!all!the!research!institutions!and!(c)!they! effect accounted for more than half of jobs created in ten of the twelve recognize!there!is!a!huge!market!–!Brooklyn!alone!has! industries that exhibited significant growth in Brooklyn between 2009 and 48 over!two!million!people”!! 2014. EVA$CRAMER,$President,$Downstate$Technology$Center! The industries with the largest local competitive effect are, in descending order: 1) Tourism & Entertainment, 2) Retail Trade, 3) Health Care and Social Assistance, 4) Professional, Scientific and Technical Services, and 5) Brooklyn’s Competitive Advantages Other Services. As shown below, not only do these industries have the If, as highlighted above, a significant portion of employment growth is driven largest number of jobs created due to the competitive effect, but in one case, by local competitive advantages, then what are these advantages? Regional the local competitive effect was responsible for most of the employment economic development literature identifies five primary regional competitive growth. For example, Tourism & Entertainment added approximately 18,800 49 advantages : jobs between 2009 and 2014. Approximately 3,500 of those jobs were due to nationwide industry growth and 15,300 jobs (more than 82 percent of total → Demand conditions (population potential and income level, growth) were due to the local competitive effect. These patterns are an respectively); indication that unique regional advantages exist in these industries that → Quantity and quality of the labor force; ought to be identified and fostered. → Educational and research infrastructure; It is interesting to note that while Health Care and Social Assistance added Accessibility (solid transportation networks and integration with larger the most jobs (26,000) between 2009 and 2014 in Brooklyn, only 30 percent → region); and of that growth (approximately 7,700 jobs) was due to the local competitive effect. By comparison, Retail Trade added 15,400 jobs during the same → Living environment (cultural services and physical factors, which period, but approximately 80 percent of those jobs (12,300 jobs) were includes everything from public safety to the strong presence of what gained due to a local competitive effect. So while Retail Trade added fewer Richard Florida called the creative class) jobs overall than Health Care, it added more jobs due to local competitive The following paragraphs present a brief discussion of how Brooklyn is doing advantages than the Health Care industry. along each of these dimensions.

Other Services, Government, and Information industries are also noteworthy Demand Conditions because they lost jobs in the U.S. as a whole, but gained jobs locally. Chapter II of this report confirms that one of Brooklyn’s local competitive On the opposite end of the spectrum, there are four industries, which advantages is strong demand conditions. Brooklyn is undergoing experienced job losses primarily due to the local competitive effect. These tremendous population, and income growth, which translates into disposable include: 1) Wholesale Trade, 2) Manufacturing, 3) Finance and Insurance, income, which drives demand for products and services. This is an important and 4) Transportation and Warehousing. Three of these industries gained driver particularly for industries that sell directly to final consumers, such as Retail Trade, Arts & Entertainment and Other Services. These are precisely

! 42# the industries that exhibit the biggest employment changes due to the local tomorrow. Many of these program create synergies with companies in the competitive effect. area, as a way of ensuring that the skills learned are suitable for Brooklyn’s emerging industries. Component 2 of the Tech Triangle’s Strategic Plan Quantity and Quality of the Labor Force presents an excellent overview of the education infrastructure available in Brooklyn is the most populous county in the state and the fastest growing Brooklyn. Their findings highlight a concerted effort to improve educational borough in New York City. Brooklyn’s population is younger than that of New infrastructure. York City and the state as a whole. Population growth trends also show a Additionally, two universities in Brooklyn have launched incubators which are rising share of prime-age population, defined as those 25 to 54 years old attracting new businesses from all over the world. SUNY Downstate who tend to have higher labor participation rates and greater resilience to launched a Biotechnology Incubator adjacent to its medical center to employment cycles and economic downturns. While Brooklyn’s educational accommodate demand for space from emerging biotechnology firms with no attainment lags behind New York City and New York State, marked other place to locate in New York. By constructing small labs with the improvements have been observed over the past few years. Additionally, specialized ventilation and equipment needed by these start-ups, the new residents to Brooklyn from abroad (many of which are foreign migrants) incubator in East Flatbush has become the location of choice for domestic who hold graduate or professional degrees have increased three-fold from and international biotech firms seeking a foothold in the New York market 2009 to 2013. Brooklyn’s growing young, highly educated, and skilled (See Chapter V). NYU-Polytechnic School of Engineering has taken similar workforce is a strong positive indicator of greater economic opportunity for initiative for firms focused on clean energy and clean technology with the the region. Urban Future Lab located in Downtown Brooklyn. The only tech incubator Some of the indicators presented in Chapter V, also provide an indication of run by a higher education institution, the Lab and its two counterpart Brooklyn’s rapid transformation of its labor force. For example, the share of incubators have graduated 50 companies, which have created over 1,200 adults with terminal degrees (e.g., graduate and professional degrees) is jobs and $352 million in economic impact. (See Chapter V) increasing faster than the rest of the city, state, and country, and so is the Accessibility number of adults with degrees in science and engineering fields. Furthermore, Brooklyn is growing and attracting a large number of Brooklyn is highly interconnected to the international, national, and regional entrepreneurs. economy with two international and one domestic airport, a roadway network with linkages to the greater metropolitan area, and one of the best regional Educational and Research Infrastructure coverage metro systems in the world, which provide linkages to the rest of Education and research infrastructure is not examined in depth in this report. New York City and other parts of the region. Many of the major employers – However there are some indicators of strong education and research both historical and newly arrived – chose their locations because of the infrastructure in the borough. For example, Brooklyn is home to 20 higher transportation system. Brooklyn is served by 18 subway lines, 85 bus lines education campuses, including relatively large institutions, such as Long and an increasing number of ferries. In February 2015, New York City Mayor Island University, ASA College, Saint Joseph’s College, the Pratt Institute, Bill de Blasio proposed expanding existing ferry services to include New York University Polytechnic School of Engineering, and St. Francis additional stops in Brooklyn at Atlantic Avenue/Pier 6, Red Hook, the College. Enrollment data is not available for all of Brooklyn’s institutions of Brooklyn Army Terminal and Bay Ridge starting in 2017. higher learning. However, 18 of these institutions enroll more than 120,000 Major economic development projects have been sited throughout the students. borough, but the largest developments are in Downtown Brooklyn, which is In addition, educational and research infrastructure is not limited to higher the area best served by public transportation. Atlantic Yards, a $5 billion, 22- education. There are numerous programs, such as P-Tech and K-12 STEM, acre mixed-use development, is located on top of a train station served by 9 which seek to improve the skills and better prepare the workforce of subway lines and the Long Island Rail Road commuter system. City Point, a

! 43# 1.9 million square foot mixed-use development, is located a short walk from health and environment. Five of the top ten neighborhoods are in Brooklyn, 13 subway lines and 16 bus lines. including top-ranking Park Slope. Other Brooklyn neighborhoods in the top ten included Cobble Hill & Boreum Hill, Brooklyn Heights, Carroll Gardens & For firms requiring a connection not already served by the considerable Gowanus, and Prospect Heights. public transportation system, there are challenges. For example, accessibility is limited between the Brooklyn neighborhoods known as the Any index or ranking of cities or neighborhoods is influenced by how much Tech Triangle – DUMBO, Downtown Brooklyn, and the Navy Yard. This weight is assigned to any one of the individual raking factors, is bound to be poses a challenge for Brooklyn’s long-term economic development in these controversial and will not satisfy everybody.53 Nevertheless, Mr. Silver’s areas because it raises transportation costs, in particular the costs of moving analysis and others, which also rank some of Brooklyn neighborhoods as people around. According to prominent urban economist Edward Glaeser, all some of the most attractive in the city, highlight Brooklyn’s high quality living agglomeration economies can be understood as consequences of reduced environment. transportation costs. Transportation costs must be interpreted broadly, and Of course, a borough with more than 2.6 million inhabitants spread over 71 include the difficulties in exchanging people and ideas, as well as goods. square miles is bound to exhibit significant variability in quality of life factors Glaeser points out that “[w]hile the costs of moving goods may have and not all neighborhoods will score equally high in quality of life. For declined dramatically, the cost of moving people is still high. After all, time is example, in a recent review of rates of violent crime per capita across New a major input into human travel, and the value of time continues to rise as York City neighborhood, Brooklyn leads the way with 8 of the top 20 most people become more productive.”50 The higher transportation costs involved dangerous neighborhoods in New York City. The Bronx comes in in face-to-face delivery of goods and services, means that service industries, second with 7, Manhattan follows with 5, and Queens has zero of the top 20 the kind of industries that have been growing in Brooklyn, stand to benefit most dangerous neighborhoods in NYC.54 This data should of course be the most from reducing the cost of moving people (their customers and taken with a grain of salt and within context. With unprecedented population workers) across space. levels, New York City, including Brooklyn, is safer than ever, with recent Thus far, employment growth appears to be largely driven by demand crime rates among historic lows. Nevertheless, this type of analysis helps to factors, but if Brooklyn is going to build on the current wave of employment identify areas of the borough which may need special focus to improve the growth through agglomeration economies it must improve on intra-borough quality of life of its residents. connectivity. In addition to the competitive advantages tracked in the literature, there is a Living Environment distinct recognition that Brooklyn is attracting the workforce of the future. These young highly educated employees are changing the world of An in-depth analysis of the living environment factors that make Brooklyn residential and office leasing in Brooklyn. The consolidation of these workers attractive is beyond the scope of work of this analysis. However, Brooklyn’s in Brooklyn has been a driving force in attracting tenants to lower Manhattan residential draw has received a significant attention in the media. Some of and reducing the availability rate for Downtown Brooklyn to as low as 4 Brooklyn’s neighborhoods are consistently rated as some of the most percent.55 Attracted to an increasing number of neighborhoods throughout attractive in New York City.51 Brooklyn, these new residents prefer to live and work in the same borough. One of the most comprehensive analyses of quality of life factors by THE!LOCAL!COMPETITIVE!EFFECT!ACCOUNTS!FOR!MORE!THAN!HALF!OF!JOBS! neighborhoods was recently conducted by famed statistician Nate Silver for CREATED!IN!TEN!OF!THE!TWELVE!INDUSTRIES!THAT!EXHIBITED!GROWTH.!THIS! New York Magazine.52 He evaluated 60 neighborhoods in New York City INDICATES!THAT!UNIQUE!LOCAL!COMPETITIVE!ADVANTAGES!ARE!DRIVING!JOB! along twelve quality of life dimensions: housing, housing quality, transit and GROWTH!IN!BROOKLYN!(AS!OPPOSED!TO!GENERAL!IMPROVEMENTS!OF!THE!U.S.! proximity, safety, public schools, shopping and services, food and ECONOMY.)! restaurants, bars and nightlife, creative capital, diversity, green space, and

! 44# Shift3Share3Analysis: 20093! 2014 Aggregated3at3the3two!digit3NAICS[1];3Sorted3by3Competitive3Effect3(Absolute3Growth) Absolute3Growth3in3Jobs3(in31,000s) Percent3Change3(%)3 15.3 53.8% Tourism3&3Entertainment3[2] 3.5 12.5% 18.8 66.3% 12.3 21.7% Retail3Trade 3.1 5.5% 15.4 27.2% 7.7 5.3% Health3Care3and3Social3Assistance 18.3 12.6% 26.0 17.8% Professional,3Scientific, 4.3 31.5% 1.6 11.6% and3Technical3Services 5.9 43.1% Other3Services 4.1 18.5% !0.7 !3.1% (except3Public3Administration) 3.4 15.4% 2.6 11.7% Educational3Services 2.3 10.3% 4.9 21.9% Admin.3and3Support3and 2.4 12.7% 3.8 19.8% Waste3Management3and… 6.2 32.5% 2.2 9.3% Construction 0.6 2.7% 2.8 11.9% Real3Estate3and3Rental 1.8 13.0% 0.5 3.5% and3Leasing 2.3 16.5% 1.5 22.0% Information !0.2 !2.7% 1.3 19.3% 1.1 3.0% Government !1.0 !2.8% 0.1 0.1% Management3of3Companies 0.6 34.0% 0.3 16.1% and3Enterprises 0.9 50.1% !0.3 !1.2% Wholesale3Trade 1.1 4.6% 0.8 3.4% !0.6 !2.7% Manufacturing 0.6 2.9% 0.0 Industries with3negative3 0.2% Transportation !1.8 local3competitive3effect !9.9% 1.9 10.1% and3Warehousing 0.0 0.2% !0.1 !0.7% Finance3and3Insurance 0.0 0.3% !0.1 !0.4%

!5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 !20.0% !10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Thousands Competitive3Effect Expected3Change Job3Change

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).

! 45# Other industries with strong job growth projections, at least in percentage Job Growth Projections terms, are the Construction industry (1.7 per year) and Management of Companies and Enterprises (1.6 per year). The construction industry is th Statewide employment projections by industry between 2012 and 2022 are already the 6 largest industry in Brooklyn, and is likely to continue its robust presented below. While these projections are not specific to Brooklyn, they growth given the appetite for new residential and commercial space in the highlight industry-wide employment trends, which can be used to infer borough. Management of Companies and Enterprises is a relatively small opportunities for growth in Brooklyn and to develop strategies to position industry in Brooklyn accounting for less than 1 percent of total employment. Brooklyn to capture a larger share of the projected employment gains or However, it experienced tremendous growth between 2009 and 2014, stave off projected employment losses in any particular industry. increasing from 1,800 to 2,700 jobs.

The statewide employment projections bode well for Brooklyn. The Health Only two industries are projected to lose jobs in the state through 2022: Care and Social Services industry, which is Brooklyn’s largest employer is Government and Finance & Insurance. However, Government accounts for expected to continue growing at a robust pace of 1.9 percent per year; approximately 6 percent of employment and Brooklyn is significantly less adding nearly 29,000 jobs per year statewide. Tourism & Entertainment, dependent on Government employment to drive the local economy than the Brooklyn’s third largest industry is also expected to continue growing rapidly rest of the city and state. at approximately 2.2 percent per year (twice the average for all industries). The story is similar with Finance & Insurance. For the most part, this industry Professional, Scientific, and Technical Services is projected to be the fastest tends to concentrate in Manhattan; it accounts for less than 3 percent of jobs growing industry in the state in percentage terms (2.2 percent) and third in Brooklyn. Brooklyn also experienced mild job losses in this industry largest in absolute numbers (115,000 jobs per year). This industry accounts between 2009 and 2014 despite the industry remaining steady nationwide. for a relatively low percentage of Brooklyn’s employment, but as shown in BROOKLYN’S!INDUSTRY!MIX!GIVES!THE!BOROUGH’S!ECONOMY!A!POSITIVE! the shift-share analysis, is one of the industries with the largest employment OUTLOOK!FOR!LONGcTERM!JOB!GROWTH.!BROOKLYN!HAS!A!HIGH! growth (in absolute numbers) due the local competitive effect. Also, the CONCENTRATION!OF!JOBS!IN!SEVERAL!INDUSTRIES!THAT!ARE!PROJECTED!TO! strengthening of Brooklyn’s labor force (see Chapter VI), as well as the EXPERIENCE!ROBUST!GROWTH!IN!THE!STATE.!IN!PARTICULAR,!BROOKLYN’S! development of new office space (see Chapter II) will contribute to further LEADING!SECTORS!–!HEALTH!CARE!AND!SOCIAL!ASSISTANCE!AND!TOURISM!AND! job growth in this sector in Brooklyn. ENTERTAINMENT!–!ARE!WELL!POSITIONED!TO!EXPERIENCE!ROBUST!GROWTH.! ! Administrative Support and Waste Management and Remediation services STRONG!STATEWIDE!JOB!GROWTH!PROJECTIONS!IN!BROOKLYN’S!EMERGING! th is also a relatively small industry in Brooklyn (8 largest with less than 5 INDUSTRIES,!SUCH!AS!PROFESSIONAL,!SCIENTIFIC,!AND!TECHNICAL!SERVICES,! percent of total employment). However, between 2009 and 2014, it was the ADMINISTRATIVE!AND!SUPPORT!AND!WASTE!MANAGEMENT!AND!REMEDIATION! fourth largest growing industry (in absolute numbers) in Brooklyn adding SERVICES!,!AND!MANAGEMENT!OF!ENTERPRISES,!AND!OTHER!SERVICES!(EXCEPT! more than 6,200 jobs in 5 years. Although most of this growth was due to PUBLIC!ADMINISTRATION)!BODES!WELL!FOR!INDUSTRY!DIVERSIFICATION!IN! industry growth rather than local competitive factors, the projected growth in BROOKLYN.!! this industry is good news for Brooklyn as it continues to diversify its economy.

! 46# New0York0State0Job0Growth0Projections0by0Industry:02012G20220[1] Sorted0by0projected0absolute0job0growth

Industries?with?Projected?Job?Growth?(Jobs?in?1,000s) Compound?Annual?Growth Rate

Health?Care?and?Social?Assistance 1,392.8 290.4 1,683.2 1.9%

Tourism?&?Entertainment 804.1 198.5 1,002.6 2.2%

Professional,?Scientific,?and?Technical?Services 476.4 115.7 592.1 2.2%

Administrative?and?Support?and 437.3 102.0 539.3 2.1% Waste?Management?and?Remediation?Services

Retail?Trade 912.8 75.7 988.5 0.8%

Other?Services?(except?Public?Administration) 417.7 69.7 487.4 1.6%

Educational?Services 984.3 68.4 1,052.7 0.7%

Construction 314.4 57.7 372.1 1.7%

Management?of?Companies?and?Enterprises 136.8 23.7 160.5 1.6%

Transportation?and?Warehousing 242.5 17.5 260.0 0.7%

Real?Estate?and?Rental?and?Leasing 176.8 15.1 191.8 0.8%

Wholesale?Trade 333.6 13.6 347.2 0.4%

Information 259.1 5.2 264.3 Jobs?in?2012 Projected?Job?Growth Projected0Jobs0in02022 0.2% average all industries? Manufacturing 459.2 0.3 459.5 0.0% 1.1%

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 V1% 0% 1% 2% 3%

Industries?with?Projected?Job?Losses?(Jobs?in?1,000s) Compound?Annual?Growth?Rate

Government 812.5 V22.7? V0.3%

Finance?and?Insurance 491.8 V9.8? Projected0Jobs0in02022 "Projected?Job?Losses" V0.2%

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 V1% 0% 1% 2% 3% 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).

