![]() ![]() The final cost of the cleanup and restoration of the World Trade Center site is expected to be about $1.5 billion. Physical capital losses are the next cost component evaluated. Drawing on average earnings figures for each of these city industries, the authors estimate that job losses and work-hour reductions led to a total earnings shortfall of between $3.6 billion and $6.4 billion as of June 2002. The financial services, air transportation, hotel, and restaurant industries suffered the most severe job losses ( chart) the garment and restaurant industries in Lower Manhattan also saw a significant drop in the number of hours worked by employees. Using an estimated breakdown of these employment numbers by industry, the authors then translate the job shortfalls into wage and salary losses. ![]() In February, the range moved to as high as 49,000 to 71,000, then eased to between 28,000 and 55,000 by June 2002. They find that in October 2001, the number of private-sector jobs in the city was about 38,000 to 46,000 lower than it would have been otherwise. To this end, they employ a dynamic forecasting model to estimate what the path of New York City’s employment would have been had the attack not occurred ( chart). Explaining that a contracting economy had caused private-sector employment in the city to decline steadily in the months preceding September 11, the authors undertake to isolate the job losses attributable to the attack from those attributable to the business cycle. The authors then assess the loss in earnings incurred by workers who were displaced from their jobs as a result of the attack. The authors’ estimates suggest that lifetime earnings losses for these workers were, in aggregate, roughly $7.8 billion-an average of $2.8 million per worker. As a measure of this cost, they use the discounted value of the deceased workers’ expected future earnings. The authors begin their analysis by calculating the “cost” of the nearly 3,000 lives lost in the World Trade Center attack. In this article, the authors seek to quantify the short-term economic impact of the attack on the city’s labor force and capital stock. The attack directly affected economic activity in the area of the World Trade Center and also disrupted a number of industries located in other parts of the city. The loss of human life and the destruction of commercial property and infrastructure on September 11 temporarily reduced the productive potential of the New York City economy. Using data through June 2002-the month in which the recovery process at the tradecenter site ended-they estimate that earnings losses, property damage, and cleanup costs total between $33 billion and $36 billion. Of the Economic Policy Review, Volume 8, Number 2Īuthors: Jason Bram, James Orr, and Carol Rapaportīram, Orr, and Rapaport present a detailed account of the costs of the World Trade Center attack. ![]()
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