The author would like to thank Sarah Ludwig, Dick, Netzer asnd Emanuel Tobier for their helpful comments. This paper was made possible in part by finds granted by the Charles H. Reverson Foundation. The Statements make and views expressed, however, are solely those of the author.
New York vs. New Jersey:
A New PerspectiveUntil quite recently, New Jersey was a handy little state for a city like New York to have as a neighbor; it held one-third of the east coast's oil refining capacity; it sat quietly across from the city's largest waste disposal landfill on Staten Island; and it provided the delicious blueberries in July and beefsteak tomatoes in August that only a New Yorker could appreciate. For most of the nation's history, New York exploited New Jersey because of its location, across the river, in a separate political jurisdiction. And New Jersey - a state without a dominant city - had an identity split between the Philadelphia and New York markets. With its economy based on agriculture in the south and industry in the north, New Jersey unwittingly let itself be used for all those activities that New York didn't want or couldn't accommodate.
Well, it's time for New York City and its Newark-bred Mayor to wake up. Lawsuits to prevent federally-subsidized office projects, newspaper advertisements nailing the Holland Tunnel shut, and combat over sewage disposal are no substitute for informed policies that recognize the changing relationship between New York and New Jersey.
Competition Since the Colonial Days
Competition between New York and New Jersey is hardly new. In the early colonial period, New Jersey consisted of two parts: East and West Jersey. The then-colony of New York repeatedly sought to absorb East Jersey into New York. Colonel Thomas Dongan, the governor of New York in the 1680's, supported annexation of East Jersey, citing "great inconveniences [of having two governments] upon one river."
Conflict over the boundaries separating New York from the Jerseys was pervasive throughout the colonial years. In 1664, when the Duke of York included Staten Island in his grants to the Jerseys, he also declared that all "small islands" in waters adjacent to New York were to be considered part of the New York colony. Although Jerseyites argued that Staten Island was not "small" and belonged to New Jersey, New York Governor Andros ruled that all islands in the bay that could be circumnavigated within 24 hours were part of New York. Soon thereafter, Captain Christopher Billopp succeeded in sailing around the island in the designated time. Yet the dispute was not officially resolved until 1834, in a compromise that gave New Jersey increased control over certain Hudson River waters in exchange for New York's continued inclusion of Staten Island within its borders.
Competition for port traffic has traditionally been the principal point of contention between New York and New Jersey. In 1684, New Yorkers petitioned the British Crown to restrict shipping in and out of Perth Amboy; and for a time New Jersey-bound ships were forced to pay a customs duty to New York. With the growth of railroads, the rivalry between New York and New Jersey intensified. Though shipping was concentrated on the New York side of the harbor, most of the railroads terminated in New Jersey. Railroad rates were the same for all parts of the port, and an elaborate network of boats and barges moved cargo across the Hudson, causing congestion that even affected World War I shipping. In 1916, New Jersey groups argued before the Interstate Commerce Commission that the railroad rates were "unjust and discriminatory because they were constructed to provide compensation for the extraordinary terminal services required by New York and Brooklyn."(1) The Interstate Commerce Commission rejected claims by New Jersey interests, stating in The Neeu York Harbor Case: "The solution of the terminal problem is to be found, not in a change in the rate adjustment, but in the united efforts of the people of the district and the carriers toward the improvement of conditions in which their interests are mutual."(2) After much study, both states in 1921 established a bi-state compact that created the Port of New York Authority with jurisdiction over shipping and other transportation within 25 miles of Manhattan.
Port Development and the Region
During the first twenty-five years following its creation, the Port Authority concentrated on building bridges and tunnels between New York and New Jerseyan agenda in which the two states clearly had a common interest. After the Second World War, however, the Authority turned its attention to revitalizationofthe region's ocean commerce.The Port Authority proposeda massive renovation of the municipally-owned piers in Manhattan, but New York City - perceiving this as a threat to its own waterfront domain - turned the offer down. In the 1950's, the Port Authority did invest in pier development in New York City, most notably in the area between the Brooklyn Bridge and the Columbia Street grain terminal; but more importantly, anticipating the advent of containerization, the agency also launched a program to develop Newark and Elizabeth as container ports. Still, with both passenger and cargo traffic thriving on the New York City docks, municipal officials did not take containerization seriously.