! 47# wages of 4.3 and 2.7 percent, respectively. This is a positive development Wages by Industry for Brooklyn since both industries have experienced robust job growth in Brooklyn since 2009. In 2014, average annual wages in Brooklyn were approximately $41,083 Moderate Wage Industries compared to $84,752 average in NYC, and $65,899 in the whole state. However, as previously noted, Manhattan wages skew average wages for Among moderate wage industries, Health Care and Social Assistance and the city and the state. It is not just Wall Street industries that have higher Educational Services are noteworthy. The Health Care and Social wages in Manhattan. In fact most industries have higher wages in Manhattan Assistance industry is Brooklyn’s largest employer and added the most jobs than elsewhere in the state. The wage differential between Manhattan and between 2009 and 2014. However, average real wages in this industry the rest of the state is not unexpected. It can be partly explained by experience the steepest declines in Brooklyn during this period shrinking at “agglomeration economies”, which enable highly dense places such as an average of 2.3 percent per year. Manhattan, to become more competitive by increasing the effective size of Educational Services on the other hand, experienced significant wage the labor force, making better matches between worker skills and employer growth of 1.7% per year since 2009 (fourth fastest industry). Educational needs in hiring, and increasing informal information sharing among skilled th Services is Brooklyn’s 5 largest industry with approximately 5 percent total workers and innovating firms. employment and high location quotient relative to the state and country (i.e., In order to do a more fair comparison of wages by industry, Brooklyn high specialization). This industry also experienced above average average wages are compared against the other three boroughs, and against employment growth between 2009 and 2014. the rest of state (excluding Brooklyn and Manhattan). As shown below, Lower Wage Industries Brooklyn’s average wages trail the rest of the city across all industries, except Information, PSTS (Professional, Scientific and Technical Services), At the bottom of the wage range spectrum, are Retail Trade, Other Services and Retail Trade. Brooklyn’s average wages also trail the state across most (except Public Administration), and Tourism & Entertainment. Retail Trade industries, except Information, Government, Retail Trade, and Tourism & and Tourism & Entertainment are Brooklyn’s second and third largest Entertainment. industries respectively, accounting for more than 20 percent of total employment in the Borough. These two industries are also the second and The wage differential by industry between Brooklyn and the rest of the city third fastest growing industries (in absolute numbers) between 2009 and and state is an important issue that merits further research to explain the 2014, combined adding more than 34,000 jobs during this period. A positive forces behind it. development for Brooklyn is that average wages in Tourism & Higher Wage Industries Entertainment, which has the lowest average annual wage, grew at a fast rate between 2009 and 2014 (an annual average of 3.1 percent per year in Focusing exclusively on wages in Brooklyn, the industries with the highest real terms). average wages are, in descending order: 1) Information, 2) Finance and Insurance, 3) Government, 4) Management of Companies and Enterprises, “We!always!pay!as!close!to!a!living!wage!as!possible!because! and 5) Professional, Scientific and Technical Services. Unfortunately, these are industries of relatively low specialization in Brooklyn (i.e., low LQs). of!business!and!personal!philosophy.!It!attracts!a!high! Combined, they account for less than 15 percent of borough’s total quality!worker!and!results!in!better!productivity”!! employment. Two of these industries are also the fastest, and third fastest DAVID$BOLOTSKY,$Founder$and$CEO,$Uncommon$Goods! growing industries in terms of wages: 1) Information, and 2) Professional Scientific, and Technical Services, which experienced annual growth in

! 48# Average3Annual3Wages3by3Industry:32014 Two[digit3NAICS;3Sorted3in3decreasing3order3by3Brooklyn3average3wage

$79 Information $65 $73 $75 Finance3and3Insurance $85 $92 $63 Government $68 $58 Management3of3Companies $63 $85 and3Enterprises $102 Professional,3Scientific, $60 $49 and3Technical3Services $75 $57 Construction $70 $62 $48 Wholesale3Trade $60 $73 Real3Estate3and3Rental $42 $44 and3Leasing $47 $41 Average3All3Industries $47 Average3for3all3industries $50 Health3Care3and $39 $45 Social3Assistance $46 $39 Educational3Services $47 $46 $39 Manufacturing $47 $63 Transportation $37 $57 and3Warehousing $48 Admin.3and3Support3and $30 $35 Waste3Management3and… $38 $29 Retail3Trade $28 $29 Other3Services $26 $28 (except3Public3Administration) $29 $24 Tourism3&3Entertainment3[2] $27 $22

$0 $20 $40 $60 $80 $100 $120 Thousands Brooklyn NYC3(Excl.3Brooklyn3&3Manhattan) Rest3of3State3(excl.3Brooklyn3&3Manhattan)

! 49# Wage(Trends(in(Brooklyn(by(Industry([1] Aggregated(at(the(twoUdigit(NAICS $90,000 Buble&Size& Finance(and(Insurance Information $74,895( $79,029( $80,000 150,000 Number(of( jobs(in(each( Government industry(in( Management(of(Companies( $63,232( Professional,(Scientific,( $70,000 and(Enterprises and(Technical(Services 20,000 2014.( $62,990( $60,264(

$60,000 Construction $56,523( Buble Color Wholesale(Trade $47,894( Average(wage, Jobs added(in(Brooklyn( $50,000 between(2009(and(2014 Educational(Services all industries $39,434( $41,083 >10,000(jobs $40,000 Health(Care( and(Social(Assistance 5,000(U 9,999(jobs $39,448( Real(Estate(and(Rental(and(Leasing $30,000 $42,233(

Average(Annual(Wage(in(2014 Manufacturing 500(U 4,999(jobs Transportation(and(Warehousing $38,967( $20,000 $36,817( Retail(Trade <500( $28,888( Tourism(&(Entertainment* $23,695( $10,000 Other(Services( Administrative(and(Support(and(Waste( (except(Public(Administration) Management(and(Remediation(Services,( Labels $30,439( $26,068( Industry(name(followed(by( $0 average(annual(wage(in(2014 U4.0% U3.0% U2.0% U1.0% 0.0% 1.0% 2.0% 3.0% 4.0%

Real(Wages(Average(Annual(Growth(2009U2014

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).

! 50# information, in addition to data on wages, is used to catalog Brooklyn along Putting It All Together four major categories described below. It is important to recognize that this analysis is conducted at the two-digit The industry statistics provided above are useful for comparing industries to NAICS industry level. This means that the data represent broad categories one another along one specific dimension of performance at the time. of industry. Such level of aggregation hides finer industry detail. For However, a more useful analysis is to compare individual industries to one example, an industry may be cataloged as an “Industry Under Pressure”. another along multiple dimensions to make inferences about overall, relative However, there may be some subsectors which are actually thriving and performance. The figure below permits a comparison of Brooklyn’s industries may belong in the “Emerging Industry” category. Nevertheless, the two-digit in terms of employment size (bubble size), specialization (vertical axis), mid- analysis is useful because the subsectors included within each industry term performance (horizontal axis), and growth prospects (bubble color). group have inherent similarities input structures, labor skills, and production This processes to draw conclusions about their general prospects for growth.

Performance4of4Brooklyn4Industries4[1]

2.50 Buble&Size& Indicates jobs4in4each4 industry4in42014.4

2.00 Health4Care4and4Social4Assistance The4exact4number4 171,511 Real4Estate4and4Rental4and4Leasing,416,358 appears4next4to4 Transportation4 the4industry4 and4Warehousing name Educational4Services,427,365 Exporting4 Industries4 18,614 Construction Buble Color 1.50 Wholesale426,608 Trade Projected4Statewide42012V22 Average4Annual4Growth 24,564 Admin.4and4Support4and4 Retail4Trade Waste4Mngmt4and4Remediation4Services 72,223 Fast4Growth4(>2%4 25,160 per4year) 1.00 Other4Services4 (except4Public4Administration) Professional,4Scientific,4 ModerateVHigh4 Manufacturing 25,586 and4Technical4Services Growth4(1.54V 2%4per4 20,689 19,610 year) Tourism4&4Entertainment4[2] ModerateVLow4 0.50 Information 47,271 Growth4(<1.5%4per4 Government 8,034 Brooklyn4Industry4Specialization4(Location4Quotient) 35,841 Management4of4Companies4 year) and4Enterprises Importing4 Industries4 No/Negative4Growth4 2,710 Finance4and4Insurance (<0.014%4per4year) 15,423 0.00 V1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Below4average4growth4<<< >>>Above4average4growth

Brooklyn4MidVTerm4Industry4Performance4(Compound4Annual4Growth4Rate42009V2014)

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).

! 51# GROWTH-DRIVING INDUSTRIES (Projected Statewide through 2022. growth 2012-2022) These industries are literally fueling employment growth in Brooklyn by Industry Summary adding large numbers of jobs and increasing economic activity and the A detailed overview of this industry is presented in the next chapter. competitiveness of the borough. 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 Retail Trade strong mid-term growth, and are projected to experience significant growth in the state of New York through 2022. Indicator Measure Description

Health Care & Social Services Footprint Large Second largest industry in Brooklyn (Jobs in 2014) with more than 72,200 jobs; Indicator Measure Description approximately 13% of all jobs in Brooklyn. Footprint Large Largest industry in Brooklyn with (Jobs in 2014) 171,500 jobs; approximately one-third Remuneration Low Average annual wages of of all jobs in the borough. (Average annual wage in approximately $29,000 are significantly 2014 and real wage growth below the average for all industries Remuneration Moderate Average Annual wages of approx. 2009-2014) ($41,000). In addition, wage growth in (Average annual wage in $39,000 per year is the same as the industry has been stagnant since 2014 and real wage growth Brooklyn’s average wage for all 2009, failing to keep up with inflation. 2009-2014) industries. However, wages in the industry have been declining since Specialization Moderate- The industry has a high LQ relative to 2009. (Location Quotient) High NYC, but more moderate compared to the state and the country. Specialization High Highest location coefficient among all (Location Quotient) industries relative to NYC, the state, Recent Performance Strong Created the third most net new jobs and U.S. Industry accounts for 30% of (Job growth between 2009 (15,400) in Brooklyn since 2009. Most total employment in Brooklyn. By and 2014; focus on growth of this growth (12,300 jobs) is due to comparison, nationwide the industry due to competitive effect) Brooklyn’s competitive effect. accounts for only 13% Opportunities for High The industry is expected to continue to Recent Performance Strong Average in percentage terms, but the expansion grow at a moderate 0.8% per year in (Job growth between 2009 largest increase in absolute terms; (Projected Statewide the state through 2022. However, as and 2014; focus on growth Nearly 26,000 net new jobs since growth 2012-2022) due to competitive effect) explained in Chapters II and IV, the 2009. Most of this growth (18,300 jobs) retail sector in Brooklyn appears well was "expected growth" reflecting positioned for further growth. nationwide industry trends. However, Brooklyn still surpassed expectations Industry Summary due to local competitive advantages. A detailed overview of this industry is presented in the next chapter. Chapter II also documents the recent expansion of the retail sector in Brooklyn. Opportunities for Moderate- The industry is projected to continue expansion High growing at a healthy 1.9% per year

! 52# ! Special Mention

Tourism & Entertainment Educational Services

Indicator Measure Description Indicator Measure Description

Footprint Large Third largest industry in Brooklyn with Footprint Moderate Brooklyn’s fifth largest industry with (Jobs in 2014) 47,300 jobs; approximately 8% of all (Jobs in 2014) 27,400 jobs (approximately 5% of jobs in the borough. total employment)

Remuneration Low Lowest average wages in Brooklyn Remuneration Moderate Average annual wages of $39,434 (Average annual wage in ($24,000). However it experienced (Average annual wage in are near the city’s average for all 2014 and real wage the second fastest growth in average 2013 and real wage industries. This industry has the 4th growth 2009-2014) real wages. Average real wages grew growth 2009-2014) fastest wage growth at a robust 1.7% 3.1% per year. per year in real terms.

Specialization Moderate- This industry has low location Specialization High High location quotient relative to the (Location Quotient) Low coefficient (under 0.85) relative to the (Location Quotient) state (1.32) and U.S. (2.47) city, state and country. Recent Performance Moderate- Added approximately 4,900 jobs Recent Performance Strong Added the most jobs (18,800) in (Job growth between High since 2009; more than 20% growth. (Job growth between Brooklyn since 2009 behind Health 2009 and 2014; focus on More than half of this growth (2,600 2009 and 2014; focus on Care. Most of this growth (15,300 growth due to competitive jobs) was due to local competitive growth due to competitive jobs) is due to Brooklyn’s competitive effect) advantages. effect) effect. Opportunities for Moderate- Projected to grow at 0.7% per year Opportunities for Strong Average annual growth is projected at expansion Low through 2022. Below the average for expansion 2.23%; the fastest growing industry in (Projected Statewide all industries of 1.1% (Projected Statewide the state. growth 2012-2022) growth 2012-2022) Industry Summary Based on size and growth prospects, this industry could have been cataloged Industry Summary under Moderate Growth Industries (see below). However, this industry is Given the high marks in all the indicators evaluated, this industry is evaluated important to Brooklyn for numerous reasons. While it only accounts for 5% of in more detail in the following section of this report. total employment, it is Brooklyn’s fifth largest industry and is specialized relative to the state and country. It is also growing largely due to local competitive advantages. It is also a moderate-wage industry and is experiencing robust wage growth. Most importantly, this industry plays a key role in workforce development, which is essential for the performance of the local economy. Strengthening of this industry will contribute to the growth of all industries in Brooklyn across the board, but especially to the growth of the emerging industries in Brooklyn, which are particularly dependent on an ample supply of skilled labor.

! 53# EMERGING INDUSTRIES experienced very strong growth between 2009 and 2014, most of it due to local competitive advantages (i.e., local competitive effect). Furthermore, the As the category name implies, these are nascent industries, which thus far industry is projected to growth at a very robust pace statewide through 2022. have a limited presence in Brooklyn. However, they exhibit strong mid-term Average annual wages in the industry are high and rising fast. growth in Brooklyn, and long-term growth potential statewide. These industries present opportunities to diversity the Brooklyn economy going ! forward. Administrative and Support and Waste Management and Remediation Professional, Scientific and Technical Services Services Indicator Measure Description Indicator Measure Description

th Footprint Small 8th largest industry in Brooklyn with Footprint Small 11 largest industry in Brooklyn with (Jobs in 2014) 25,200 jobs; accounts for 4.4% of (Jobs in 2014) 19,600 jobs; accounts for 3.5% of total jobs. total jobs in Brooklyn. Remuneration Low Average annual wages of Remuneration High Average annual wages of $60,000. (Average annual wage in approximately $30,000. In addition, (Average annual wage in Fifth highest in Brooklyn. Average 2013 and real wage wages in the industry have been 2013 and real wage annual wages are rising fast at a growth 2009-2014) growth 2009-2014) stagnant since 2009, failing to keep vigorous 2.7% per year in real terms up with inflation. In real terms, (third fastest increase in Brooklyn) average annual wages decrease by 0.7% per year. Specialization Low Low location quotients (below 0.60) (Location Quotient) relative to City, state, and U.S. Specialization Low Low location quotients (below 0.86) (Location Quotient) relative to city, state, and U.S. Recent Performance Strong Fifth fastest growing industry in (Job growth between Brooklyn in absolute numbers and 2009 and 2014; focus on Recent Performance Strong Fourth fastest growing industry in third fastest in percentage terms. (Job growth between growth due to competitive Brooklyn in absolute numbers and in Added nearly 5,900 jobs between 2009 and 2014; focus on effect) percentage terms. Added more than 2009 and 2014. Most of this job growth due to competitive 6,200 jobs between 2009 and 2014. growth (4,300) was due to the local effect) However, only a 2,400 jobs was due competitive effect. to the local competitive effect – most job growth was due to industry wide Opportunities for Strong Third fastest growing industry in trends. expansion absolute terms and second fastest in (Projected Statewide percentage terms. Projected to grow Opportunities for Strong Fourth fastest growing industry in growth 2012-2022) at approximately 2.2% per year. expansion absolute terms and third fastest in (Projected Statewide percentage terms. Projected to grow Industry Summary growth 2012-2022) at approximately 2.1% per year through 2022. The PSTS industry has a relatively small footprint and low specialization in Brooklyn, but growth trends indicate that this is changing. The industry Industry Summary

! 54# (Projected Statewide above the average for all industries of The Administrative and Support and Waste Management and Remediation growth 2012-2022) 1.1%. Services industry has a relatively small footprint and low specialization in Brooklyn, but growth trends indicate that this is changing. The industry Industry Summary experienced very strong growth between 2009 and 2014. However, most of it is due to industry wide trends, as opposed to local competitive advantages This industry has a relatively small footprint and low specialization in (i.e., local competitive effect). However, given that the industry is projected to Brooklyn, but recent positive growth trends (largely due to local competitive growth at a very robust pace statewide through 2022, it presents an advantages), as well as auspicious growth forecasts are indications that the opportunity for Brooklyn to diversify its economy. industry has some potential in Brooklyn.

!

