Remembering Mayor Ed Koch

Much in the news these past couple of days on the passing of our larger-than-life former mayor, Ed Koch.   Koch was a man of great energy and enthusiasm, always in good humor and good spirits.  He took the helm of the City at about its lowest point (1978), and left it far better off twelve years later.  But what about an objective assessment of how much credit we can give Koch for the improvement in the City since the 70s?

Koch had one huge achievement as mayor, which is that he got the City budget under control by dramatic cuts in spending.  The number of City employees shrank by close to 100,000 in his first term.  By 1980, that number was down to about 200,000 total.  It then gradually crept back up until it was back to about 250,000 when he left office.  Here is a graph post-1980.  (The number today is around 280,000.)  Koch did not meaningfully lower City taxes, but he also did not meaningfully increase them, which is a great achievement compared to his predecessors.

There were two major issues that needed tackling during Koch's tenure and that he did not tackle:  public safety and welfare.  Crime did not meaningfully decline.  Here is a chart of number of murders in New York City over the years.  The number was 1504 in 1978 and 1905 in 1989.  (In 2012 it was 414.)  Welfare recipients numbered well over 1,000,000 throughout his tenure.  (NYC had 343,000 welfare recipients by 2011 according to this NYT article.)

In the 1980s when Koch was mayor, the real estate market in New York took off, and the population of the City, which had shrunk by almost a million during the 70s, started a rapid recovery.  Koch certainly deserves some credit for the rebound, for showing that the budget could be tamed.  But I would give far more credit to something else that was not in Koch's control:  the lowering of the New York State top income tax rate from almost 15% to about 8%.  Main credit for that goes to Koch's contemporary, Governor Hugh Carey, who served from 1975 to 1982.  Also, don't forget the huge assist added by New Jersey, which had no income tax at all before 1976, and was eating New York's lunch.  Their top rate started at 2% in 1976, but once they had it it just went up and up.  Today, their top rate is almost 9%.  Today, nobody moves to New Jersey to save on taxes.  

One other major (and unappreciated) factor in the revival of New York City has been the (painfully slow) phase out of rent regulation.  Again, that came well after Koch, and at the initiative of the State government (mainly Governor George Pataki), not the City.