However, by the 1960's, the jet had replaced the passenger liner, and truck traffic on the interstate highway system had superseded the railroad. Containerization had made it possible for shippers to automate cargo operations, thus permitting ships to spend more time at sea and less time in the harbor. While the Port Authority was creating container ports in New Jersey, the City of New York was spreading its buckshot - renovating banana boat piers on the East River, modernizing the Chelsea Piers on the Hudson River, upgrading Pier 40 in Greenwich Village, building container facilities at Howland Hook, and restoring breakbulk piers in Brooklyn. Unfortunately, the outcome of these initiatives is a one-sided port: the banana boats have moved to Albany and Wilmington; the Chelsea Piers have yet to see a cargo ship; Howland Hook is almost entirely vacant; the City of New York's Department of Corrections wants to dock a prison barge at Pier 40; and the South Brooklyn Marine Terminal is inactive. Port Elizabeth and Port Newark, with good interstate highway linkages and backup space for container storage, have benefitted from the investment in containerization. The Red Hook container terminal, developed by the Port Authority in the late 1970's, is the only port facility still thriving on the New York side of the harbor.
Much like the television families on "Dynasty" and "Dallas," tension between the two jurisdictions never ceases; only the issues change. In the past decade, the rivalry between the City of New York and the New Jersey communities across the Hudson has broadened to include a variety of issues other than competition for ocean cargo. The opposing camps have waged a constant struggle over issues such as competition for jobs, a $40 million Urban Development Action Grant for Jersey City, Westway, ocean dumping by New York City, and the movement of back offices from Manhattan.
Fighting for Jobs
It's important to note that New Jersey wasn't reborn overnight. The state has long had a major presence in the drug and pharmaceutical industry, with Johnson and Johnson, Squibb, and Warner-Lambert. It has also served as the headquarters for large chemical firms and insurance giants such as Prudential, Chubb, and State Farm. The first clue to the rediscovery of New Jersey should have been apparent when Bell Labs moved from Greenwich Village to northern New Jersey, a move-out that was far more damaging in the long run than the loss of the Giants or the Jets.
Still, probably no regional issue has received more attention than the often-repeated charge that New Jersey is stealing jobs from New York City. This charge has little basis in reality. When New York City lost more than half a million jobs from 1969 to 1977, most of these jobs, which included manufacturing as well as headquarters jobs, did not flow to New Jersey. The apparel industry went to the non-union South or to low-wage nations in Asia, and New York City's large commercial banks built data processing and clerical facilities on Long Island. Of the corporate headquarters that left Manhattan between 1974 and 1987, eleven went to New Jersey but twenty-one moved to Connecticut.(3) Ironically, when New York City's problems were at their worst, no one blamed Connecticut, Long Island, or the Third World as the source of the city's problems.
In the post-fiscal crisis period, approximately 400,000 new jobs were created in New York City, fueled largely by business and consumer services. During this economic resurgence, New Jersey also prospered. However, New Jersey's economic boom has not been at the expense of New York. A study by George Sternlieb and Alex Schwartz of Rutgers University revealed that 80 percent of the firms that had moved facilities into New Jersey's "growth corridors" had relocated from elsewhere in the state. (4) Of course, these are statewide figures and for the nearby Meadowlands, located just six miles from Manhattan, one-third of the firms surveyed had emigrated from New York. This, however, does not diminish the importance of recognizing that New Jersey's economic success has largely been due to the growth of indigenous firms.
