Thu. Feb 22nd, 2024

NEW YORK — It was February, the Omicron surge was abating and Mayor Eric Adams was telling New Yorkers, “The best thing we can do to deal with Covid is get back to work.” But the city’s public advocate, a fellow Democrat who’s running for governor, offered a different prescription for managing the pandemic and reviving the local economy.

“As Covid-19 cases thankfully drop across New York,” Public Advocate Jumaane Williams said, “the way forward is to forge a new normal, in line with the science and with the needs of New Yorkers, with an eye toward the future for both the risk of new surges and the potential for a new transformative economy that centers on working people.”

Since then, the intraparty divide has continued. Moderate Democratic leaders such as Adams and Gov. Kathy Hochul are pushing for a more robust return to the office that they say is crucial for the city’s economic recovery, while Democrats to their left argue they should accept that many workers prefer to be remote for the long haul, and New York City’s economy should adapt accordingly.

The split means there’s no shared vision for the post-pandemic future of the nation’s largest metropolis, whose office workers have returned at a slower rate than in most other big cities in the U.S. CEOs in Manhattan are cobbling together their own approaches, many leaving once-overflowing office suites nearly empty — caving to workers who’ve come to love the work-from-home life.

For the Democratic Party, which is shifting back to the center after a yearslong push leftward, the future of work offers a new area of divergence. Moderates get to show off their capitalist bona fides and progressives can be seen promoting what workers want.

Adams and Hochul have been generally friendly to the business leaders and real estate firms banking on a return to the office, becoming cheerleaders for the cause, while progressives like Williams, who is running in the gubernatorial primary against Hochul, are more aligned with labor activism and skeptical of the push. They say the moderate members of their party are fighting a losing battle that will only delay steps to diversify the economies of battered business districts.

And most New Yorkers aren’t listening to the pleas of the mayor, who said last week, “The financial ecosystem of this city depends on people being in office.”

Manhattan office buildings remain sparsely populated more than two years into the pandemic, even as its restaurants and theaters fill up. Around a third of office employees are coming to work in person, compared to pre-pandemic times.

“There’s a huge disconnect with the way the governor and the mayor are moving. There’s a huge disconnect between them and the way people are adapting their lives to the new post-pandemic reality,” said state Sen. Jessica Ramos, a progressive who chairs the labor committee. “The mayor and the governor cannot tell us what the future of work is. Only workers can tell us what the future of work is.”

Williams agreed.

“We have to adjust,” he said in an interview.

In recent weeks, Adams and Hochul too have begun to acknowledge that the face of Manhattan will be permanently changed by remote work, even as they continue to push their preference for fuller office towers.

New Yorkers want to work in their PJs

Office occupancy in New York City is at 32.9 percent of pre-pandemic levels as of the week of April 20, according to data collected by Kastle Systems, which operates access card readers. That’s below the average of 40.5 percent for the 10 large cities the company monitors, with only San Jose, Calif., lower.

The numbers ticked up after the Omicron surge abated, but have never come close to early 2020 levels. Now Covid cases are rising again, and the city crossed into a higher official risk level for the disease on Monday. Persistent concerns about safety on the subway system and streets — accentuated by a mass shooting on a Brooklyn subway train this month — have also made workers more reluctant to return, according to a business group survey.

“Elected officials calling for or demanding return to the office has accomplished nothing. But what they can do is make sure people feel safe,” said Kathy Wylde, the influential president of the Partnership for New York City.

Her group, which represents the city’s biggest corporations, conducted a poll finding that, among workers who have been operating remotely at least some of the time, the biggest share — 43 percent — ranked personal safety as the top concern about returning to the workplace. That was followed by exposure to Covid-19, at 29 percent, and long commutes. Crime is also the top concern for state voters overall, according to a recent Siena poll.

Adams has used a mix of appeals to civic duty and self interest to persuade workers to return — and their bosses to require them to do so — since he took office at the beginning of the year.