Management of Enterprises Other Services

Indicator Measure Description Indicator Measure Description

th Footprint Small One of the smallest industries in Footprint Moderate Brooklyn’s 7 largest industry with (Jobs in 2014) Brooklyn with approximately 2,700 (Jobs in 2014) 25,600 jobs (4.5% of total jobs; less than 1 percent of total employment) employment. Remuneration Low Industry with second lowest average Remuneration High Industry with high average annual (Average Annual) annual wages in Brooklyn ($26,000). (Average annual wage in wages of approximately $63,000. Wages have also been declining fast 2013 and real wage This industry experienced a at approximately 1% in real terms. growth 2009-2014) significant drop in average wages in 2014, as a result average annual Specialization Moderate- Industry has moderate specialization growth rate since 2009 has been (Location Quotient) High relative to the city and state (LQ’s negative. under 1.15) but high relative to the country (1.45) Specialization Low Industry with the lowest location (Location Quotient) quotients (below 0.30) relative to city, Recent Performance Moderate- Added approximately 3,400 jobs state, and U.S. (Job growth between High between 2009 and 2014; The industry 2009 and 2014; focus on in Brooklyn grew close to 3% per year growth due to competitive while the industry was shrinking Recent Performance Moderate- Although moderate in absolute terms effect) (Job growth between High (900 jobs), this industry was the nationwide, indicating a local 2009 and 2014; focus on second fastest growing in Brooklyn in competitive advantage. growth due to competitive percentage terms; 8.5% per year effect) between 2009 and 2014. Also, most Opportunities for Moderate- Projected to grow at a brisk 1.6% per of the growth (600 jobs) was due to expansion High year through 2022. Above the the local competitive effect. (Projected Statewide average for all industries of 1.1% growth 2012-2022) Opportunities for Moderate- Expected to grow at approximately Industry Summary expansion High 1.6% per year through 2022, well

! 55# expansion High year through 2022. Above the Although recent job growth has been moderate (close to average for all (Projected Statewide average for all industries of 1.1% industries), the fact that most of this growth is due to local competitive growth 2012-2022) advantages (most likely due to high growth in demand), coupled with strong Industry Summary moderate-high growth projections, means that this industry represents an opportunity for growth in Brooklyn. Job growth since 2009 has been surprisingly moderate given the significant uptick in residential and commercial construction permits in Brooklyn. One This industry is cataloged as an emerging industry primarily because strong reason for this is that while construction may be happening in Brooklyn and consumer demand in Brooklyn will continue to support its growth. Brooklynites maybe employed for those jobs, the companies may be based elsewhere. Therefore the jobs don’t get credited to Brooklyn as the jobs are tracked by place of employment based on the company’s location. Moreover, Construction the real uptick in construction permits occurred in 2013 and 2014. Job data for 2014 indicate a strong increase of 7% in net new jobs, which is an Indicator Measure Description indication that the industry may be on gaining momentum. Statewide statistics project robust growth in the industry through 2022. Given Brooklyn’s Footprint Moderate Brooklyn’s 6th largest industry with (Jobs in 2014) nearly 26,600 jobs (4.7% of total pace of population and employment growth, the borough is likely to capture a employment) significant share of that growth.

Remuneration High Average annual wages of (Average annual wage in approximately $57,000 are nearly 2013 and real wage 40% above the average for all Special Mention growth 2009-2014) industries in Brooklyn. However, the industry experienced a significant Motion Picture and Sound Recording decline in average real wages between 2009 and 2014 (1% per Summary year). As previously stated, this study evaluated industries at the two-digit NAICS Specialization Moderate High LQ relative to the city, but level. The Motion Picture and Sound Recording Industry is not a two-digit (Location Quotient) moderate compared to state and U.S. NAICS industry, but is instead a subsector of the Information industry, which we have identified below as a “Moderate Growth Industry”. Recent Performance Moderate Industry experienced below average However, the Motion Picture and Sound Recording Industry has experienced (Job growth between growth between 2009 and 2014; less 2009 and 2014; focus on than 3% over the 5-year period. a very significant expansion in Brooklyn since at least 2009, which merits growth due to competitive However, a positive note is that this special mention. While the industry represents a relatively small share of total effect) growth outpaced this industry’s employment in Brooklyn (approx. 1,600 jobs), The industry is growing very nationwide growth, indicating a local rapidly. Between 2009 and 2014 the industry added more than 1,000 net new competitive advantage. In 2014, the jobs – a 62% growth – and nearly 180 new establishments – a 78% growth. number of net new jobs increased by Additionally, average annual wages have increased significantly, although a a robust 7% indicating strengthening few high-income earners may be skewing that statistic. of the industry It should also be mentioned that the employment statistics underestimate the Opportunities for Moderate- Projected to grow at a brisk 1.7% per

! 56# impact of the industry on the borough, as many workers supported by this growth occurred in 2014. industry are not captured by the industry employment statistics. For example, many artists, performers, writers, consultants, and independent contractors of Specialization Moderate- Moderate LQs relative to the state creative industries who live in Brooklyn may be counted under different (Location Quotient) High and country (1.14 and 1.02, industries or not counted at all. respectively), but high relative to the city (1.28) Growth of this industry has been partially driven by expansions of key industry players in Brooklyn, such as Steiner Studies and Broadway Stages. Recent Performance Low Sluggish growth adding less than 800 Steiner Studios is the largest film and television studio complex (with the (Job growth between jobs since 2009; a 0.7% annual 2009 and 2014; focus on largest soundstage) outside of Hollywood. It is also is the Navy Yard’s largest increase (well below the average for growth due to competitive all industries of 3.6%). Also, growth of tenant and its facilities include 10 soundstages, support facilities (such as effect) this industry in Brooklyn trailed the wardrobe, mill shops and post-production facilities), a 5.6-acre back lot, and rest of the nation. state-of-the art electrical, climate and Internet infrastructure.56 The 2013 Summer Brooklyn Labor Market Review by the Brooklyn Chamber Opportunities for Low Limited growth of 0.4% per year expansion through 2022. of Commerce presents an overview of the Film and Television Production (Projected Statewide and all the positive development that make this a promising industry for growth 2012-2022) Brooklyn.57 Industry Summary

Although this industry is relatively specialized in Brooklyn and accounts for a moderate share of local employment, its limited job growth between 2009 and MODERATE GROWTH INDUSTRIES 2014 and equally limited opportunities for expansion are indications that this industry may face challenges going forward. From an industry-wide These are small- to mid-sized industries, which are growing at a steady (low perspective, employment growth may be constrained due technological to moderate) pace. These industries are moderately specialized in Brooklyn, advances, which increase efficiency but reduce the need for labor force. Also, with the exception of Information industry, which has a low LQ, and low to industry consolidation to take advantage of economies of scale in purchasing moderate long-term prospects statewide. power and transportation, and competition from manufacturers and large Wholesale Trade retailers who bypass distributors by selling directly, may affect overall industry growth.58 Indicator Measure Description From a local perspective, lack of available space and increasing real estate Footprint Moderate Brooklyn’s 9th largest industry with prices may continue to drive this industry out of the city. Based on the high (Jobs in 2014) nearly 24,600 jobs (4.3% of total LQ relative to the city, Brooklyn appears to serve as a hub of this services to employment) the rest of the city.

Remuneration Moderate- Average annual wages of (Average annual wage in High approximately $48,000 are nearly 2014 and real wage 17% above the average for all Real Estate and Leasing growth 2009-2014) industries in Brooklyn. Wage growth stagnant since 2009; 0.4% per year in Indicator Measure Description real terms, however most of the

! 57# (Average annual wage in Brooklyn ($79,000). Wages were Footprint Small Approximately 16,400 jobs; less than 2014 and real wage relatively stagnant through 2014 (Jobs in 2014) 3% of total employment in Brooklyn growth 2009-2014) decreasing 0.6% per year in real terms. However, average annual Remuneration Moderate Average annual wages of $42,000 wages increased by 25% in nominal (Average annual wage in are near the city’s average for all terms in 2014 due to wage increases 2014 and real wage industries. Average wages have been in Motion Picture and Sound growth 2009-2013 flat since 2009 with 0% growth. Recording.

Specialization High Moderate LQ relative to the city (0.94) Specialization Low Low LQs relative to city, state and (Location Quotient) and high LQs relative to the state and (Location Quotient) U.S.; 0.33, 0.48, and 0.71, U.S. (1.4 and 1.97, respectively) respectively.

Recent Performance Moderate- Industry experienced average growth Recent Performance Moderate Experienced moderate growth adding (Job growth between Low in percentage terms between 2009 (Job growth between approximately 1,300 jobs since 2009; 2009 and 2014; focus on and 2014; 3.1% growth per year over 2009 and 2014; focus on a 3.6% increase (same as the growth due to competitive 5 years compared to 3.6% for all growth due to competitive effect) average for all industries). However, industries. The majority of this growth effect) a positive note is that this growth (1,800 jobs out of a total of 2,300) occurred as the industry was was due to Brooklyn’s competitive shrinking nationwide, indicating a effect. local competitive advantage. Furthermore, the industry Opportunities for Moderate Below average growth of 0.8% per experienced an 11% increase in expansion year through 2022. employment in 2014. (Projected Statewide growth 2012-2022) Opportunities for Low Almost no growth projected; 0.2% per Industry Summary expansion year through 2022. (Projected Statewide Despite moderate growth projections at the state level, this industry is likely growth 2012-2022) to continue experiencing relatively robust growth given the strong demand for Industry Summary commercial and residential real estate in Brooklyn. However it is unlikely that this industry will grow to become a driver of the local economy. The indicators for this industry are somewhat conflicting. This is mostly because the analysis, which is conducted at the two-digit NAICS, hides ! variability within the industry. This is a broad industry, which includes Publishing (except internet), Broadcasting, Motion Picture and Sound Information Recording, Telecommunications, Data Processing, etc. Some of these subsectors, such as Motion Picture and Sound Recording are growing in Indicator Measure Description Brooklyn, while others, such as Publishing Data Processing are shrinking. In Footprint Small Approximately 8,000 jobs; less than fact, the Motion Picture and Sound Recording sub-industry is growing so (Jobs in 2014) 1.5% of total employment. rapidly that we have listed this sub-industry as an “Emerging Industry” in the previous section. All other sub-industries within the Information Industry are Remuneration High Highest average annual wages in expected to continue experiencing moderate growth.

! 58# trailing nationwide trends.

INDUSTRIES UNDER PRESSURE Opportunities for Low Practically zero growth projected expansion through 2022. This category includes industries with low to moderate specialization in (Projected Statewide Brooklyn, low to moderate mid-term performance, and limited long-term growth 2012-2022) prospects statewide. Industry Summary

The categorization of these industries under this rubric does not imply that While the manufacturing sector may be contracting as a whole, Brooklyn is these industries will not play an important role in the growth of the Brooklyn home to a growing number of small manufacturers many of whom are economy. It is merely an observation of aggregate level data, which indicate connected to the burgeoning innovation industry. The Brooklyn Navy Yard that these industries are facing challenges. Sometimes these challenges are (BNY), a 300-acre industrial park committed to promoting economic industry-wide, sometimes region-specific, and sometimes both. Also, as development, is one enclave where traditional manufacturers, creative previously stated, this analysis is conducted at the two-digit level, which revolution firms, and companies on the spectrum between design and hides subtleties in the industries. There may be some subsectors within manufacturing have continued to thrive and grow. The number of employees these industries, which are thriving, while other are struggling. A more at the Yard has doubled in the past 10 years to 7,000 and is expected to detailed analysis is outside the scope of this report, but may be warranted in more than double again in the next 5 years. future research by the Chamber or other entities. Industry City (IC), New York’s largest privately held manufacturing property Manufacturing has over 6 million square feet of space and attracts a wide range of start-ups, innovators, and manufacturers in food, clothing and technology. Indicator Measure Description Food, Apparel, Printing, and Furniture manufacturing account for nearly 50% Footprint Small Approximately 20,700 jobs; 3.6% of of manufacturing jobs in Brooklyn and many of the small firms at BNY and IC (Jobs in 2014) total employment in Brooklyn create products that fall into that category.

Remuneration Moderate- Average annual wages of $39,000 (Average annual wage in low are comparable to city’s average for 2014 and real wage all industries. However, average Finance & Insurance growth 2009-2014) wages have been shrinking 0.3% per year in real terms. Indicator Measure Description

Specialization Low This industry has low LQs relative to Footprint Small Approximately 15,400 jobs; (Location Quotient) the state and U.S. (0.72 and 0.41, (Jobs in 2014) approximately 2.7% of total respectively), but high relative to the employment in Brooklyn. city (1.91). Remuneration Second highest average annual Recent Performance Low The industry lost approximately 500 (Average annual wage in wages in Brooklyn ($75,000) with (Job growth between jobs between 2009 and 2013; a mild 2014 and real wage moderate annual growth of 1.2% in growth 2009-2014) 2009 and 2014; focus on 2.6% decrease. The industry real terms since 2009. growth due to competitive recovered in 2014 by adding effect) approximately 570 jobs. Despite, this Specialization Low Low LQs relative to the city (0.34), growth, however, the industry is still (Location Quotient)

! 59# state (0.48), and U.S. (0.66). per year).

Recent Performance Negative This is the only industry in Brooklyn Specialization Moderate Moderate LQ (under 1.27) relative to (Job growth between that lost jobs since 2009. However (Location Quotient) city, state, and U.S. 2009 and 2014; focus on the loss was very mild (under 70 growth due to competitive jobs). The industry has been stagnant effect) Recent Performance Lost jobs The industry lost approximately 1,100 nationwide since 2009. (Job growth between jobs between 2009 and 2013; a 5.8% 2009 and 2014; focus on decrease. However, the industry Opportunities for Negative Job growth is expected to remain growth due to competitive recovered in 2014 by adding almost expansion more or less flat through 2022 with effect) the same amount of net new jobs, (Projected Statewide mild decreases of 0.2% per year. resulting in zero growth between growth 2012-2022) 2009 and 2014. More troubling, these Industry Summary trends occurred as the industry was expanding nationwide. This was one of the industries most affected by, and some say the root of, the Great Depression of 2009. Since then, the industry has been stagnant, Opportunities for Moderate Below average growth of 0.7% per not just in Brooklyn and New York City, but also the state and country as a expansion year through 2022. (Projected Statewide whole. Unfortunately, job projections for the city and state in this category do growth 2012-2022) not point toward a recovery anytime soon, as job losses are projected through 2022. Industry Summary However, even within this context there may be opportunities for Brooklyn to Despite the stagnation in this industry, it is widely understood that there is a grow this industry as demonstrated by the recent relocation of 2,000 JP national shortage of short and long haul truck drivers. Freight handling is a Morgan employees to the Metro Tech in Brooklyn. Brooklyn is likely to see necessary by-product of retail growth, but despite innovations in tracking and more of this, as more and more Class A office space is built in Brooklyn (see just-in-time delivery, shipping is generally still handled the old-fashioned way Chapter II). – with a phone and a pencil. The typical carrier owns a single truck and delivers for whomever calls despite destination inefficiencies. This can result in half empty trucks driving unnecessary additional miles. Cargomatic is attempting to change this paradigm by connecting shippers and carriers Transportation and Warehousing using an app. See Chapter V for more information.

Indicator Measure Description Uncommon Goods, an e-retailer, moved its warehouse to Brooklyn in 2008. Founder and CEO David Bolotsky knows he could save money by moving his Footprint Small Approximately 18,600 jobs; warehouse to another state and paying lower rent and salaries. However, as (Jobs in 2014) approximately 3.3% of total a 3rd generation New Yorker, he wants to keep these jobs in Brooklyn and as employment in Brooklyn part of his business philosophy keeps all salaries, including warehouse jobs, as close to a living wage as possible. Remuneration Moderate- Average annual wages of $37,000 (Average annual wage in Low 10% below the city’s average for all 2014 and real wage industries. Industry experienced growth 2009-2014) relative high declines in average real wages between 2009 and 2014 (1.4%

! 60# IV. BROOKLYN’S LARGEST INDUSTRIES !

Three industries account for over half of the jobs in Brooklyn: health care, towards large employers, as the health care industry accounts for only 13 59 retail, and tourism and entertainment. Among these three industries, health percent of the businesses in Brooklyn, but fully 33 percent of the jobs. care is dominant, with nearly double the share of total employment in These businesses are also geographically dispersed, with many outlying Brooklyn than is found in New York City, New York State, or the country as a areas of Brooklyn having up to 50 percent of their jobs, or nearly every 60 whole. The proportion of retail trade employment is slightly larger than in employer with more than 500 employees, in the health care industry. those markets, and tourism and entertainment is slightly smaller. These three industries play a key role in defining the economic well-being of the city Health+Care+&+Social+Services+Job+Growth:+2009!2014+ and, as noted above, the concentration or cross-reliance of the participants Sorted+by+Industry+Size

in these industries can be a proxy for the resilience of the economy against Industries+with+Positive+Job+Growth+ CAGR+(2009!14) future shocks. Ambulatory health 48.1 20.4 68.6 7.3% care+services Health Care Industry

Social Brooklyn 48.6 6.9 55.4 2.7% assistance Average+ The health care industry has long been a major employer in Brooklyn. The 3.3% profile of the industry includes hospitals, health care centers, not-for-profit Total+Jobs+in+2009 Nursing+and State and publicly-funded social assistance organizations, as well as individual residential 19.0 0.9 19.8 Net+Jobs+Added+2009!2014 0.9% Average+1.7% doctor, dental, and specialist practices. The health care industry tends to the care+facilities Total*Jobs*in*2014

2.6 million residents of Brooklyn, and its employment needs tracks the needs 0 10 20 30 40 50 60 70 80 !5% 0% 5% 10% of Brooklyn’s population. Industries+with+Negative+Job+Growth+(Jobs+in+1,000s) CAGR+(2009!14)

Total*Jobs*in*2014 “In!the!last!5c10!years,!there!has!been!an!influx!of! Hospitals 27.6 !2.2+ Net+Jobs+Lost+2009!2014 !1.5% households!with!a!higher!level!of!income!and! 0 10 20 30 40 50 60 70 80 !5% 0% 5% 10% different!level!of!awareness!about!dental!care.!These! Source: Bureau of Labor Statistics, QCEW families!also!have!third!party!dental!coverage.!That’s! what’s!driving!the!increased!demand!for!service!in! Despite the large share of employment contributed by the health care industry, it has managed sustained compounded growth at a high rate. While Brooklyn.’”!! the compound annual growth rate (CAGR) of the health care industry in New DR$RENEIDA$REYES,$President,$ADA$Foundation$and$Section$Chief,$Pediatric$ York State has been 1.7 percent over the last four years, Brooklyn has Dentistry,$NY$Methodist$Hospital$! managed a rate of 3.3 percent. In addition, the ambulatory health care services subsector has posted even greater growth, sustaining an average

growth rate of 7.3 percent over the last five years. The subsectors of social Brooklyn has a number of large and well-established health care employers assistance and nursing and residential care facilities have kept pace with the that provide the outsized number of health care-related jobs in the borough. overall growth in the sector, while hospitals have declined at a rate of 1.5 This reflects the health care and social assistance industry’s tendency percent.