Fundamentally, the current tension over jobs between New York City and New Jersey is due to the fact that northern New Jersey, after years of having what no one wanted, now has what everyone wants: a highly diversified economic base; a modern and auto-accessible sports and entertainment complex; most of the region's port facilities; a safe, inexpensive commuter rail system into Manhattan; relatively low construction costs; plus an underused waterfront that offers spectacular views of Manhattan.
to Other Areas: 1974 - 1987
Amax
American Brands
American Maize Products
Continental Group
Esterline
General Host
General Signal
Grolier
Moore McCormack
Peabody International
Penn Central
Pittston
Revere Copper and Brass
Richardson Vicks
Singer
Trans-Lux
UMC Industries
Union Carbide
Uniroyal
U.S. IndustriesAtlas
Blessing
Engelhard Mining
OAF
General Public Utilities
International Protein
Metromedia
Nabisco
E.R. Squibb
Sterling Drug
Western UnionBerkey Photo
Clevepak
TexacoSource: City Almanac; The Economist.
The Back Office Battle
Just as the movement of cargo has generated regional conflict in the past, the movement of information has become a current source of regional rivalry. Banks, securities firms, and insurance companies are increasingly dependent on advanced communications networks to process enormous volumes of information around-the-clock. New York City's energy costs and the fear of communications and energy disruption - such as the flood that stopped trading on the Chicago Mercantile Exchange in 1988, or the fire in one of Illinois Bell's three largest hubs that disrupted midwest business for weeks - have led some firms to move their data processing centers out of Manhattan, even though on-site, back-up energy systems are available. Moreover, back office and computer centers, with their high energy loads and large space requirements, have been lured by New Jersey's energy and space prices, and by the PATH system and other transit services, which allow firms to have access to the same labor force.
The prospect of financial service firms moving to New Jersey led New York City to launch an aggressive effort to retain such firms, and programs to attract back offices to downtown Brooklyn have enjoyed some modest success to date. Technology has not yet fully replaced paper in the brokerage business, and as a result, securities firms are still reluctant to move their labor and paperintensive back offices too far from headquarters. Although the exodus of financial service firms has slowed with the recent cutbacks and consolidations on Wall Street, new housing and office complexes are planned for the Jersey side of the Hudson, where the dramatic and uninterrupted views of the Manhattan skyline give definition to previously underutilized sites. If Weehawken, a community best known as the site of the duel between Alexander Hamilton and Aaron Burr, can attract Paine Webber, and if Jersey City, a town whose school system is on the verge of a state takeover, can attract Donaldson, Lufkin and Jenrette, then New York City should recognize the potential for rejuvenating the East and Harlem River waterfronts.
Ironically, it is not the securities firms but the information-intensive giants headquartered in New York, such as McCraw-Hill and The New York Times, that have made some of the largest, and least publicized, commitments to move their operations to New Jersey. The Times, for example, is building a $400 million, one-million-square-foot printing and distribution center in Edison, New Jersey as part of its effort to modernize newspaper production. While NBC chose to remain at Rockefeller Center rather than move to the Meadowlands, other firms, lacking equivalent stature and size, may be less able to gain such a favorable package of incentives to stay in Manhattan.
The Flow of People Across the Hudson
The media coverage given to the movement of offices out of New York City makes it appear as if all the traffic were one-way; in fact, the movement of people from New Jersey to New York City has been increasing. New Jersey towns and suburbs have always been an important source of labor for New York City firms, and the city's economic recovery has added to the trans-Hudson traffic flow. In 1987, 240,000 travellers crossed the Hudson during the morning rush hour, an increase of more than 25 percent over 1975. A Port Authority survey issued in 1986 reported that more than two-thirds of new (post-1980) Hudson County residents are commuting to Manhattan compared with less than 15 percent for the total Hudson County population.