“You can’t stay home in your pajamas all day. That is not who we are as a city,” Adams said in February.

He projected that message even at the height of the Omicron surge. “It’s time to get back to work,” he said at an event at the Steinway piano factory in Queens in January. “We cannot run a city as complex as New York remotely. I will say this over and over again.”

As he released his preliminary city budget, he asked the leaders of major companies to bring their workers back, citing an office vacancy rate that is the highest in four decades. “We can’t keep kicking the can down the road,” he said, after delivering the same message in a meeting with 100 CEOs. “The timeframe is now.”

More recently, he blamed the persistence of remote work for “draining our economy,” saying it helps explain why the city is down nearly half a million private sector jobs since before the pandemic. “We’re doing a full push to get people back to work,” he said.

Hochul, for her part, in November declared a “New Year’s resolution” in a speech to the Association for a Better New York, another leading business group: “That in the days after New Year’s, that we say, ‘everybody back in the office.’”

“You can have a flex time, but we need you back, at least the majority of the week, come on back, New Yorkers, we miss you,” she said.

By February, with the resolution unfulfilled, she told the Cornell Institute of Politics and Global Affairs: “I really do want everyone back in their offices. … We thrive more when everybody comes back in person. But we’ll cut you slack a little bit longer.”

For the most part, the appeals have fallen on deaf ears.

“They’re up against a very powerful force: the desires of a million-plus Manhattan-based office workers who have other priorities,” said James Parrott, an economist at the New School’s Center for New York City Affairs.

Even after the pandemic is over, New York workers plan to cut the number of days they spend in the office in half, according to recent research, the biggest decline in any city surveyed except San Francisco. That translates into a $6,730 reduction in average annual spending on things like meals, dry cleaning and other services, compared to the $13,700 employees reported spending around their workplace before the pandemic.

Jose Maria Barrero, a professor at the Instituto Tecnológico Autónomo de México Business School who co-authored the research, said getting everyone back full time is “kind of a lost cause.”

“There are many other things that attract people to New York other than going to the office,” he said.

The vast majority of the city’s more than 300,000 workers have been called back in person full time, under a policy instituted by former Mayor Bill de Blasio that sparked protests, and maintained by Adams. But Williams said in his office, staffers are coming in two days a week.

“People trying to tell folks to get back to normal has always concerned me. I think normal was a problem,” Williams said, emphasizing his support for a hybrid approach that gives workers more flexibility. “There’s a way to [revive the economy] while respecting workers and their families.”

In making his pitch, Adams has emphasized the hit taken by small businesses and low-wage workers in Manhattan’s business districts who depended on foot traffic from office workers.

“If you’re not in the office and not going to the cleaners, not going to the barbershop, not going to the local restaurant, bringing back business travelers, which are 70 percent of our hotel occupancy, eventually it’s going to impact the business that they’re in,” Adams said last Wednesday at the Future Cities Americas conference hosted by the Financial Times.

But where Midtown Manhattan has suffered, other neighborhoods around the city’s five boroughs may be benefiting from New Yorkers spending money close to home. A report last year by the Real Estate Board of New York found lower retail vacancy rates in residential neighborhoods in Brooklyn and Queens, as compared to east Midtown and the area around Grand Central, where nearly 30 percent of storefronts were unoccupied.

“It’s been harder for Midtown or FiDi to come back, because people don’t want to commute back to the office. But they do want to work from their local coffee shops,” said Ramos, who represents neighborhoods like Jackson Heights in Queens that were the epicenter of the first wave of the pandemic, where she said small businesses are now flourishing.

What a hybrid future looks like

Still, the city is losing out on a significant amount of spending because an estimated 30 percent of office workers live outside the five boroughs.

For many service sector workers who have not gotten their jobs back since the pandemic, Parrott said, officials should offer training to help them get jobs in growing areas like health care and tech.

“I don’t think the solution is to try to harangue workers to return to the office for that reason,” he said. “The city’s economy is expanding in other areas.”