! 61# Among these large employers are hospitals and medical centers, some of As a result, as a borough, Brooklyn has the largest number of elderly which have been in existence for well over 100 years, including: residents at almost 412,000 according to the 2010 census. This population prefers to age in place which is part of the increased demand for ambulatory → Brooklyn Hospital Center, a 464-bed health center that associates care services, including home health care. In addition, Medicare and with neighborhood Family Health Centers to employ nearly 3,000 dedicated medical professionals and staff.61 Brooklyn Hospital Medicaid now place an increasing emphasis on Home & Community Based Center brought over $350 million in revenue to the borough in 2011, Service with a goal of assisting the elderly in their own home. This has also and accounted for over $200 million in salaries and employee resulted in increased demand for home health care aides. benefits.62 → Maimonides Medical Center, a 711-bed health center, which provides Social Assistance ambulatory, specialist, and emergency care in 10 clinics and facilities The vast majority of Brooklyn’s social assistance industry is from not-for- throughout Brooklyn. Maimonides brought in $951 million in revenue profit companies that are largely funded by public contracts and Medicare or in 2012, and paid $504 million in salaries and wages alone.63 Medicaid reimbursements.67 These jobs are largely created by the needs of Several prominent Brooklyn hospitals have been facing financial difficulty, a large and growing population with a significant number of individuals in and the borough and state have been working with the federal government need of particularized care. Since the 1930s, Brooklyn has been the largest in order to keep the hospitals open. These include Brookdale University of the city’s five boroughs, now over 2.6 million, drawing with it a greater 64 Hospital and Interfaith Medical Center. Interfaith accounts for 287 beds, of need for social services. In addition, despite the increasing prosperity in which almost half are dedicated to psychiatric services and accounts for Brooklyn, pockets of socioeconomically disadvantages group rely on social approximately 1,500 employees. Brookdale has more than 3,000 assistance programs. Social assistance jobs are a crucial link in the employees. Long Island College Hospital closed in 2014 displacing 2,000 employment landscape. employees.65 These difficulties are reflected by the employment figures, which reflect a “The!challenge!with!shifting!to!the!home!health!care! drop in the number of hospital employees. That drop, however, is model!is!that!there!is!a!significant!amount!of!training! significantly smaller than the huge increase in ambulatory health care services, for which the largest increase was in home health care services. that!a!typical!nurse!would!need.!The!unions!have! been!very!responsive!about!providing!training!and! Ambulatory Health Care Services retraining.”!! With such a large population, the number of physicians, dentists, and KHARI$EDWARDS,$VP$of$External$Affairs,$Brookdale$Hospital$! medical laboratories serving Brooklyn is significant. There has also been a

shift in customer expectations and while, in the past, Brooklyn residents were likely to seek out medical experts in Manhattan, there is now a tendency to find care in their home borough. Although the Brooklyn population is younger than the city and state as a whole on a percentage basis, the number of residents over 60 years old has been growing throughout New York City since 2000.66

! 62# Retail Industry

The retail sector is a large and diverse industry in Brooklyn with a wide range of niche businesses and employers. Chapter II highlights the tremendous growth of the retail sector in Brooklyn over the past five years. Retail growth in Brooklyn is a combination of an increase in local businesses and increased attention from national and international brands recognizing an under-retailed borough. Incomes are increasing across the board and in certain neighborhoods have risen dramatically and quickly resulting in a population the size of Long Island with just one-fifth the retailers. Like the health care industry, Brooklyn’s overall rate of employment growth in the sector is significantly larger than in New York State as a whole, at 4.9 percent versus the state’s 1.7 percent. Sub-sectors posting unusually large When Brooklyn Artery, a brick and mortar retail gift store, opened on annual growth rates include non-store retailers and furniture and home Cortelyou Road it was the only gift store serving a neighborhood of 160,000. furnishings, with Compound Annual Growth Rate (CAGR) of 18.1 percent Founders Susan Siegel and Jocelyn Lucas were not just meeting retail and 9.3 percent, respectively, between 2009 and 2014. A subsector of non- demand, they were supporting local entrepreneurs. With almost every item store retailers, electronic shopping and mail-order houses, quadrupled in the store handmade and 40% purchased or consigned from Brooklyn employment in five short years, from 536 in 2009 to 2,605 in 2014. Other artists, their two retail outlets – including an outpost on Governors Island – retail sectors that have shown significant growth include electronics and enables the viability of upwards of 50 small businesses. appliances, food and beverage, and miscellaneous stores. A subsector of miscellaneous stores that led the employment growth in that category is used merchandise stores, which have grew at an average annual rate of 18.5 percent since 2009, albeit from a low base. The significant growth in small areas reflects support for a wide range of different types of businesses and a thriving commercial culture.

! 63# ! Retail3Trade3Job3Growth:32009O20143 Brooklyn3Retail3Gap3(Leakage/Surplus)3by3Category,32014 Sorted3by3Industry3Size CAGR 2009O2014 Motor3Vehicle3&3Parts3Dealers $2,698

Food3and3beverage 15.4 5.6 21.0 6.4% Gasoline3Stations $1,329

Clothing3and3clothing Brooklyn3 10.0 0.5 10.5 1.0% accessories Average, 4.9%3 General3Merchandise $1,082

General3merchandise 7.2 2.1 9.2 5.3% Food3&3Beverage $629

Health3and3personal3care 7.8 1.4 9.2 3.4% Nonstore3Retailers $622 Bldg3material3and3garden 3.8 0.7 4.6 3.6% supply Bldg3Matls,3Garden3Equip3&3Supply $171

Nonstore3retailers 1.5 2.0 3.5 18.1% Sporting3Goods,3Hobby,3Book,3Music $39

Electronics3and3appliance 2.2 1.1 3.4 8.7% Furniture3&3Home3Furnishings !$2

Misc3store3retailers 2.4 0.7 3.1 5.3% Electronics3&3Appliance !$82 NY3State3 Motor3vehicle3and3parts 2.4 0.3 2.8 2.7% Average, 1.7%3 Misc3Store3Retailers !$358 dealers Leakage Surplus Furniture3and3home 1.5 0.8 2.3 9.3% Clothing3&3Clothing3Accessories !$380 furnishings Sporting3goods,3hobby, 1.6 1.2% Health3&3Personal3Care !$657 book,3music 0.1 1.7 !$2,500 !$500 $1,500 $3,500 Gasoline3stations 1.0 0.0 1.0 0.2% Millions 0 5 10 15 20 25 0.0% 5.0% 10.0% 15.0% 20.0% Retail'Gap'(Retail3Potential3! Retail3Sales) Thousands Total3Jobs32009 Net3Jobs3Added32009O2014 Total Jobs42014 Source: Esri Business Analyst 2014. Source: Bureau of Labor Statistics, QCEW Excludes leakage in Food Services and Drinking Places, which is reported in the next section.

Retail Leakage/Surplus Analysis The graph above shows Brooklyn’s retail leakage and surplus by category. The retail leakage and surplus analysis examines Brooklyn’s potential retail Retail leakage means that residents are spending more for products than opportunities. The analysis measures the difference between actual and local businesses capture. Retail sales leakage suggests that there is unmet potential retail sales. Actual retail sales are estimates of sales to consumers demand in the local area and that residents go outside Brooklyn to purchase by retail establishments. Sales to businesses are excluded. Potential retail those products. While this could indicate a potential to capture more of the sales are estimates of the expected amount spent by local residents at retail community’s spending to support additional store space in the local area, establishments. The difference between these sales estimates is referred to retail leakage does not necessarily translate into opportunity. For example, as the “Retail Gap,” which indicates: how well the retail needs of the local there could be a strong competitor in a neighboring community that residents are being met; uncovers unmet demand and possible dominates the market for that type of product or store. Retail leakage opportunities; and examines strengths and weaknesses of the local retail categories in Brooklyn with the largest sales gap are Motor Vehicle Dealers sector. and Gasoline Stations, followed by Food and Beverage Stores.

! 64# A retail surplus means that local businesses are capturing the local market plus attracting non-local shoppers. In Brooklyn, the retail surplus categories include: Health and Personal Care, Clothing and Clothing Accessories, Electronics and Appliance, and Furniture and Home Furnishings. This indicates that Brooklyn has developed strong clusters of stores in these categories that have broad geographic appeal.

Aggregating the surplus and leakage for all industries, there are approximately 5 billion in annual retail leakage as Brooklyn’s consumer demands are not being met locally. This figure does not include an additional Locally produced items were already in demand when By Brooklyn was $1.1 billion leakage in the Food Services and Drinking Places subsector, founded in 2011 to provide a single destination for Brooklyn made goods. which is discussed in the next section. This retail leakage, coupled with The proprietor, Gaia DiLoreto, curates a selection of products which must be Brooklyn’s dramatic population and personal income growth (see Chapter II), assembled or finished within the borough to qualify. The shelves are filled highlight the potential for further growth as the retail sector expands to meet with the offerings of companies, both new and historic, individual artists and the growing demand. larger firms. Although her customers may simply be focused on finding the As retailers are evaluating new opportunities in the New York City metro perfect gift, she is purposeful about supporting the 160-200 Brooklyn makers market, understanding the landscape of Brooklyn is of pressing importance. big and small represented in the store and the jobs they provide. She is also Given the density, demographics and draw of the Barclays Center, the an ardent protector of the Brooklyn brand. feeling among national and regional retailers is a need for a Brooklyn In addition to the original store on Smith Street in Carroll Gardens, Gaia is flagship as an immediate outpost from Manhattan. In particular, Downtown expanding her reach through a second store in Williamsburg, an e- Brooklyn is appealing for various reasons like its transit network, daytime commerce site and temporary pop-ups at around the city. and workforce population, tourism and residential density. Downtown Brooklyn offers immediate access, either pedestrian or by way of transit, to Gaia’s expertise marketing Brooklyn as a brand has brought requests from the Brownstone Belt and numerous residential neighborhoods. This makes far and wide for ideas on how to replicate her success and she’s mentored Downtown a natural shopping destination. Sales volumes generated in store-owners in other parts of Brooklyn, San Francisco and Los Angeles. places like the Fulton Mall and Atlantic Terminal near the Barclays Center She’s also become a destination for visitors from all over the world and support the argument that more retail is necessary to serve the area. Also, profiles in Japanese and French tour guides have brought requests for with an abundance of residential units being developed and set to deliver to Brooklyn goods from nearly every continent. market in the next 24 to 36 months, the demand for retail will increase and retailers want to capture this audience locally versus driving traffic to a Manhattan location. Tourism & Entertainment “People!don’t!want!to!have!to!leave!the!neighborhood! Brooklyn’s reputation as a center of young, hip, and cool culture has to!buy!gifts.!And!artists!don’t!want!to!have!to!leave!to! exploded internationally, making it a popular destination for visitors from sell!their!work!and!teach!their!craft.”!! abroad as well as within the metropolitan area.68 Beyond hotel accommodations, the tourism and entertainment industry includes other Susan$Siegel,$Founder,$Brooklyn$Artery$ ! categories of services that are equally attractive to Brooklyn residents such

as bars, restaurants, and recreation centers and performing arts venues.

! 65# average annual growth rates ranging from 9.7 percent in amusements and “We’re!getting!feedback!from!visitors,!tour!operators,! recreation to 16.3 percent in accommodation.

and!travel!agents!requesting!stops!in!Brooklyn.! There’s!a!general!interest!in!the!borough!and!people! Tourism9&9Entertainment9Job9Growth:92009I20149 want!to!learn!more!about!Brooklyn.’”!! Sorted9by9Industry9Size CAGR 2009I2014 BRIAN$SCULLING,$Marketing$Manager,$Big$Bus$–$New$York$! Food9services 23.2 15.2 38.4 10.6% and9drinking9places Brooklyn’s share of tourism and entertainment jobs is also growing faster than those in New York City as a whole. Overall, tourism and entertainment employment in Brooklyn grew at an average annual rate of 10.7 percent Performing9arts9and 1.5 1.7 3.2 16.3% from 2009 through 2013, as compared with a state average of 4.1 percent. spectator9sports This advance was supported by robust sector growth in every major category, including food services and drinking places, amusements and recreation, performing arts and spectator sports, and accommodations. The Amusements, Brooklyn9 gambling, 1.9 1.1 3.0 9.7% Average, only sector that did not experienced growth during this period was museums, and9recreation 10.7% historical sites, zoos and parks.

“Small!and!medium!sized!arts!organizations!are!really! Accommodation 0.9 0.8 1.7 14.6%

struggling.!With!all!the!hype!around!the!growth!of! State9 Brooklyn!and!the!influx!of!residents,!the!larger! Museums, Average, historical9sites, 1.0 0.0 1.1 0.9% 4.1% institutions!are!better!positioned.!The!pie!is!larger! zoos,9parks

overall,!but!the!new!residents!have!less!of!an!affinity! 0 10 20 30 40 0.0% 5.0% 10.0% 15.0% 20.0% Thousands for!the!smaller!groups!who!they!might!not!know! Total9Jobs9in92009 Net9Jobs9Added92009I2014 Total Jobs12014 about!yet.”!! Source: Bureau of Labor Statistics, QCEW

JAMES$BARTLETT,$Executive$Director,$Museum$of$Contemporary$African$ Diasporan$Arts,$NY$Methodist$Hospital$! Food Services and Drinking Places (Restaurants and Bars) The largest employer in the tourism and entertainment industry is the food services and drinking places category69, which individually accounts for over Food services and drinking places accounted for the vast majority of both 81 percent of the jobs in the tourism & entertainment industry. The growth in jobs and job growth. The categories of accommodations, performing arts jobs has been lockstep, with 81 percent of new jobs added since 2009 in the and spectator sports, and amusements and recreation, while proportionally restaurant and bar category. As of 2014 there were approximately 4,394 small employment sectors (providing between 1,700 and 3,200 jobs in bars and restaurants in Brooklyn. Between 2011 and 2014 alone, the 2014), have grown tremendously since 2009. These categories posted borough added 640 bars and restaurants - more than Manhattan, which added only 581. However, it is not just in the quantity of new bars and

! 66# restaurants that is impressive, but also the quality. This industry has grown in a symbiotic relationship with local food-based businesses including Food.Services.Industry Statistics,.2015 Farmigo, a fresh farm produce startup in Gowanus, and the food incubator at 630 Flushing Avenue (the “Pfizer factory”), to create an area at the epicenter 518 $2.56* Expenditures of modern food trends. Leakage $1.1 In 2015, ten Brooklyn restaurants earned one or more of the coveted $1.46* Michelin Guide stars.70 No other borough outside of Manhattan has more star-rated restaurants. Brooklyn is also home to the only two- and three-star 168 190 rated restaurants in NYC outside of Manhattan. While Manhattan continues to dominate the Michelin list, the 2015 edition highlights Brooklyn’s arrival Demand Supply.(Sales) Brooklyn Manhattan NY.State.(Excl. (Consumer Brooklyn.and with eight of the 20 new star-rated restaurants in New York City. Expenditues) Manhattan)

Bar.&.Restaurant.Expenditures.Leakage.in. Bars.&.Restaurant.Establishments As a result of Brooklyn’s growth, neighborhoods such as , Park Brooklyn.in.billions per.100,000.Residents Slope, and Williamsburg have become veritable food & drink meccas. Source: Bureau of Labor Statistics, QCEW Williamsburg for example has been described by Bon Appetit Magazine as “a legitimate culinary hotbed…[A] destination that no self-respecting foodie 71 can miss.” However, Brooklyn’s food scene is not limited to these Performing Arts and Spectator Sports neighborhoods. It is quickly spreading to other areas such as Fort Greene, Red Hook and Bushwick. Brooklyn’s success in the restaurant and bar sub-industry has been in lock step with growth in the performing arts and spectator sports sub-industry. As Despite Brooklyn’s enviable increase in bar and restaurant options, some pointed out by Bon Appetit magazine, these sub-industries are highly linked: indicators, such as leakage of consumer expenditures and the number of “On a day trip, you might visit an old Polish restaurant for a late breakfast, establishments per capita point toward significant opportunities for further while away a few hours at a combination art installation and historical growth. For example, as shown below, despite Brooklyn’s robust growth it museum, then hit a few galleries along Grand Street. Having completed all still trails the rest of New York State in terms of establishment per capita. this cultural reconnaissance, you can treat yourself to drinks, then dinner, at Moreover, consumer expenditures by Brooklyn residents in bars and any of the string of Manhattan-worthy bars and restaurants.” restaurants exceeds sales by local establishments by $1.10 billion. This ‘leakage’ is money that resident spend at bars and restaurants outside of Brooklyn.