The commutation across the Hudson demonstrates New York City's reliance on a skilled regional labor force, not all of whom can afford or choose to live within the five boroughs. The expansion of housing in the close-in Hudson River communities stands in contrast with New York City's housing production. A report issued by New York State Senator Franz Leichter noted that "during 1986 and the first half of 1987, Hudson and Bergen Counties, which together have less than one-fifth of the population of New York City, produced 9,866 new housing units, or more than half as many as the 17,363 units produced in New York City." As witnessed by the real estate ads in the Village Voice, Jersey City is now accommodating the pioneers and working students who once inhabitated Greenwich Village and Chelsea. Moreover, from 1985 to 1986, Hudson County had the largest increase in new housing units of any county in the seventeen county New York-New Jersey region. The revival of regular ferry service across the Hudson, in conjunction with new office construction on the west side of midtown Manhattan, will undoubtedly heighten the demand for housing on the Jersey side of the Hudson.(5)
The Airport Connection
Highways and mass transit move people within the region, but airports - not ships or railroads - are crucial to the flow of people in and out of the region. And Newark Airport, once the least used part of the region's airport system, now accounts for almost 30 percent of all the region's air passenger traffic. While deregulation and People's Express contributed to the rise of Newark Airport, New York City residents, who accounted for just five percent of Newark's traffic in 1972, now generate almost 20 percent of all Newark Airport passenger traffic. Proximity to Newark Airport has become even more important as congestion at LaGuardia Airport has increased, and as problems on the city's bridges and highways have made access to LaGuardia more difficult.
Air transportation is also critical to the flow of information - not all of which moves electronically. Newark Airport is the regional hub for both Federal Express and UPS, which transport the high-value documents and packages that are produced in New York City and distributed overnight to points around the globe and vice versa. Also of strategic value to New Yorkers is Teterboro Airport, the busiest corporate airport in the nation, situated just a few miles north of the Lincoln Tunnel. When the Federal Reserve Bank of New York announced its plan to build a new data center in East Rutherford, New Jersey, one of the main reasons was proximity to Teterboro Airport, through which all checks are flown in and out. Clearly, Kennedy and LaGuardia Airports, which account for more than two-thirds of the region's air passenger traffic, are the principal airports for city residents, but the nearby New Jersey airports are also essential to New York City's economic life.
The Future of the Region
New Jersey is no longer New York City's industrial colony. Although it's hard for some New Yorkers to accept, New York and New Jersey need each other, and this mutuality of interest will intensify, rather than diminish, in the years ahead. The high volume of communications between New York and Northern New Jersey was even recognized in the break-up of AT&T, when a special corridor was created for calls between New York City and five northern New Jersey counties.
The challenge for policy-makers is to build upon the synergy that exists between the two areas and to realize that neighbors need not always be adversaries. While competition between New York and New Jersey has been a constant for more than 300 years and will not fade away, each state is still in many ways asource of competitive advantage for the other. New Jersey provides skilled workers, housing and distribution networks that are vital to New York; and New York in turn provides a market, a wide range of specialized business services, and a variety of international connections that have been essential in New Jersey's development. The precise relationships have varied through successive economic and technological eras, but they have consistently reinforced the strength of the region overall.
Conflicts will inevitably arise. But building on the distinctive strengths of each side is a more effective way to assure continued growth than is waging the kind of guerrilla warfare that limits the opportunities for each jurisdiction to benefit from the other's economic development.
1. Erwin Wilkie Bard, Port of New York Authority. New York: Columbia University Press, London: P.S. King & Staples, Ltd. 1942, p.16.
2. Cited in Bard, p.23.
3. Regina R. Armstrong and David Miller, "Employment in the Manhattan CBD and Back-Office Locational Decisions," City Almanac, Vol. 18, No. 1-2, June/August, 1984: The Economist. May 9, 1987.
4. George Sternlieb and Alex Schwartz, New Jersey Growth Corridors, Center for Urban Policy Research, Rutgers University, 1986.
5. Kate Ascher. "Down to the Sea Again: The Resurgence of the Trans-Hudson Ferry," Portfolio. Spring, 1988, Vol. 1., No. 1.
Originally published in Portfolio, Summer 1988
Volume 1, Number 2
The Port Authority of NY and NJ. 1988
(C) 1999 Mitchell Moss