The shift has also affected the city’s budget, which relies heavily on property taxes. The city is projecting commercial vacancy rates topping 20 percent and anemic growth in related taxes through 2026.

Christina Greer, a Fordham University political science professor who hosts a podcast about New York, said the divide reflects both ideology and the pressure Adams and Hochul are under as chief executives. “It’s not surprising that the two executives, the mayor and the governor who have more financial constraints on them, are the ones pushing for folks to go back to offices,” she said.

“Hochul and Adams are catering to the economic crowd, the people who own these corporate buildings who need the rent and the businesses who are saying we’re hurting,” Greer said. Progressives, she said, “are answering to the voters who are saying, we don‘t have to replicate an old system of people commuting, and Covid’s not over.”

Adams and Hochul have at times also acknowledged the need to adapt. They plan to form a joint blue ribbon panel to examine the future of the workplace and what it means for the city’s traditional office districts. It is supposed to deliver recommendations in the fall of 2022.

“It may never be a five-day week again. I don’t know this. It may be four days with flexibility. It may be three-and-a-half days in person,” Hochul said in March.

Adams sounded a similar note last month. “Work is going to change. Pre-Covid and post-Covid, it’s going to be different,” he said, but added: “But we would rather see people get back.”

The city and state have limited policy levers to compel private sector workers to return to the office if their bosses don’t require it, experts said — though many said improvements to cleanliness, safety and the homelessness crisis could make the prospect more attractive.

Nicole Gelinas, a fellow with the conservative think tank Manhattan Institute, said a first step would be “giving people comfort to come back onto the transit system and to walk around Midtown and not feel like they’re going to be constantly harassed or attacked.” She pointed to other practical measures, like restoring express commuter train service from the northern suburbs that was eliminated during the pandemic.

Large employers are currently setting remote work policies that will be permanent, as opposed to the patchwork of temporary plans and shifting deadlines that have been in place since March 2020, Wylde said. “They’re all working on policies that they think will be a compromise between what the employers would like to see — which is everybody back in the office — and what employees are demanding,” she said.

Even JPMorgan CEO Jamie Dimon, one of the most prominent opponents of long-term remote work, acknowledged in a recent shareholder letter that “working from home will become more permanent in American business.” He predicted that about 40 percent of the firm’s employees will work under a hybrid model.

Citigroup, UBS, Verizon and Facebook are among other employers allowing remote work some or all of the time.

According to the Real Estate Board, some major commercial building landlords who run newer, higher-end office spaces are seeing higher occupancy rates than the citywide average, at 50 to 60 percent in recent weeks.

Older buildings in Midtown could potentially be targeted for conversions to housing. Hochul proposed in her state budget changes to law governing apartments to pave the way for conversions by making requirements for light and air more flexible, but it was left out of the final budget lawmakers passed. Hochul will continue to push for the measure in the closing weeks of the legislative session, according to her office.

The final state budget does include an additional $100 million for the Housing Our Neighbors with Dignity Act, which can be used to convert hotels and vacant commercial spaces into housing, the governor’s office said. They also cited state grants and tax credits for tourism businesses and restaurants to hire staff, and money to lure back business conferences and trade shows. The mayor’s office pointed to its efforts to clean up streets and subways and promote cultural events.

The experience of Lower Manhattan after the Sept. 11 attacks may prove instructive. Millions of square feet of office space were converted to residential use.

The larger residential population has helped Lower Manhattan’s financial district, which remains a major office hub, weather the effects of the pandemic, said Andrew Breslau, senior vice president of communications and marketing for the Downtown Alliance.

“Lower Manhattan is in a very different place than it was a decade or even two decades ago because of the growth in the residential population down here,” he said. “A number of businesses have been able to pivot from office lunch to engaging the residential population a little more creatively and aggressively.”

Business openings are now more than keeping pace with closures, he said. “We’re certainly not in a good place, but we’re not by any means in a disastrous place right now down here.”

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