! 67# Between 2009 and 2014, the Performing Arts and Spectator Sports sub- industry grew at an extremely fast rate (16.3 % per year). Brooklyn is host to “Over!the!past!few!years,!Brooklyn!has!seemed!to! 230 performing arts spaces that have a knock-on effect of bringing in visitors accelerate!in!growth!more!quickly,!and!has!quickly! that then frequent other tourism and retail businesses in the area.72 One example is the 150-year old Brooklyn Academy of Music in Fort Greene, become!one!of!the!most!popular!destinations!in!New! which presents more than 200 stage performances a year, bringing in York!City.!What!was!once!a!second!choice!for!hotel! 73 231,000 viewers for more than $24 million in performance revenues. A stays!has!become!a!first!choice!for!travelers!who! newer venue is the Kings Theatre in Flatbush which reopened early this year after an extensive $94 million renovation and restoration to the venue’s want!to!experience!the!culture,!excitement!and!edge! original 1929 design as a concert and event venue with over 3,000 seats. that!Brooklyn!is!enjoying.”!! Drawing a new audience to Central Brooklyn as the 4th largest theater in SAM$IBRAHIM,$General$Manager,$New$York$at$the$Brooklyn$Bridge! New York City, the project is anticipated to create 100 full time jobs, not including individual production personnel.74 Accordingly accommodation jobs nearly doubled from 2009 to 2014. The One of the highest-profile developments in Brooklyn has been the Atlantic pace of increase shows no sign of slowing. At the same time, hotel rates Yards Arena and Redevelopment Project, which includes as a centerpiece continue to rise and averaged $170 per night in 2014.76 an 18,000-seat arena hosting the Brooklyn Nets basketball team. The first events took place in September 2012. Estimates of ultimate job creation by Significantly, there has been a marked increase in the number of full-service, the Barclays Center vary, but generally reflect approximately 2,000 jobs internationally branded hotels. While the Marriott Brooklyn Downtown has created between sports arena facilities and concessionaires. been a mainstay for years, it stood largely alone until the arrival in the past five years of new properties from Sheraton, Best Western, aloft, Fairfield Inn Accommodations & Suites, and Holiday Inn. However, the growth is not limited to downtown and this year hotels will open in Bedford-Stuyvesant, Gowanus, and The growth of dining and entertainment options, as well as the growing Brownsville. Development has extended past residential and commercial cache of Brooklyn as a place of cool, translates into more and more tourists neighborhoods and is now popping up in industrial districts. The Pointe choosing to stay in Brooklyn rather than in Manhattan. Plaza Hotel near the Brooklyn Navy Yard and the Gowanus Inn & Yard near Traveler accommodations account for a slim 3.5 percent of employment in the Gowanus Canal are embracing the architecture of the neighborhood and the tourism and entertainment industry, but one that is growing significantly. avoiding the stereotype of budget hotels developed in the past with In 2007, over twelve new hotels were slated for construction. Fifteen hotels featureless architecture and vast parking lots. In addition to attracting guests were completed in 2010 and 2011 with a total of 1,431 rooms.75 According from nearby residential neighborhoods, industrial areas argue that hotels to a February 2015 Hotel Development report by NYC & Company, over the help attract businesses. Earlier this year, Industry City, a 6-million square three year period from 2012 through 2014, four new hotel properties opened foot complex in Sunset Park owned by a consortium including Jamestown in Brooklyn with a total of 394 hotel rooms. Ten hotels are expected to open Properties, made this argument when it requested permission from the city on 2015 alone, totaling nearly 1,700 hotel rooms and including some 300 to build a hotel not currently permitted by zoning. rooms in the fully restored, historic Brooklyn Heights Bossert Hotel. New openings in the pipeline for 2016 include 5 hotel properties with over 900 additional rooms.

! 68#

In 1998, when the New York Marriott opened a Brooklyn location on Adams Street near the entrance to the Brooklyn Bridge, it had been over 60 years since a newly built branded hotel had been construction in the borough. For almost 15 years, it was the only hotel in the area and even today, with 667 rooms, it dwarfs its new neighbors. Today, Downtown Brooklyn is home to six hotels with 1,500 rooms and another four hotels with 850 rooms are in the pipeline. In light of this new competition, Marriott is investing $43 million to renovate the entire facility.

! !

DNAinfo, Map: See where Downtown Brooklyn is Adding 1,200 Hotel Rooms, July 16, 2014

! 69# ! Tourism,#Attractions#and#Entertainment#Map#

Source: Esri Business Analyst and LEG [1] Map is illustrative of the number and distribution of hotels, attractions and restaurants in Brooklyn. It does not represent every business. {2} # estb represents the number of restaurant and bar establishments in each cluster

! 70# The study reinforced the reasons that Brooklyn is a growing base for these Innovation and Technology Sector firms, including:

Technology and Innovation are widely recognized as drivers of economic Brooklyn is An Attractive Place to Be growth. According to BusinessWeek’s Michael Mandel: “Economic growth is driven by new technologies and its applications, always and in all places. So → The Brooklyn Tech Triangle is home to approximately 10% of all tech firms citywide – the largest concentration outside Manhattan. that we know that periods of rapid innovation are also periods of strong 77 growth, we have new jobs and new industries.” For this reason, regions → 12% of firms surveyed moved to Brooklyn from other (non-NYC) across the world are adopting policies to foster environments where places in the U.S. and abroad. technology and innovation can thrive. → 30.4% of firms surveyed started in one of the other boroughs of NYC Fortunately, Brooklyn naturally developed a thriving ecosystem for tech, and moved to Brooklyn. creative, and innovation firms. The Brooklyn Tech Triangle conducted a → 99.3% of firms currently in the Tech Triangle would like to stay there. study of the “Economic Impacts of the Tech and Creative Sector”.78 → Top factors in real estate selection were rent, proximity to transit, and According to this study, the Greater Downtown Brooklyn area has seen a neighborhood character, neighborhood amenities. rise in entrepreneurship, technology and creative firms over the last decade, especially in the DUMBO and Brooklyn Navy Yard areas and these three Brooklyn has a Deep Talent Pool neighborhoods are known as the Tech Triangle. These tech and innovation (creative or arts) firms have a tremendous impact on the Brooklyn economy → 77.2% of Tech Triangle Firms say that more than half of employees and are expected to continue growing rapidly. live in Brooklyn

Big Impact Today and Rapid Growth Expected → 31.5% of Tech Triangle firms say that all their employees live in Brooklyn → Similar percentages were found for firms located outside the Tech Triangle.

Brooklyn Firms have Strong Local Ties and Linkages

→ 56.8% of surveyed firms originated in Brooklyn → 26.4% of Tech Triangle firms purchase more than half of their supplies/services in Brooklyn. These findings indicate that, under the right conditions, the innovation and technology sector will continue to play an important an expanding role in the economic growth of Brooklyn in the years ahead.79

Source: Brooklyn Tech Triangle

! 71# V. INNOVATION !

Ever since the 1950s, innovation or technological progress has been Brooklyn is happening across a wide range of industries such as education, recognized as a major force in the economic growth of highly industrialized agriculture, manufacturing, and transportation. These innovative businesses societies. The work of Nobel Prize winner Robert Solow80, and subsequent and their products are extremely heterogeneous making an accurate economic success of Silicon Valley, resulted in a growing emphasis on definition of “innovation” an elusive task. For this reason, rather than defining innovation as the central goal of most economic policies to spur local and ‘innovation’ along a set of industries or occupations, we used broad national economic development. indicators of innovation. However, as innovation comes in many forms and shapes, there are few indicators that can be used to accurately measure the Due to the importance of innovation in economic development, many regions level of innovation in Brooklyn. Therefore, the indicators are enhanced with use a variety of measures and indicators to gauge their innovation profiles of three organizations that illustrate the type of innovation that is competitiveness. These innovation indicators tend to focus on the high tech happening in Brooklyn. sector. This is because innovation is typically equated to technological progress; something carried out by highly skilled workers, in R&D intensive Summary companies with strong ties to leading centers of excellence in the scientific world.81 From this perspective, innovation can be measured through outputs The indicators of innovation illustrate Brooklyn’s rapid transformation of its (e.g., patents) or inputs (e.g., high skilled workers, research institutions, economy and labor force. Patents per worker are increasing, the share of number of entrepreneurs, etc.). This section examines some widely used adults with terminal degrees (e.g., graduate and professional degrees) is indicators of innovation to illustrate the level of innovation in Brooklyn. increasing faster than the rest of the city, state, and country, and so is the number of adults with degrees in science and engineering fields. Brooklyn is These indicators are not meant to measure the size or impact of innovation growing and attracting a large number of entrepreneurs. Furthermore, on the economy of Brooklyn and the region. The Brooklyn Tech Triangle has Brooklyn has high rates of small and relatively young companies, which tend already conducted an extensive analysis of the economic impacts of the to drive innovation. “tech and innovation sectors” in Brooklyn, which is summarized in the previous chapter. Instead, this chapter presents indicators widely used to evaluate a region’s level of “innovation” or “innovation potential”. These Innovation Indicators indicators permit comparisons overtime to shed light on whether Brooklyn is becoming more or less innovative. They can also be compared across Patents Granted jurisdictions to provide the reader with a better sense of the relative circumstances found in Brooklyn. Patent grants are a useful proxy for innovation, since they frequently reflect developments at the cutting edge of innovation. This is perhaps the most Consistent with common practice, the indicators presented here tend to be traditional measure of innovation. Brooklyn scores well on this mark, with a technology and science focused. However, we do not attempt to define growing rate of having patents granted to companies and individuals within innovation (i.e., what industries and occupations are innovative). Innovation the Borough. in

! 72# WHILE!THE!NUMBER!OF!PATENTS!GRANTED!PER!100,000!EMPLOYEES!PER!YEAR!IN! closing the gap with the city and state. Growth in the number of adults with BROOKLYN!LAGS!FAR!BEHIND!NEW!YORK!STATE,!ITS!GROWTH!SINCE!2009!HAS! graduate and professional degrees in New York State and New York City BEEN!IMPRESSIVE.!FROM!2009!THROUGH!2013,!THE!NUMBER!OF!PATENTS!ISSUED! were roughly on par with each other, increasing by 19 and 20 percent PER!100,000!EMPLOYEES!GREW!BY!98!PERCENT!IN!BROOKLYN,!COMPARED!TO!90! between 2005 and 2013, respectively, while the that of the U.S. grew by 25 PERCENT!IN!NEW!YORK!CITY!AND!56!PERCENT!IN!THE!STATE.! percent. During the same period, the population with advanced degrees in Patent2Grants Brooklyn grew by an impressive 46 percent. In fact, during this period, Brooklyn accounted for 50 percent of the increase in the number of adults with advanced degrees in New York City. 97.8 89.3 THE!SHARE!OF!BROOKLYN’S!POPULATION!WITH!TERMINAL!DEGREES!HAS!BEEN! 84.9 82.4 75.8 INCREASING!RAPIDLY!SINCE!2005.! 70.6 66.7 62.8 58.5

Employees 56.3 56.8 Share)of)Adults)with)Graduate/Professional)Degrees 41.4 15% 33.4 29.8 28.0 100,0002 21.6 21.2 22.4 23.4 21.2 14% 19.6 15.7 39.7 32.3 30.1 34.0 13% 22.7 22.3 20.1 17.1 20.3 19.0 20.9 Years)and)Older

Patents2/2 12% 25) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11%

Brooklyn New2York2City New2York2State 10% Source: U.S. Patent and Trademark Office, U.S. Census Bureau, and LEG. 9%

%)of)Population) 2005 2009 2013

While the rate of patent grants for Brooklyn and New York City generally trail Brooklyn New)York)City New)York)State U.S. behind New York State, this is likely due to Armonk, New York-based IBM, Source: US Census Bureau, American Community Survey, and LEG. as the recipient of the most U.S. patent grants of any company in the world for 22 consecutive years, with over 50 percent more patents granted than Science Workers the next closest competitor. The rate of increase in Brooklyn shows an increasing density of inventors with novel intellectual property. We include measures on the number of resident adults with degrees in science and engineering fields as proxy for workforce potential to engage in Terminal Degrees basic research and development. Another suitable proxy for innovation is the share of the population which The proportion of adults with science and engineering college degrees in possesses a terminal degree (Ph.D., M.D., etc.), which reflects the potential Brooklyn (5.4 percent) is slightly lower than the rest of the city and state. pool of high human-capital individuals who are more likely to engage in However, this segment of the population has been growing significantly innovative activities.82 faster in Brooklyn. The number of adults in Brooklyn with science and engineering degrees grew by 26 percent between 2009 and 2013 compared In 2005 Brooklyn’s share of adults with terminal degrees was below the to 18 and 15 percent for the rest of the city and state, respectively. averages of the U.S., New York City, and New York State. However, since then, it has grown at the fastest rate, surpassing the U.S. and significantly

! 73# Adults'with'Degrees'in'Science'and'Engineering'Fields'1 New York City decreased by approximately the same number. This suggests that among those entrepreneurs that folded up shop or moved elsewhere, 2009&'2013& %&of&Adult& relatively fewer were in Brooklyn, and among those that started up or moved 2009 2013 %&change Population&in&2013 to a new location, relatively more chose Brooklyn as their home.

Brooklyn 74,597 94,204 26% 5.4% BROOKLYN!IS!A!MAGNET!FOR!INCORPORATED!SELFcEMPLOYED!WORKERS!cA! Rest'of'City 217,850 256,138 18% 6.3% PROXY!FOR!GROWTHcCREATING!INNOVATORS.!IN!THE!LAST!THREE!YEARS,! Rest'of'State 649,633 749,703 15% 6.4% BROOKLYN!ATTRACTED,!ON!AVERAGE,!MORE!THAN!5,500!WORKERS!IN!THIS! EMPLOYMENT!CATEGORY.! Source: US Census Bureau, American Community Survey, and LEG. Incorporated+Self/Employed,+by+Place+of+Work 1 Includes adults 25 years and older with college degrees and higher in 1) Computers, Mathematics, and Statistics, 2) Biological, Agricultural, and Environmental Sciences, 3) Physical and Related Sciences, and 4) Engineering. Growth Place,of,Work 2008310 2011313 Absolute Percentage Number of Entrepreneurs The+Bronx 10,968 9,103 /1,865 /17% Unfortunately, there is no widely accepted way to measure the number of Brooklyn 29,602 35,145 5,543 19% entrepreneurs or ‘growth-creating innovators’. Early research relied on estimates of the ‘self-employed’, including those who incorporate their Manhattan 73,891 72,902 /989 /1% businesses and those who choose not to, as a proxy for entrepreneurship.83 Queens 31,347 28,921 /2,426 /8% However, Ross Levine and Yona Rubinstein at UC Berkeley and the London Staten+Island 5,039 5,312 273 5% School of Economics, respectively, examined U.S. Census data in order to identify a better proxy for the type of entrepreneur that dreams up growth- NYC 150,847 151,383 536 0% creating innovations.84 Levine and Rubinstein conclude that the New+York+State 333,864 335,142 1,278 0% “incorporated self-employed” is a better proxy for those engaged in growth- creating entrepreneurial activities than using the aggregate group of self- Source: US Census Bureau, American Community Survey, and LEG. employed, which includes non-incorporated self-employed. Levine and Rubinstein find, for example, that the incorporated self-employed have a distinct combination of cognitive, non-cognitive, and family traits which make “There!has!been!a!significant!shift!from!wanting!a!sure! them more successful as self-employed entrepreneurs.85 While it is unrealistic to expect that every one of the incorporated self-employed is an job!to!wanting!to!take!the!risk!of!entrepreneurship!for! entrepreneur who is working on breakthrough innovation, Levine and Yona’s potentially!much!higher!compensation.”!! analysis indicates that this group is more likely to include such individuals. KURT$BECKER,$Vice$Dean$for$Research,$Innovation$and$Entrepreneurship,$NYU$ For this reason, we include a measure of the incorporated self-employed as Polytechnic$School$of$Engineering! a proxy for the potential number of entrepreneurs in Brooklyn.

