CNYCA’S COVID-19 Economic Update – 02-23-21

New York City’s economy will not “snap back” in 2021; data so far for the first six weeks of the year bear that out

COVID-19 Economic Update is a bi-weekly column prepared by economist James Parrott of the Center for New York City Affairs (CNYCA) at The New School, whose research is supported by the Consortium for Worker Education and the 21st Century ILGWU Heritage Fund. Read past installments here. 

Last year New York City experienced its worst single-year job loss since the 1930s. In 2020, the city lost an estimated 750,000-plus payroll and self-employed/independent contractor jobs on average between the months of February and December, nearly one out of every six jobs. While the new year is brightened by the late December $900 billion federal aid package and the prospect of additional federal economic recovery aid, 2021 will bring monumental challenges in addressing the lopsided economic impact of the pandemic in the U.S. and in New York City.

The Center for New York City Affairs recently released an extensive report documenting the New York City job market impact of Covid-19 by industry and demographic group, examining how the pandemic has upended the labor market and exacerbated income inequality, and looking ahead to what to expect in coming months. Even when a large share of the population has been vaccinated and social distancing restrictions ease, jobs and businesses will not “snap back” in 2021. New York City will likely end 2021 still short 300,000-400,000 jobs due to the continuing impact on tourism, the arts, restaurants, building services, and other industries. 

Workforce development organizations are facing unprecedented challenges in aiding low-wage workers in re-engaging in the job market, accessing training and educational assistance needed to re-tool in a changing economy, and in working with policy makers to develop more systematic approaches to address inequities and raise job quality. 

What about the sharp drop in Covid-19 case rates since mid-January? 

Despite the sharp drop since mid-January, Covid-19 case rates in the metropolitan area remain extremely high and have stayed about the same in New York City over the past two weeks. The chart below shows case rate trends for the metropolitan area and the United States. The improvement since the mid-January peak in case rates has not been as fast here as the national average. 

The slight improvement in case rates has not been sufficient to lead to a pickup in small business leisure and hospitality revenues in the New York metro area. In fact, revenues continued their downward trend since October and as of February 10 were nearly 86 percent below the average for January of 2020, and considerably below the national average as indicated in the chart below. 

New York City initial jobless claims for regular State unemployment insurance averaged 25,000 from mid-January to mid-February, more than four times the pre-pandemic level of a year ago for the same weeks. In addition, initial claims in the city for Pandemic Unemployment Assistance provided to independent contractors and others who don’t qualify for regular unemployment insurance averaged 20,000-23,000 for the four weeks through mid-February. Thus, it is unlikely that the New York City employment numbers for January and February will show any improvement over December’s lackluster level (which was down 10,000 from November). The State Labor Department will release January and February jobs data on March 11, along with the annual revisions to payroll employment data for 2020.