CNYCA’S COVID-19 Economic Update – 11.03.21

New Yorkers have received $272 billion in Federal Covid-19 relief funding, but most benefits have run out while a substantial jobs deficit persists.

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. 

New York State’s people, businesses, governments, health care providers, and educational institutions have received $272 billion in Federal Covid-19 relief funding since March of 2020. Most of this Federal aid was included in the CARES Act ($165 billion) passed in first month of the pandemic, and the American Rescue Plan Act ($84 billion) passed in March of this year. Thirty percent ($82.7 billion) of the total – the largest single component – took the form of unemployment benefits to workers, and nearly 17 percent ($45.9 billion) was assistance to businesses affected by public health-prompted Covid-related restrictions on economic activity (see the figure below). Business assistance consisted mainly of the Paycheck Protection Program, with the bulk of what were originally loans eventually being forgiven for recipients meeting criteria for retaining employees.

A total of $38 billion was paid in the form of Economic Impact Payments to New York tax filers with incomes below $160,000. It was disbursed in three installments (totaling up to $3,200 per qualifying adult and up to $2,500 for each qualifying child under age 17), with the last payment coming in the spring of 2021. A little over $8 billion has been provided to low-income New York households in the form of rental assistance, supplemental food assistance, and enhanced Earned Income Tax Credits.

The State of New York and local government entities received a total of $74 billion in Covid-19 relief funding (28 percent of the overall state total), with slightly over half ($41.6 billion) of governmental aid earmarked for particular purposes, such as $14.8 billion for elementary and secondary schools. Nearly $33 billion in New York governmental aid was in the form of fairly flexible funds, most of which was from the State and Local Fiscal Recovery Fund included in President Biden’s American Rescue Plan Act.

(In coming weeks, the Center for New York City Affairs will release detailed analyses of the Covid-19 relief funding provided to New York City and New York State, with a particular focus on funding for workforce and human services programs.)

What has been the impact of this $272 billion in Federal Covid-19 relief funding in New York?

  • The substantial amounts of unemployment assistance, rental assistance, and other payments to individuals have cushioned the economic damage wrought by massive worker dislocation, keeping New York’s poverty rate from soaring. Nationally, Covid-19 relief reduced poverty by nearly one-quarter through the first eight months of 2021 (the impact is greater in New York State because of higher unemployment benefit recipiency.)1
  • The Paycheck Protection Program, the Restaurant Revitalization Fund, and other business assistance, while not reaching all affected small businesses, including many Black-owned businesses, has shored up tens of thousands of locally owned businesses across the state.
  • The budgets of New York City, New York State, and the Metropolitan Transportation Authority (MTA) were stabilized after revenues plunged and emergency response costs soared.
  • Hospitals on the frontlines dealing directly with unimagined medical challenges were compensated and a range of public health needs, including the deployment of vaccinations, were financed with Federal dollars.
  • Federal funds helped schools prepare for reopening this fall and public and private colleges and universities (and students) were assisted in coping with the pandemic’s disruptions.

While the State and the City budgets are now flush with Federal aid that can be used through 2025, almost all of the relief funds for individuals and businesses have been paid out. However, even though we’ve been grappling with getting the coronavirus under control for a year-and-a-half, it certainly has not been completely contained and New York in particular is still a long way from recovering economically. New York State’s total jobs deficit was more than three times that of the rest of the United States in September 2021, compared to the pre-pandemic month of February 2020 (-8.9 percent vs. -2.9 percent). New York City’s jobs deficit was even greater (-11 percent), and the New York suburbs and Upstate combined had a 7 percent jobs shortfall (see the figure below).

By any yardstick, New York is still experiencing a severe economic downturn. And yet, with the exception of the expanded Child Tax Credit (CTC), Federal aid has largely ended. The ARPA-expanded CTC will provide $5 billion in advance credits to New Yorkers during the second half of this year, benefitting 3.6 million New York children. However, when Federal unemployment benefits expired on September 6 – ARPA only extended Federal benefits through that date – 1.5 million state residents lost between $500-$600 per week, and the total monthly dollar amount received by state residents plummeted by 90 percent, falling from $4.7 billion in August to about $430 million.2 (By the end of October, nearly all of the $2.1 billion in the State-funded Fund for Excluded Workers had been disbursed; it was established to aid workers who lost earnings but have not received Federal assistance.)

Compared to New York’s 6.1 percent share of national population according to the 2020 Census, the Empire State’s 8.1 percent of Federal Covid-19 relief funding may seem favorable. Yet it falls far short when you consider that New York has accounted for 11.9 percent of Covid-triggered joblessness.3

Not surprisingly, with most Federal benefits ending and with the statewide total payroll jobs count still 875,000 below the pre-pandemic level, the share of New York families experiencing hardship is alarmingly high, especially among Black and Latinx populations. For the four weeks from September 15-October 11, the Census Bureau’s Household Pulse survey shows that 44 percent of New York Latinx adults experienced difficulty paying usual household expenses.

Among Blacks, 42 percent experienced difficulty paying usual household expenses, a far greater proportion than among White adults (see the figure below).

The pandemic’s economic effects have been extremely lopsided. Incomes have risen for the great majority of high-income earners not losing jobs while hundreds of thousands of low-paid workers and small business owners in face-to-face service industries lost their livelihoods to protect public health. State and City tax revenues have largely rebounded, and Wall Street and big tech companies are flourishing. But the continuing economic hardships experienced by a substantial number of low-income New Yorkers, particularly Black and Brown workers, calls for a more targeted local response to connecting these workers with promising job openings, and providing additional skills training or education where necessary so that these workers can embody “building back better.”

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Derek Thomas, an economic policy and data consultant for CNYCA, assisted in preparing this Update.

  1. Columbia University Center on Poverty & Social Policy,
  2. The Federally funded $300 weekly unemployment supplement also ended on September 6 for the roughly 300,000 New York residents receiving regular State-trust fund financed benefits.
  3. New York accounted for 11.9 percent of those receiving unemployment benefits from April 2020 through September. Over the 13 weeks through October 2, 2021, New York’s share of those receiving unemployment averaged 14.9 percent.