Using data from the American Community Survey for the periods 2008-2010 and 2011-2013, it can be shown that Brooklyn is a hot spot for the type of Small Businesses growth-creating entrepreneurs identified by Levine and Rubinstein. During Brooklyn’s employer base is split between the two extremes, with a large the period of analysis, the number of incorporated self-employed working in number of firms having more than 500 employees, and a large number of Brooklyn increased by more than 5,500, while their numbers in the rest of firms have fewer than 20 employees. While larger firms may be perceived as

! 74# more stable, better able to weather economic downturns, better disposed to draw on resources, and perhaps better able to have capital available to Brooklyn1Employment1Growth1by1Firm1Size dedicate towards research and development compared to small firms, small 200 firms are a potent driver of innovation. "Small firms are a significant source of innovation and patent activity. Small 150 businesses develop more patents per employee than larger businesses, with the smallest firms, those with fewer than 25 employees, producing the 100 greatest number of patents per employee. Furthermore, small firm patents tend to be more significant than large firm patents, outperforming them in a 50 number of categories including growth, citation impact, and originality."86

Number1of1Employees1(thousands) 0 87 Other research supports the idea that small firms are highly innovative. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Additionally, many innovative companies are small business in the earliest 0H19 20H49 50H249 250H499 500+ stages of dramatic growth. Source: QWI Explorer application, U.S. Census Bureau IN!2013,!FIRMS!IN!BROOKLYN!WITH!MORE!THAN!500!AND!FEWER!THAN!20! EMPLOYEES!ACCOUNTED!FOR!OVER!350,000!JOBS,!68!PERCENT!OF!TOTAL! Young Businesses EMPLOYMENT.!EMPLOYMENT!IN!THESE!LARGEST!AND!SMALLEST!FIRMS!HAS!ALSO! Numerous academic studies have found that younger companies tend to GROWN!AT!THE!FASTEST!RATE!BETWEEN!2003!AND!2013.! drive innovation. Specifically, firm age has been found to be inversely related 88 Employment2by2Firm2Size,22013 to innovative output, new and intermediate age firms tend to show high 89 %2of2Total2Employment probabilities of innovation, and firm age is negatively related to technical quality, particularly in technology active areas.90 For this reason, we track

48% employment by firm age as an indicator of innovation. 52% 38%

30%

21% “Our!users!are!all!over!the!country!and!the!world!designing! 15% 15% 20% 11% 10% for!their!microbusiness,!wedding!or!DIY!projects.!The! 15% 7% 6% umbrella!that!connects!them!all!is!that!they’re!creative.! 9% 6% That’s!why!it’s!so!important!for!us!to!be!in!a!creative! 0,19 20,49 50,249 250,499 500+ environment!like!Brooklyn.”! Firm2Size2by2Number2of2Employees Brooklyn New2York2City New2York2State ELLEN$JOHNSTON,$CEO,$Makr!

Source: QWI Explorer application, U.S. Census Bureau

! 75# Brooklyn has a higher percentage of employment in young (1-3 years) and intermediate age (4-10 years) firms and lower percentage of employment in more established firms (11+ years) than the city and state. ! Employment,by,Firm,Age,,2013 %,of,Total,Employment

79% 66% 76%

12% 8% 9% 4% 7% 4% 7% 4% 5% 5% 5% 10%

0+1,years 2+3,years 4+5,years 6+10,years 11+,years Firm%Age

Brooklyn New,York,City New,York,State

Source: QWI Explorer application, U.S. Census Bureau

“With!the!shift!in!demand!for!housing!to!neighborhoods! throughout!Brooklyn,!employees!with!the!very!specific! skills!needed!by!design!and!manufacturing!firms!–!and!the! decision!makers!for!those!firms!–!are!now!Brooklyn! residents.!They!want!to!be!near!the!technology!firms!and! app!developers!in!the!rest!of!the!tech!triangle.!And!they! much!to!prefer!to!bike!to!work!than!to!jump!on!the! subway.!That’s!what!makes!the!Navy!Yard!a!perfect!home! for!them.”!

!DAVID$EHRENBERG,$President$and$CEO,$Brooklyn$Navy$Yard$Development$ Corporation$!

! 76# Makr wants to make every Innovation Profiles person a designer. The Greenpoint-based firm provides Innovation permeates every industry and Brooklyn is home to enterprises at inspiration by democratizing the cutting edge. While it is difficult to measure the number of these firms creative tools through an app for and employees in what is considered the innovation sector, this section iPad and iPhone that empowers everyone to design and be creative. attempts to highlight some of the diversity of companies taking advantage of The six-person team designed the app to avoid the paralyzing “blank page Brooklyn’s competitive advantages. This very small sampling, which includes approach” and uses content and templates to provide inspiration and guide app developers, creative design firms, and a biotechnology incubator, is just good design choices for the non-professional. The design can be put on the tip of the iceberg. products ranging from business cards and letterhead to stickers, promotional give-aways, and wedding invitations. Users from around the world take advantage of the free design tools, but all product fulfillment is done within Catching a taxi at the airport, the the United States. Javitz Convention Center or the Manhattan Cruise Ship Terminal Makr closely identifies with its Brooklyn home and sees the borough as one, might be about as hard as it gets. if not the, epicenter of the maker movement. Being co-located with creative The six employees at Brooklyn- firms is critical to their inspiration and keeps them in touch with the mindset based firm Bandwagon want to of their typical user. make it easier and maybe A recent acquisition by Staples will allow the firm to lower prices, expand introduce riders to a new friend. Partnering with locations with a high density available products, and focus on hyper-local production and fulfillment. They of riders, the Bandwagon taxi-sharing app improves the customer anticipate doubling in size this year and plan to stay in Brooklyn as they experience by connecting riders headed to similar destinations. The riders grow. save money and time and the driver makes more from multiple customers than a single rider would have paid. And for certain types of events – like conferences or concerts – it can be a fun and organic way to get strangers talking to each other. ! When Mesh, a West Virginia-based graphic design and brand development firm, wanted to expand, they opened a Brooklyn office. Their collaborative approach to design includes graphic design, interaction design, web development, writing, illustration, photography and videography and Greenpoint had the density of creative talent they needed. Whether designing a web platform for the Children’s Museum of New York or creating a national campaign for crowd-sourced video content for the American Civil Liberties Union, Mesh is able to leverage the creative hub of independent workers in the borough.

! 77# Cargomatic, a California- As far back as 2000, SUNY Downstate realized that based software company, is despite obvious demand, there was no real estate changing the way one of appropriate for emerging biotechnology research Brooklyn’s most traditional industries – freight handling – does business. firms in New York City. The specialized ventilation Knows as the “Uber for freight”, Cargomatic uses a platform to connect infrastructure and equipment needed by these shippers and carriers for same day and next day local freight deliveries start-ups was expensive to install and could not be within 150 miles. Shipments range from a single pallet to a truckload and accommodated in a typical building. This unmet allows companies and individuals to connect to truckers with excess need led to the creation of the Biotechnology Park capacity. a certified business incubator and Start Up New York partner. There are enormous benefits to Brooklyn businesses and residents. Located adjacent to the SUNY Downstate Medical Center in the East Ensuring that more trucks are hauling full loads and accepting jobs based on Flatbush section of Brooklyn, the Incubator allows companies to grow from destination efficiencies results in less truck traffic overall. Cargomatic is one desk or office to 4,000 square feet while in the research and working with the New York City Department of Transportation to increase development phase. As a complement to this facility, Downstate also these benefits. created BioBAT, a biotech expansion and manufacturing space at the Brooklyn Army Terminal. Once firms have outgrown the Biotechnology Park, Typically, a shipper calls each carrier individually, meaning that finding the they can take up to 100,000 square feet in BioBAT. right space availability and destination efficiency might take many calls and that scenario assumes a shipper knows who to call. Smaller businesses In addition to providing the critical real estate critical, the Park’s adjacency to might only have relationships with a few carriers. In Brooklyn, there is a SUNY Downstate provides invaluable access to university resources – growing community of artisan craftpersons doing smaller volume and higher scientists, clinicians, students, libraries, and research facilities. Downstate priced items that require shipping. This community does not necessarily patients also benefit by being eligible for clinical trials for the state-of-the-art have knowledge of the shipping industry or relationships with many developments pioneered at the Park. companies. The app means anyone can easily access a carrier that can The Brooklyn location is also critical for firms to partner with traditional provide an immediate response. In addition, shippers have assurances that industries. One firm at the BioBAT, Modern Meadow, is cultivating meat and they will be charged the fee they were quoted, which are generally about leather from animal biopsies which allows for those items to be produced 20% lower than standard fees. without killing animals. Being located a few subway stops from the center of Carriers in this short haul range tend to be self-employed owners of a single the fashion industry is critical for their partnerships and there is no other truck or a few trucks, so these drivers benefit enormously from access to place in New York City for them to do the work they’re doing. potential shippers who might never have contacted them otherwise. Even The Park is not only focused on attracting trained biotechnology workers, but more importantly to these local entrepreneurs, payments to the carrier are cultivates these skills locally. The incubator hosts student interns to expose guaranteed in two weeks and the faster turnaround time allows these them to research outside of academia. It also hosts a technician-training businesses to avoid needing high interest loans to tide them over. program to expose students to the complicated equipment necessary to be There is a national shortage of truck drivers, so obtaining a Commercial considered for a job in the growing industry. As the industry expands and Driver’s License provides huge salary benefits to a driver over driving a Brooklyn becomes the center of biotechnology in New York, it will be the livery cab or taxi. Cargomatic makes it possible for any driver with a truck to source of an increasing number of higher paying jobs. Downstate is quickly ramp up their business. committed to setting up the educational pipeline so everyone has the opportunity to be a part of this growth.

! 78# The Urban Future Lab (UFL) is home to the future of clean technology. This office in Metrotech combines PowerBridgeNY, a cleantech proof of concept center, the Clean Start Professional Certification program, cleantech education activities and the Accelerator for a Clean and Resilient Economy (ACRE).

ACRE is one of three incubators developed by NYU- Polytechnic University in collaboration with New York City and State. It is the only tech incubator in New York run by a higher education institution, which isn’t limited to tenants with an existing university affiliation. Tech firms focused on clean energy and clean technology can apply to be a tenant and the application process is competitive. In addition to renting space, the companies get access to support: legal, accounting, human resources, and faculty and research advisors. There is also an entrepreneur training program with business development components.

This additional support structure is part of the reason NYU-Polytechnic’s three incubators can boast a success rate of higher than 70%, an unheard of target for start-ups. And while firms are limited to two years at ACRE, they are tracked after they leave. The 50 companies that have graduated from all three incubators have created 1,256 jobs, raised over $150 million in venture capital and had over $350 million of economic impact to New York City. Due to location and university affiliation, ACRE is attracting firms from around the world hoping to test the New York market. Resident firms hail from Canada, Germany, Denmark and Scotland. These companies want to be in the United States market, preferring the east coast to the west coast because of the time difference and, within New York, are drawn to the Brooklyn ethos and proximity to funders in Lower Manhattan.

From an employee pipeline perspective, UFL has been influential in changing how faculty teach. The mere presence of the incubator has staff and students focused on market-driven product generation. !

! 79# VI. WORKFORCE OVERVIEW !

The most important resource in an economy is its people. According to the International Labor Office, “Ultimately, [a] country’s prosperity depends on Labor2Force2Growth22000:2014 how many of its people are in work and how productive they are, which in indexed2to2year22000 turn rests on the skills they have and how effectively those skills are used.”91 120% A large, highly educated and skilled workforce increases the productivity of 117% 115% local businesses, and attracts new businesses to the area. The indicators in 112% this section help identify the demographic mix and workforce characteristic 110% of Brooklyn. 105% 105% Worforce Quality Indicators 100% 95% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Size and Growth of Labor Force Brooklyn New2York2City NY2State

During 2014, Brooklyn averaged a labor force of 1.22 million - approximately Source: U.S. Department of Labor 30 percent of New York City’s total labor force. The growth of Brooklyn’s labor force largely mirrors its impressive population growth. As shown below, Brooklyn’s labor force grew at approximately the same rate as the city and Labor'Force'Growth'2009/2014 state as a whole through 2009. However, between 2009 and 2014, the Number'of'net'new'laborers'and'percentage'change state’s labor force remained largely flat while Brooklyn’s labor force experienced substantial growth. Within New York City, Manhattan and 103,149' New'York City:'165,187 Staten Island’s labor force shrunk during this period. As a result, Brooklyn New'York'State:'(73,891) 72,764' accounted for nearly 63 percent of the net labor force growth in New York City between 2009 and 2014. 28,281' 9% 14% 3%

/9% /3% (23,113) (31,962) Brooklyn Bronx Queens Staten'Island Manhattan

Source: U.S. Department of Labor

! 80# Demographic Trends – Prime Age Workforce PrimeAAge7Population7as7Percent7of7Total7Population Brooklyn’s population is younger than that of New York City or New York State as a whole, with fully 77.4 percent of its population age 54 or younger, % % % % % % % % % % as compared to 75.8 percent and 78.2 percent, respectively. Brooklyn’s % % 45.5 45.4 44.7 44.0 43.8 43.7 43.0 42.9 42.6 41.6 large share of under-14 population as compared to New York City indicates 41.3 40.1 more young people in Brooklyn that may be entering the workforce in coming years.

BROOKLYN’S!POPULATION!IS!YOUNGER!THAN!THAT!OF!NEW!YORK!CITY!OR!NEW! YORK!STATE!AS!A!WHOLE.!IN!2013,!APPROXIMATELY!33!PERCENT!OF!BROOKLYN! RESIDENTS!WERE!UNDER!25!YEARS!OLD!AND!77!PERCENT!WERE!UNDER!55.! Brooklyn New7York7City New7York7State U.S. 20132Age2Distribution 2005 2009 2013

Source: US Census Bureau, American Community Survey Brooklyn 19.9% 13.4% 44.0% 17.5% 5.2%

Growth4in4Prime4Age4Population New2York2City 17.9% 13.2% 44.7% 18.3% 5.9% 2005?2013 8.7%

New2York2State 18.0% 13.9% 41.3% 20.4% 6.4% 3.8% 2.2% &0.4% U.S. 19.5% 14.0% 40.1% 20.5% 5.9%

0% 20% 40% 60% 80% 100% Brooklyn NYC NY U.S. 142and2under 152to2242years 252to2542years 552to2742years 752years2and2over State Source: US Census Bureau, American Community Survey Educational Attainment Brooklyn’s population trends shows a rising share of prime-age population, Statistics on Brooklyn’s educational attainment tell two stories. Brooklyn is defined as those 25 to 54 years old. These individuals have generally very competitive at the college-graduate and higher education attainment completed their investment in education and are the drivers of the workforce, level. In 2013, a greater percentage of Brooklyn’s adults (25 and older demonstrating the highest labor participation rates and the greatest population) earned Bachelor’s degrees compared to the state or country resilience to employment cycles and economic downturns. An increasing (although lagging behind the city as a whole), and Brooklyn’s graduate and share of this population is a positive sign for the robustmess of Brooklyn’s professional degree holders are proportionally less than in the city or state, workforce. That Brooklyn’s share is gorwing while those of New York City but well above the country as whole. On the other hand, Brooklyn has a and New York State are both declining is a testament to the attractiveness of relatively high proportion of adults with less than a high school education, Brooklyn to people in their prime-age years.

! 81# and a relatively low proportion of adults with some college or associate’s 2009I2013,Median,Annual,Earnings,by,Level,of,Education degree. 8.4% 8.4% Lower levels of educational attainment are closely tied to lower median 5.4% 3.1% 64,991 annual earnings and earnings growth over time. In 2013, Brooklyn residents 59,959 !0.8% 50,978 25 and older that did not graduate high school had median annual earnings 47,012 35,888 34,060 27,894 of $18,300, 68 percent of those that graduated high school ($27,000), and 27,050 19,277 only 36 percent and 28 percent of those with a Bachelor’s degree ($50,600) 19,122 and Graduate or professional degrees ($64,300), respectively. ,,Less,than,high ,,High,school ,,Some,college,or ,,Bachelor's,degree ,,Graduate,or The difference is compounded by an increasing earnings gap over time. school,graduate graduate,(includes associate's,degree professional,degree equivalency) While those that did not graduate high school saw their medial annual earnings increase by 0.6 percent between 2009 and 2013, those with 2009 2013 %*Change Bachelor’s, Graduate or professional degrees increased by between 4.2 to Source: US Census Bureau, American Community Survey 6.0 percent – an increase of seven to ten times in percentage points. In dollar terms, the difference is even starker, with the average Bachelor’s High School Graduation and Dropout Rates degree holder earning approximately $2,700 more, and the average high The snapshot of educational performance in 2013 masks the sustained school graduate’s earnings only increasing by $200. improvement that has been demonstrated. Between the graduating classes BROOKLYN’S!OVER!25!POPULATION!HAS!LOWER!LEVELS!OF!EDUCATIONAL! of 2010 to 2014, Brooklyn’s high school graduation rates increased by five ATTAINMENT!COMPARED!TO!NEW!YORK!CITY!AND!STATE.!NEARLY!50!PERCENT! percent, college readiness increased by four percent and dropout rates fell HAVE!A!HIGH!SCHOOL!DIPLOMA!OR!LESS,!WHICH!HAS!A!SIGNIFICANT!IMPACT!ON! by three percent. While these rates still lag behind New York State as a EARNINGS!GROWTH.!! whole, the improvements are on par with those observed across the state Educational,Attainment,for,Population,25,and,Older,,2013 during the same period, and reflect a growing momentum of educational

% achievement in the public schools. % % % % 29.2 % 27.8 26.8 26.0 % % % 24.7 % % % 24.3 % % 21.2 21.1 20.4 19.9 19.8 19.6 % % 19.3 % 18.4 % % % 14.8 14.6 14.4 13.4 13.0 11.2

,,Less,than,high,school ,,High,school,graduate ,,Some,college,or ,,Bachelor's,degree ,,Graduate,or graduate (includes,equivalency) associate's,degree professional,degree

Brooklyn New,York,City New,York,State U.S. Source: US Census Bureau, American Community Survey

! 82# GRADUATION,!COLLEGE!READINESS!AND!DROPOUT!RATES!AT!BROOKLYN’S!PUBLIC! HIGH!SCHOOLS!LAG!BEHIND!THOSE!OF!NEW!YORK!STATE,!HOWEVER!THERE!WERE! “We’re!drawing!immigrants!from!all!over!the!world!who! MARKED!IMPROVEMENTS!FROM!THE!CLASS!OF!2010!THORUGH!2014.! bring!amazing!skills!–!whether!as!a!technician!or!scientist!–! HS8Graduation,8"College8Ready"8and8Dropout8Rates for!good!paying!biotechnology!jobs.!They!bring!innovation! when!they!thing!‘how!can!I!do!that!better.’”!! 79% 73% 74% 69% 64% 64% EVA$CRAMER,$President,$Downstate$Technology$Center$!

