CNYCA’S COVID-19 Economic Update – 09.15.21

Economic hardships likely to rise as Federal unemployment benefits end and job growth remains sluggish

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. 

Our previous Economic Update called attention to the unemployment benefits cliff facing 750,000-800,000 New York City residents as three major federally-funded unemployment assistance programs ended on Labor Day. The loss of an estimated $463 million weekly in federal benefits compounds the already-somber economic outlook as the city heads into its second fall under Covid. The city’s payroll job growth was already weak in July, and the national job numbers for August showed lackluster growth. Plus, the late-summer Covid-19 infection surge led several major employers to postpone plans to return to offices, dampening prospects for a local spending rebound in Manhattan commercial office districts. 

The loss of weekly unemployment benefits that averaged between $400-$600 weekly will obviously also raise concerns about the impact on the economic well-being for hundreds of thousands of low-income New Yorkers. Various measures of economic hardship were at record levels over the summer even before the federal unemployment benefit cutoff.

The chart below shows increases of 14-18 percent since February of 2020 in those receiving temporary cash assistance (either Temporary Assistance to Needy Families or NYS Safety Net Assistance), Supplemental Nutrition Assistance (SNAP), or enrolled in Medicaid. These recipiency levels were for June (and July in the case of Medicaid), before the early September end of unemployment benefits, with SNAP and Medicaid steadily rising in recent months.

As this table indicates, the number of New York City SNAP recipients has increased by a quarter of a million since the start of the pandemic, and over 618,000 additional city residents have enrolled in Medicaid, putting the total number in excess of four million.

Federal economic assistance provided since the pandemic’s onset, including unemployment assistance, has helped hold down the poverty rate despite the pronounced economic and job dislocations caused by Covid-19. An analysis by the Columbia University Center on Poverty & Social Policy estimated that federal pandemic assistance to individuals and families lowered the poverty rate by nearly four percentage points over what it would have been in the absence of that assistance. Such assistance has provided the greatest benefit to Black and Latinx families who suffered the brunt of job losses.

New York City’s payroll job count was 510,000 lower this July compared to the pre-pandemic level, representing nearly an 11 percent decline persisting almost a year-a-half following the start of the pandemic. The city’s job decline is more than three-and-a-half times the national average, giving the city the distinction of being the hardest hit large city in the country. With the cessation of federal unemployment benefits, New York City is likely to now see a very troubling spike in economic hardship.