37% 35% 38% 25% 21% 20% Adults2with2Avanced2Degrees2Moving2from2Abroad2 12% 12% 9% 9% 8% 7% 3,155 '09-'10 '11-'12 '12-'14 '09-'10 '11-'12 '12-'14 2,607 2,348 Brooklyn New8York8State Graduation8Rates8(48year) College8Ready Dropout8Rate Source: NY State Education Department 1,078 1,170 High-skilled Immigration As a destination for foreign migrants, the level of education of immigrants plays a substantial role in the skills and training of Brooklyn’s workforce. On this front, Brooklyn has been remarkable at attracting highly educated 2009 2010 2011 2012 2013 migrants. The share of individuals moving to Brooklyn from abroad with Source: US Census Bureau, American Community Survey graduate or professional degrees has increased three-fold from 2009 to 2013. Since 2011, a larger share of persons moving from abroad have held graduate or professional degrees than in the borough as a whole, meaning the average level of educational attainment has been pulled upward by these migrants.

! 83# Appendix A – Industry Descriptions Examples of Brooklyn Companies:

The industry classifications used in this report are based on two-digit North • Penda Aiken, Inc. • Waste Management • Alternative Pest American Industry Classification System (NAICS). The following descriptions (employment of New York, LLC Control are from U.S. Bureau of Labor Statistics. Examples of businesses in each placement) • eRecycleNY (waste • Phoenix Janitorial industry were compiled by Land Econ Group. The industries are presented • DDS Employment management) Maintenance in alphabetical order. Screening Services Services, Inc. • SJ Solutions Security & Construction (NAICS 23) Protection Services

Comprises establishments primarily engaged in the construction of buildings or engineering projects (e.g., highways and utility systems) and preparation of sites for new construction. Establishments primarily engaged in subdividing land for sale as building sites also are included in this sector. Educational Services (NAICS 61) Construction work done may include new work, additions, alterations, or maintenance and repairs. Activities of these establishments generally are Comprises establishments that provide instruction and training in a wide managed at a fixed place of business, but they usually perform construction variety of subjects. This instruction and training is provided by specialized activities at multiple project sites. Production responsibilities for establishments, such as schools, colleges, universities, and training centers. establishments in this sector are usually specified in (1) contracts with the These establishments may be privately owned and operated for profit or not owners of construction projects (prime contracts) or (2) contracts with other for profit, or they may be publicly owned and operated. They may also offer construction establishments (subcontracts). food and/or accommodation services to their students. Examples of Brooklyn Companies: Educational services are usually delivered by teachers or instructors that explain, tell, demonstrate, supervise, and direct learning. Instruction is • Transcend • Green Mountain • Iannelli Construction imparted in diverse settings, such as educational institutions, the workplace, Construction Construction and Company, Inc. or the home, and through diverse means, such as correspondence, • Empire State Design television, the Internet, or other electronic and distance-learning methods. Development LLC The training provided by these establishments may include the use of simulators and simulation methods. It can be adapted to the particular needs of the students, for example sign language can replace verbal language for teaching students with hearing impairments. All industries in the sector share Administrative and Support and Waste Management and Remediation this commonality of process, namely, labor inputs of instructors with the Services (NAICS 56) requisite subject matter expertise and teaching ability.

Comprises establishments performing routine support activities for the day- Examples of Brooklyn Companies: to-day operations of other organizations. These essential activities are often • Pratt Institute • St. Francis College • Brooklyn undertaken in-house by establishments in many sectors of the economy. General Assembly Brooklyn Law College/CUNY The establishments in this sector specialize in one or more of these support • • St. Joseph's School Institute of Design & activities and provide these services to clients in a variety of industries and, • • Xaverian High Construction in some cases, to households. Activities performed include: office College • School administration, hiring and placing of personnel, document preparation and • LIU Brooklyn similar clerical services, solicitation, collection, security and surveillance • Brooklyn Sandbox services, cleaning, and waste disposal services.

! 84# continuum starting with those establishments providing medical care Finance and Insurance (NAICS 52) exclusively, continuing with those providing health care and social assistance, and finally finishing with those providing only social assistance. Comprises establishments primarily engaged in financial transactions The services provided by establishments in this sector are delivered by (transactions involving the creation, liquidation, or change in ownership of trained professionals. All industries in the sector share this commonality of financial assets) and/or in facilitating financial transactions. Three principal process, namely, labor inputs of health practitioners or social workers with types of activities are identified: the requisite expertise. Many of the industries in the sector are defined 1. Raising funds by taking deposits and/or issuing securities and, in the based on the educational degree held by the practitioners included in the process, incurring liabilities. Establishments engaged in this activity use industry. raised funds to acquire financial assets by making loans and/or purchasing Examples of Brooklyn Companies: securities. Putting themselves at risk, they channel funds from lenders to borrowers and transform or repackage the funds with respect to maturity, • Long Island • Sterling Podiatry and • Brooklyn Dental scale, and risk. This activity is known as financial intermediation. College Hospital Medical Center • Home Care • Cobble Hill Health • Metropolitan Home Services for 2. Pooling of risk by underwriting insurance and annuities. Establishments Center Care Way, Inc. Independent Living engaged in this activity collect fees, insurance premiums, or annuity • Kings County • Pro-Health Medical • Visiting Nurse considerations; build up reserves; invest those reserves; and make Hospital Center Rehab Service of New contractual payments. Fees are based on the expected incidence of the • New York York insured risk and the expected return on investment. Community 3. Providing specialized services facilitating or supporting financial Hospital intermediation, insurance, and employee benefit programs.

In addition, monetary authorities charged with monetary control are included in this sector. Information (NAICS 51) Examples of Brooklyn Companies: Comprises establishments engaged in the following processes: (a) • AXA Advisors • Cobblestone Wealth • National Allotment producing and distributing information and cultural products, (b) providing (retirement & life Advisors (financial Insurance Agency the means to transmit or distribute these products as well as data or insurance) advisors) communications, and (c) processing data. Leviathan New York Life • • The main components of this sector are the publishing industries, including Corporation (trade Insurance Company software publishing, and both traditional publishing and publishing finance and supply American Transit • exclusively on the Internet; the motion picture and sound recording solutions) Insurance industries; the broadcasting industries, including traditional broadcasting and • Edward Jones those broadcasting exclusively over the Internet; the telecommunications Investments industries; Web search portals, data processing industries, and the (financial services) information services industries.

The Information sector groups three types of establishments: (1) those Health Care and Social Assistance (NAICS 62) engaged in producing and distributing information and cultural products; (2) those that provide the means to transmit or distribute these products as well Comprises establishments providing health care and social assistance for as data or communications; and (3) those that process data. individuals. The sector includes both health care and social assistance because it is sometimes difficult to distinguish between the boundaries of Examples of Brooklyn Companies: these two activities. The industries in this sector are arranged on a • American • Broadway Stages • Smart Hustle

! 85# Documentary | POV • LevelsPro Magazine (Beverages) Motorcycles Lamps) • Steiner Studios (Software) • Brooklyn Magazine • Urban green • Flickinger Glass • Brooklyn Flavors (movie/TV • Cookie Smart • Maracuya (furniture Works, Inc. (Personal Care production) (Software) Productions (Radio) Products

Management of Companies and Enterprises (NAICS 55) Other Services (except Public Administration) (NAICS 81) Comprises establishments engaged in providing services not specifically Comprises (1) establishments that hold the securities of (or other equity provided for elsewhere in the classification system. Establishments in this interests in) companies and enterprises for the purpose of owning a sector are primarily engaged in activities, such as equipment and machinery controlling interest or influencing management decisions or (2) establishments (except government establishments) that administer, repairing, religious organizations, grantmaking and giving services, social oversee, and manage establishments of the company or enterprise and that advocacy, and providing dry cleaning and laundry services, personal care normally undertake the strategic or organizational planning and decision services, death care services, pet care services, photofinishing services, making role of the company or enterprise. Establishments that administer, temporary parking services, and dating services. oversee, and manage may hold the securities of the company or enterprise. Examples of Brooklyn Companies: Establishments in this sector perform essential activities that are often undertaken, in-house, by establishments in many sectors of the economy. • Brooklyn Cattitude • Marine Park Funeral • Downtown Brooklyn By consolidating the performance of these activities of the enterprise at one Pet Sitting Inc. Home Partnership establishment, economies of scale are achieved. • Bridge Cleaners • Mr. Appliance of • Brooklyn Greenway and Tailors Brooklyn (appliance Initiative • Dime Community • • • 3 Light repair) • Brooklyn Bancshares Photography • International Truck Community Pride Repair Center Manufacturing (NAICS 31-33)

Comprises establishments engaged in the mechanical, physical, or chemical Professional, Scientific, and Technical Services (NAICS 54) transformation of materials, substances, or components into new products. Establishments in the Manufacturing sector are often described as plants, Comprises establishments that specialize in performing professional, factories, or mills and characteristically use power-driven machines and scientific, and technical activities for others. These activities require a high materials-handling equipment. However, establishments that transform degree of expertise and training. The establishments in this sector specialize materials or substances into new products by hand or in the worker's home according to expertise and provide these services to clients in a variety of and those engaged in selling to the general public products made on the industries and, in some cases, to households. Activities performed include: same premises from which they are sold, such as bakeries, candy stores, legal advice and representation; accounting, bookkeeping, and payroll and custom tailors, may also be included in this sector. Manufacturing services; architectural, engineering, and specialized design services; establishments may process materials or may contract with other computer services; consulting services; research services; advertising establishments to process their materials for them. Both types of services; photographic services; translation and interpretation services; establishments are included in manufacturing. veterinary services; and other professional, scientific, and technical services. Examples of Brooklyn Companies: Examples of Brooklyn Companies: • Kombrewcha • Indian Larry • Pletz (Custom • Brooklyn Research • Meshberg Group • Eriksen Translations

! 86# (research & (design/historic Inc. and support activities related to modes of transportation. Establishments in design) preservation & • Progressive these industries use transportation equipment or transportation related • Paychex, Inc. restoration) Bookkeping facilities as a productive asset. The type of equipment depends on the mode (payroll services) • Abrams Fensterman, Solutions of transportation. The modes of transportation are air, rail, water, road, and • Chad Dziewior LLP (law) • Tech Grease pipeline. Design Studio • Wordivate (mobile Monkey (computer Examples of Brooklyn Companies: (interior design marketing) services) production set • ASK Human Capital • Transglad, Inc. • Consolidated Bus • KTL Logistics design) Group (business (freight forwarder) Transit (global logistics) • GVZ Architects coaching) • International (School/Charter bus • Cargomatic Warehouse Group services)

Retail Trade (NAICS 44-45) Tourism and Entertainment The Tourism and Entertainment industry in this study is composed of the Comprises establishments engaged in retailing merchandise, generally following two NAICS sectors: without transformation, and rendering services incidental to the sale of merchandise. Arts, Entertainment, and Recreation (NAICS 71) includes a wide range of The retailing process is the final step in the distribution of merchandise; establishments that operate facilities or provide services to meet varied retailers are, therefore, organized to sell merchandise in small quantities to cultural, entertainment, and recreational interests of their patrons. This the general public. This sector comprises two main types of retailers: store sector comprises performing arts companies, spectator sports, agents and and nonstore retailers. managers for artist, athletes, and entertainers, independent artists, writers, and performers, museums, historical sites, and similar institutions, as well 1. Store retailers operate fixed point-of-sale locations, located and designed as, amusement parks and arcades, casinos, etc. to attract a high volume of walk-in customers. In general, retail stores have extensive displays of merchandise and use mass-media advertising to Accommodation and Food Services (NAICS 72) comprises attract customers. They typically sell merchandise to the general public for personal or household consumption, but some also serve business and establishments providing customers with lodging and/or preparing meals, institutional clients. In addition to retailing merchandise, some types of store snacks, and beverages for immediate consumption. Accommodations retailers are also engaged in the provision of after-sales services, such as includes traveler accommodation, RV Parks and Recreational Camps, and repair and installation. Rooming and Boarding houses. Food services includes full-service restaurants, limited-service eating places, special food services, and drinking 2. Nonstore retailers, like store retailers, are organized to serve the general places (bars, pubs, etc.) public, but their retailing methods differ. The establishments of this subsector reach customers and market merchandise with methods, such as the Examples of Brooklyn Companies: broadcasting of "infomercials," the broadcasting and publishing of direct- response advertising, the publishing of paper and electronic catalogs, door- • New York Aquarium • The Art of Brooklyn • New York Marriott to-door solicitation, in-home demonstration, selling from portable stalls • Brooklyn Botanic Film Festival at the Brooklyn (street vendors, except food), and distribution through vending machines. Garden • Seaside Summer Bridge • New York Transit Concert Series • Sheraton Brooklyn

Museum • BEAT Performing New York Hotel Transportation and Warehousing (NAICS 48-49) • Prospect Park Zoo Arts Festival

Includes industries providing transportation of passengers and cargo, warehousing and storage for goods, scenic and sightseeing transportation,

! 87# Wholesale Trade (NAICS 42)

Comprises establishments engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. The merchandise described in this sector includes the outputs of agriculture, mining, manufacturing, and certain information industries, such as publishing. The wholesaling process is an intermediate step in the distribution of merchandise. Wholesalers are organized to sell or arrange the purchase or sale of (a) goods for resale (i.e., goods sold to other wholesalers or retailers), (b) capital or durable nonconsumer goods, and (c) raw and intermediate materials and supplies used in production. Wholesalers sell merchandise to other businesses and normally operate from a warehouse or office. These warehouses and offices are characterized by having little or no display of merchandise. In addition, neither the design nor the location of the premises is intended to solicit walk-in traffic. Wholesalers do not normally use advertising directed to the general public. Customers are generally reached initially via telephone, in-person marketing, or by specialized advertising that may include Internet and other electronic means. Follow-up orders are either vendor-initiated or client-initiated, generally based on previous sales, and typically exhibit strong ties between sellers and buyers. In fact, transactions are often conducted between wholesalers and clients that have long-standing business relationships. Examples of Brooklyn Companies: • With Love, From • PTW-New York • Wholesale Marble Brooklyn (Gifts) Corp (medical and Granite • Fiorentino Gioielli devices (Construction (Jewelery) • Pinto Novelty Co. Supplies) (Party Supplies)

! 88# ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 See for example: Rick Hampson, “Brooklyn rebounds as the new bohemia”, G. Chatman and Robert B. Noland, of UC Berkeley and Rutgers University, USA Today August 14, 2012; Henry Goldman, “Brooklyn’s Hispter Economy respectively, found that such agglomeration economies are larger for cities with Challenges Manhattan Supremacy” Bloomberg.com. April 4, 2014; and Tim more robust public transit systems, such as New York City. Chatman & Noland Mansel, “Why does Stockholm love Brooklyn?” Video news article. BBC.com “Transit Service, Physical Agglomeration and Productivity in US Metropolitan January 8, 2014. Areas”, Urban Studies, April 2014 51: 917-937, first published on August 1, 2013. 9 2 However, for some of the indicators, such as income, poverty, and inequality, Mary C. Daly and Bart Hobijn “Why Is Wage Growth so Slow?” FRBSF data for 2014 for the full year was not yet available. Therefore, the analysis is Economic Letter, January 5, 2015. limited to the last full year of data available. 10 According to the Office of the New York City Comptroller, minimum wage is 3 CMAP’s projections are “policy-based” and assume that growth trends can be currently $8.00 per hour in New York State, but will rise to $8.75 per hour in 2015 influenced policy decisions. They take into account population changes in and to $9.00 per hour in 2016. The State Legislature is considering proposals to response to different policy strategies, such as changes in zoning, development increase New York’s minimum wage to $10.10/hour by July 2015, and to also incentives, etc. that may be put in place to stimulate or ameliorate growth within a allow cities and towns in the state to adopt municipal minimum wages 30 percent given area. CMAP’s projections may fall short if the assumed growth-inducing higher than the State minimum, or up to $13.13/hour. policies are not implemented or do not have the intended effects. Meanwhile, 11 Dave Jamieson, “Senate Democrats Consider Raising Their Minimum Wage New York City’s Planning Department uses a Cohort Component Model, which Proposal To $12” Huffingtonpost.com Posted: 03/17/2015. relies on births, deaths, and net migration trends - adjusted to account for 12 opportunities and constraints related to changes in each borough’s land use, Economists define full employment as an unemployment rate that includes no zoning, and the production of housing. However, these projections are based on cyclical (or deficient-demand) unemployment. In In lay terms, when there is data pre-2010. Therefore it is possible that these projections do not fully take into enough demand in the economy for everyone who wants a job to have one. For account Brooklyn’s population surge since 2010. the U.S. as a completely full employment is when the unemployment rate is in 4 the 5.2% to 5.6% range, according to the U.S. Federal Reserve. Dustan Prial, The City of Houston currently has 2.24 million residents. Applying growth rates “Wage Growth is the New Inflation Rate”, Fox Business, November 12, 2014. by the Texas Water Development Board, Houston could have nearly 3 million 13 residents by 2040; more than the official population forecasts for Chicago and We use the Bureau of Economic Analysis’s estimates of Personal Income. The Brooklyn. BEA and other Federal agencies generate other measures of income that better 5 reflect household spending capacity and the tax base, but the BEA’s estimate are Based on data from the Quarter Census of Employment and Wages Brooklyn the most timely and comprehensive available at the County level. Ruser, J., Pilot, (Kings County) had more jobs in 2014 than Wyoming, Vermont, Alaska, South A., and Nelson, C., “Alternative Measures of Household Income: BEA Personal Dakota, Delaware, Montana, North Dakota, and Rhode Island. Income, CPS Money Income, and Beyond” , Bureau of Economic Analysis, 6 The Bureau of Economic Analysis estimates that for the 4th quarter of 2014 November 2004. total of all income earned in the U.S. was 14.95 trillion dollars (seasonally 14 Seasonally-adjusted unemployment data are not available for Brooklyn. adjusted at annual rates). Of that total, 9.37 trillion dollars (63%) was paid in the Therefore we compare January data for long-term trends. form of wages and salaries. U.S. Bureau of Economic Analysis 15 http://www.bea.gov/national/pdf/SNTables.pdf Busansky, R., “Brooklyn Labor Market Review,” published by the Brooklyn 7 Chamber of Commerce, May 2004. Paul Vigna. “The Best Indicator of U.S. Health is Wage Growth (or Lack 16 Thereof)”, Wall Street Journal, Money Beat, April 16, 2013. The Census employment estimates differ from the U.S. and New York State’s 8 Department of Labor used elsewhere in the report. These numbers are It is not just Wall Street industries that have higher wages in Manhattan. In fact presented here merely to illustrate commute patterns within Brooklyn. most industries have higher wages in Manhattan than elsewhere in the state. The 17 wage differential between Manhattan and the rest of the state is not unexpected. Busansky, R. “Brooklyn Labor Market Review,” published by the Brooklyn The wage differential can be partly explained by “agglomeration economies”, Chamber of Commerce, May 2004. which enable highly dense places, such as Manhattan to become more 18 DiNapoli, T., Bleiwas, K. (2014, May). An Economic Snapshot of Brooklyn, competitive by increasing the effective size of the labor force, making better New York State Comptroller. matches between worker skills and employer needs in hiring, and increasing 19 Richard Wilkinson, “How Inequality Harms Societies”, TED Talk, July 2011. informal information sharing among skilled workers and innovating firms. Daniel ! !

! 89# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 20 Cingano, F. (2014), “Trends in Income Inequality and its Impact on Economic effect is largest) have been shut out of the market. Second, the housing market Growth”, OECD Social, Employment and Migration Working Papers, No. 163, recovery appears to be driven in large part by investors and cash-buyers (for OECD Publishing. Cignano also found that increased income disparities depress whom the housing wealth effect is relatively small). skills development among individuals with poorer parental education background, 28 Pratash Gopal, “Brooklyn Worst in U.S. for Home Affordability”, Bloomberg both in terms of the quantity of education attained (e.g. years of schooling), and Business, December 4, 2014. in terms of its quality (i.e. skill proficiency). 29 21 Brooklyn’s housing market phenomenal growth in prices has been documented Ibid. in other studies. See for example Aptsandlofts.com & Vanderbilt Appraisal 22 According to the World Bank, the “Gini index measures the extent to which the Company. “Sales Market Report: aptsandlofts.com’s Take on Ten Years of distribution of income or consumption expenditure among individuals or Brooklyn Real Estate”, January 6, 2014. households within an economy deviates from a perfectly equal distribution. A 30 NAR Commercial Leading Indicator for Brokerage Activity. Lorenz curve plots the cumulative percentages of total income received against http://www.realtor.org/sites/default/files/reports/2006/description-methodology- the cumulative number of recipients, starting with the poorest individual or background-2006-05.pdf household. The Gini index measures the area between the Lorenz curve and a 31 hypothetical line of absolute equality, expressed as a percentage of the CoStar, “The Co-Star Office Report Mid-Year 2015”. maximum area under the line. Thus a Gini index of 0 represents perfect equality, 32 Newmark Grubb Knight Frank, “Research: Downtown Brooklyn 1Q15 Office while an index of 100 implies perfect inequality.” Market”. http://data.worldbank.org/indicator/SI.POV.GINI 33 Morris, Keiko, “A New Office Building for the Brooklyn Navy Yard” Wall Street 23 The P80/20 index is the ratio of the share in income of the highest to lowest Journal, July 6, 2015. http://www.wsj.com/articles/a-new-office-building-for- quintile. It measures the extent of inequality between the tails of the distribution brooklyn-navy-yard-1436230346 of income or consumption. The higher this ratio, the larger the share of the 34 country’s total income or consumption belonging to the richest quintile, compared Anuta, Joe, “This Brooklyn commercial complex could more than quadruple in to the poorest quintile. size” Crain’s New York Business, July 9, 2015. http://www.un.org/esa/sustdev/natlinfo/indicators/methodology_sheets/poverty/rat http://www.crainsnewyork.com/article/20150709/REAL_ESTATE/150709911/bro io_quintile.pdf oklyn-navy-yard-could-more-than-quadruple-in- size#utm_medium=email&utm_source=cnyb-realestate&utm_campaign=cnyb- 24 Cingano, F. (2014), “Trends in Income Inequality and its Impact on Economic realestate-20150709 Growth”, OECD Social, Employment and Migration Working Papers, No. 163, 35 OECD Publishing. Morris, Keiko, “Venture Plans New Office Space for Brooklyn: Quinlan, Building & Land will convert a self-storage facility on “ Wall 25 Ibid. Street Journal, March 3, 2015. http://www.wsj.com/articles/venture-plans-new- 26 Katherine Clark, “Brooklyn’s Housing Bonanza: Developers in the borough are office-space-for-downtown-brooklyn-1425432606 constructing new (and big) rental towers in force”, March 1, 2013. This article 36 Gaiger, Daniel, “Drumbeating begins for DUMBO office complex”, Crain’s New also points out that the new wave of projects being built in Brooklyn tend to be York Business, January 12, 2015. substantially bigger than what’s being built in Manhattan, which the author http://www.crainsnewyork.com/article/20150112/REAL_ESTATE/150119983/dru attributes to the 2004 rezoning of Downtown Brooklyn, which allowed developers mbeating-begins-for-dumbo-office-complex to build residential towers on a scale impossible in Manhattan. 37 Mosendz Polly, Etsy Takes Brooklyn, Commercial Observer, June 25, 2014. 27 According to Amir Sufi at the University of Chicago, an increase in house http://commercialobserver.com/2014/06/etsy-takes-brooklyn-2/ prices drives economic activity in two ways. First, it induces investment in new 38 residential construction. Second, it leads some households to spend, either for Alexis Bittar moving HQ to Dumbo Heights campus Maurer, Mark, “High-end home improvement or consumption (i.e., the “housing wealth effect”). Amir Sufi, jeweler inks deal for nearly 19K sf at 77 Sands” The Real Deal Magazine, May “Will Housing Save the US Economy? Capital Ideas, September 3, 2013. 21, 2015. According to Mr. Sufi, the recent surge in US home prices may have a more 39 Levit, David, “Brooklyn’s Industry City to Get $1 Billion Modernization”, tamed effect on economic growth for two reasons. First, income constrained http://www.bloomberg.com/news/articles/2015-03-09/brooklyn-s-industry-city-to- households (households with low credit scores for whom the housing wealth get-1-billion-modernization ! !

! 90# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 40 Gaiger, Daniel, “Brooklyn to get its first office spec building in decades”, 51 See for example, Katherine Ulrich, “12 of the Best NYC Neighborhoods for Crain’s New York Business, December 15, 2014. Recent College Grads: 2014 Edition” December 2014. Also, Emily Nonko, “8 http://www.crainsnewyork.com/article/20141215/REAL_ESTATE/141219915/bkly Best NYC Neighborhoods for Postgrads” Newyork.com, August 19, 2014. n-to-get-first-spec-office-building-in-decades 52 Nate Silver, “The Most Livable Neighborhoods in New York: A quantitative 41 East Brooklyn Staff, “Robust Retail – Gateway Center Phase II”, index of the 50 most satisfying places to live”, New York Magazine, April 11, EastBrooklyn.com, February 6, 2014. http://eastbrooklyn.com/robust-retail- 2010. gateway-center-phase-ii/ 53 Mr. Silver acknowledges this: “The front of the list is dominated by brownstone 42 Saks to expand to Brooklyn with new Sunset Park space, (May 20, 2015). Brooklyn. This is largely due to how we calibrated the cost variable: Pay slightly Retrieved from http://therealdeal.com/blog/2015/05/20/saks-to-expand-to- less attention to price, and Manhattan starts to dominate; if price matters more, a brooklyn-with-new-sunset-park-space/) number of Queens neighborhoods rise toward the top. But this group of Brooklyn 43 Morris, Keiko, “Food Vendors Are Critical Park of Brooklyn’s City Point neighborhoods is generally the most balanced in the city, with few obvious Project”, The Wall Street Journal, April 12, 2015. drawbacks and plenty of charm.” Ibid. http://www.wsj.com/articles/brooklyns-city-point-project-accounts-for-taste- 54 Address Report, “NYC's Safest & Most Dangerous Neighborhoods, January 1428891032) 26, 2015. 44 www.economictoolbox.mit.edu 55 Downtown Brooklyn 10 years, 2004-2014. Available at 45 State projections are presented later in this section. In the U.S. as a whole, http://assets.downtownbrooklyn.com/documents/Downtown-Brooklyn-10-Year- services for the elderly and persons with disabilities, home health care services, Report.pdf offices of health care practitioners, specialty hospitals, and offices of physical, 56 DiNapoli, T., Bleiwas, K. (2014, May). An Economic Snapshot of Brooklyn, occupational and speech therapists and audiologists are projected to be the New York State Comptroller. p. 6. fastest growing industries through 2022. Source: Careerinfonet.org (sponsored 57 Brooklyn Chamber of Commerce, “Movie Production Takes Off in Brooklyn”, by the U.S. Department of Labor) Brooklyn Labor Market Review, Summer 2013. 46 For additional information about location quotients see 58 Wholesale Distribution Industry Overview, the Frantz Group. Available at http://economictoolbox.mit.edu, http://www.thefrantzgroup.com/industry-marketing-experiences/wholesale- http://www.andrew.cmu.edu/user/jp87/URED/readings/Caution%20Location%20 distribution-industry-overview/. Accessed May 4, 2015. Quotients%20at%20Work.pdf, 59 http://www.economicmodeling.com/2011/10/14/understanding-location-quotient- DiNapoli, T., Bleiwas, K. (2014, May). An Economic Snapshot of Brooklyn, 2/, and http://www.incontext.indiana.edu/2006/march/1.asp New York State Comptroller. p. 3. 60 47 For additional information about shift share analysis please see Id. at p. 7. http://economictoolbox.mit.edu, and 61 The Brooklyn Hospital Center, About Us (Retrieved from http://www.economicmodeling.com/2011/12/05/understanding-shift-share-2/ http://www.tbh.org/about-us/history) 48 The other two industries with significant job growth (Health Care & Social 62 Brooklyn Hospital Center 2011 Form 990 (Retrieved from Services, and Administrative and Waste Services) can also attribute a portion of http://www.brooklynhospitalplan.org/download.php?file=5-Audited their growth to local competitive effect, but this effect accounts for a smaller percent20Financial percent20Statements percent2C percent20990 portion of total (30 and 39 percent of total growth, respectively). percent20Forms percent2C percent20Brooklyn percent20Hospitals/990 49 Kauko Mikkonen “The competitive advantage of region and small economic percent20Forms percent2C percent20Brooklyn percent20Hospitals/Brooklyn areas: The case of Finland” FENNIA 180: 1-2 (2002) percent20Hospital percent20Center percent2C percent20Form percent20990 percent2C percent202011.pdf 50 Edward L. Glaeser, editor, “Agglomeration Economics”, published volume from 63 the National Bureau of Economic Research February 2010. Maimonides Medical Center Report to the Community: 2012 Statements of Financial Position and Utilization Data (Retrieved from ! http://www.maimonidesmed.org/Uploads/Public/Documents/FINAL percent202012 percent20Financials percent5B2 percent5D.pdf) !

! 91# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 64 Kusisto, L. (2013, September 23). Brooklyn Grapples With Struggling Hospitals 79 The Brooklyn Tech Triangle’s Strategic Plan (Spring 2013) identifies key and Demand for Health Care. The Wall Street Journal (Retrieved from challenges and proposes specific steps to address them in order to fully realize http://www.wsj.com/articles/SB1000142405270230421390457909318327368129 the Tech Triangle’s considerable potential. 4) 80 Nobel Prize winner Robert Solow’s exogenous growth model was one of the 65 Hartocollis, A. (2013, February 8). SUNY Trustees Vote Unanimously to first to identify “technical progress” as the primary determinant of output per Shutter Long Island College Hospital. The New York Times, p. A16. capita. 66 Census 2010: Changes in the Elderly Population of New York City, 2000-2010. 81 Fagerberg, J., Srhlec, M., and B. Verspagen “Innovation and Econoimc New York City Department for the Aging, Planning Division/Research Unit. July Devleopment”, United Nations University, UNU-MERIT, Working Paper Series. 2012. Available at #2009-032. http://www.nyc.gov/html/dfta/downloads/pdf/demographic/elderly_population_070 82 2012 Greater Peoria Economic Scorecard: Traking Econoimc Progress in 912.pdf Peoria, Tazewell, Woodford, Marshall and Startk Counties. 67 (2011, April 8). Back to Work: Budget Cuts Imperil Brooklyn’s Booming Health 83 The self-employed includes those who incorporate their businesses and those Care Business. (Retrieved from http://thebrooklynink.com/2011/04/08/24812- who choose not to. The incorporated self-employed are included in the Quarterly back-to-work-budget-cuts-imperil-brooklyns-booming-health-care-and-social- Census of Employment and Wages (QCEW) statistics presented in Chapter II of assistance-business/) this report. While the QCEW includes businesses run by the incorporated self- 68 Musto, M. (2015, March 5). Bridge and Tunnel Vision. The New York Times, p. employed, this group cannot be isolated in the data. This section uses data from E7. the U.S. Census’ American Community Survey, which tracks incorporated self- 69 The Food services and Drinking Places sub-category includes restaurants, employment but the data are not directly comparable to other employment and bars, and special food services, such as caterers and food trucks. Restaurants wage data used in the report. and bars account for 93% of the employment in this sub-sector. 84 Levine and Rubinstein, “Does Entrepreneurship Pay? The Michael 70 Based on list presented in Kawakami, R. “2015 New York Michelin Guide Bloombergs, the Hot Dog Vendors and the Returns to Self-Employment”, July Highlights Brooklyn, Queens Restaurants”, Wall Street Journal, September 30, 2013. 2015. 85 For example, Levine and Rubinstein found that the incorporated self-employed 71 Martin, Brett, “A Scene Grows in Brooklyn” Bon Appetit, July 13, 2010. are highly educated and—as teenagers—scored higher on learning aptitude tests, exhibited greater self-esteem, and a stinger sense that they control their 72 DiNapoli, T., Bleiwas, K. (2014, May). An Economic Snapshot of Brooklyn, futures (rather than having their futures determined by fate or luck). They are New York State Comptroller. p. 3. also more likely, than other groups, to see themselves as “entrepreneurs” (i.e., 73 BAM Annual Report 2013 (Retrieved from somebody who launches a business enterprise, usually with considerable risk http://www.bam.org/media/1302706/2013_AR_FINAL_small.pdf) and initiative.) The incorporated self-employed are also more than twice as likely 74 as other people to have contributed work toward a patent application. http://www.nycedc.com/project/kings-theatre Furthermore, when the incorporated self-employed are successful, they tend to 75 Kazartseva, M. (2012, February 23). HVS Market Intelligence Report: be much more successful than successful salaried workers are. Downtown Brooklyn, New York. (Retrieved from 86 Breitzman, A. “An Analysis of Small Business Patents by Industry and Firm http://therealdeal.com/blog/2015/01/30/mapping-brooklyns-red-hot-hotel- Size,” published by SBA Office of Advocacy, November 2008. development/)http://www.hotelnewsresource.com/article61538.html) 87 76 For example Zoltan and Audretsch found that “large firms tend to have the Hoffmann, Tess. (2015, January 30). Mapping Brooklyn’s red-hot hotel relative innovative advantage in industries which are capital-intensive, development. (Retrieved from concentrated, highly unionized, and produce differentiated products. The small 77 “Innovation = Economic Growth”. Michael Mandel’s presentation at the CeBIT firms tend to have the relative advantage in industries which are highly technology conference in New York City, May 27. innovative, utilize a large component of skilled labor , and tend to be composed 78 of a relatively high proportion of large firms.” Zoltan, J., and B. Audretsch, Brooklyn Tech Triangle, “Economic Impacts of the Tech and Creative Sectors”, “Innovation, Market Structure, and Firm Size” The Review of Economics and April 2012. ! !

! 92# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Statistics, November 1987, Vol. LXIX Number 4. Also, in an analysis of the pharmaceutical and semiconductor industries, Kim Lee, and Marschke found that patents per R&D dollar decline with firm size. Kim, J., Lee, S. J., and G. Marschke, “ Relation of Firm Size to R&D Productivity” June 2004. 88 Hansen J., Innovation, Firm Size, and Firm Age”, Small Business Economics, Vol. 4, No.1, March 1992, pp. 37-44. 89 Huergo and Jaumanderu found that “entrant firms tend to present the highest probability of innovation while the oldest firms tend to show lower innovative probabilities. Some sets of firms with intermediate ages also present a high probability of innovation” Huergo, E. and Jaumanderu, J., “How does Probability of Innovation Change with Firm Age”? Small Business Economics, April 2004, Volume 22, Issue 3-4, pp 193-207. 90 Natarajan Balasubramanian found that “firm age is negatively related to technical quality, and this effect is greater in technologically active areas.” Balasubramanian, N., “ Firm age and Innovation”, Industrial and Corporate Change, August 2008. Vol. 17, Issue 5, pp. 1019-1047. 91 International Labor Office, “A Skilled Workforce for Strong, Sustainable and Balanced Growth: A G20 Training Strategy”. November 2010

! 93#