CNYCA’S COVID-19 Economic Update – 12.01.21

Strong October job growth when Covid-19 infection rates dropped; only a handful of low-paid industries see wage gains despite reports of higher wage offers

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. 

The strong October New York City jobs report released November 18 is a powerful reminder that as the virus infection rate goes, so goes the job rebound (in the opposite direction).

New York City (and nationwide) infection rates fell from mid-September through the end of October. They started to rise again at the beginning of November, but any effects of that are not yet reflected in the data we’re presenting.

The latest New York State Department of Labor report on New York City employment shows that (not seasonally adjusted) total employment surged ahead by 83,500 from September to October, New York City’s largest monthly gain since employment started to rebound from the April 2020 pandemic low point.

On a seasonal basis, the October gain was 40,200, the largest since September of last year (+46,500), right before the second wave of Covid-19 infections took off locally.

New York City’s 2.0 percent job gain in October from the previous month was twice the national job growth of 1.0 percent.

[The discussion that follows is based on an analysis of the not seasonally adjusted figures since that permits greater industry detail, and Covid-19 related changes have often swamped usual seasonal month-to-month employment movements.]

Overall, the October data indicated that almost every sector of the city economy shared in the rebound, and that fewer industries reduced jobs in October than in previous months. The largest October jobs gain occurred in private colleges and universities, which added 15,200 jobs compared to September, a notable 11 percent increase.

Professional, scientific, and technical services added 12,400 jobs (a 2.9 percent increase), led by gains in accounting, management consulting, and advertising. Ambulatory health care increased jobs by 7,500, with most of that occurring in home health care services (+3,900), an industry whose employment is now about five percent greater than in the pre-pandemic month of February 2020.

With Broadway’s re-opening in September, performing arts employment bounced back by 15 percent in October (+5,300) following a 3,700 gain in September, but is still 6,000 jobs below the pre-pandemic level. 

Social assistance gained back 6,200 jobs (3.1 percent), with child care employment rising by 1,500 in October (following a 5,300 rebound in September). Child care employment is now about five percent below the February 2020 level.

Employment services, a category mainly involving employment through temporary help agencies, gained 4,200 jobs in October, a five percent gain, reflecting some of the return to offices. On the other hand, building services employment, which is another barometer of returning office activity, showed a slight decline.

Full-service restaurant employment continued its several-month rebound with a gain of 2,400 jobs in October. But employment in this sector is still down by more than a third from its pre-pandemic level. Retail added back 5,400 jobs in October, reflecting improvement in brick-and-mortar retail activity as well as the continued growth in e-commerce. Warehouse employment grew in October, but air transportation was flat. Hotel employment added back 1,000 positions in October, but is still down nearly 30,000 (57 percent) compared to its pre-pandemic level. 

The October jobs report also showed that the city’s total employment level for September was revised upward by 8,400. On a year-to-date, non-seasonally adjusted basis, New York City’s total employment in October was 176,400 higher than in December 2020; on a seasonally adjusted basis, October’s employment level was 172,400 higher than last December.

The city’s pandemic jobs deficit fell to 8.5 percent in October from a revised September level of 10.3 percent. However, the city’s pandemic job deficit was more than seven times as great as the national 1.2 percent October job deficit. New York City’s 398,400 job deficit represents more than 22 percent of the national 1,750,000 deficit. The city has now regained 57 percent of its pandemic job loss compared to a 92 percent rebound for the nation overall.

While early indications are that job growth continued in November, as noted earlier, the virus case rate started to rise again both locally and nationally in early November. The emergence of the new and possibly highly transmissible Omicron variant at month’s end again clouded prospects for a sustained economic and employment rebound. The reinstatement of travel bans likely will put a severe damper on the city’s nascent tourism rebound.

As of the second quarter of this year it does not appear that wages are rising particularly fast in New York City’s low-wage, face-to-face industries

In light of reports that some New York City employers are offering higher wages to recruit workers, it is helpful to look at the latest authoritative data to see if higher wages are significant enough to affect industry-wide averages. 

The latest Quarterly Census of Employment and Wages (QCEW) data from the New York Department of Labor show a mixed picture of generally moderate wage increases for the two years from the second quarter of 2019 to the second quarter of 2021 for low-paying industries hard hit by pandemic job losses. (There’s a five-month lag in the availability of the QCEW data for individual industries.) 

Among the face-to-face industries shown in the table below, the warehousing industry had the largest average wage gain over the past two years. (Change in average wages over two years is used since data for the second quarter of 2020 were unusually distorted by the initial pandemic impact.) The 14.5 percent increase in average wages occurred during the rapid expansion in distribution center employment in New York City accompanying the e-commerce trend. 

Clothing stores had a double-digit wage increase that might reflect the need to pay higher wages to recruit workers back, although the 12.4 percent increase was less than that recorded during the two-years between the second quarters of 2017 and 2019. 

Other industries that experienced sharp pandemic job losses had relatively small two-year wage increases, including hotels (7.4 percent), food service and drinking places (6.8 percent), and transit and ground passenger transport (1.1 percent). The last two of these industries had larger 2017-2019 gains.

The more noteworthy 17.4 percent 2019-2021 increase in second quarter average wages for New York City’s overall private sector reflects the change in the mix of jobs. There has been a greater proportionate decline in lower-paying jobs compared to higher-paying jobs, arithmetically boosting the difference in the overall private sector average wage over the two-year period. 

Although working in a nursing facility where Covid-19 infections and deaths were particularly high might have been expected to command a wage premium, the most recent two-year average wage increase was only 10 percent, not much more than the wage gain over the prior two years pre-pandemic. 

In some respects, the pattern of wage changes across industries over the past two years may not be much affected by the pandemic. High-paying industries like professional services and financial investments, where job losses have been limited and employees shifted to working on a remote basis, had the greatest average pay gains of all industries shown in the table: 15.8 and 18.8 percent, respectively. 

When inflation is factored in, workers in about half of the detailed industries in the table saw real wage gains of less than two percent (or negative) over the two years through this year’s second quarter. The Consumer Price Index (CPI) rose by 6.7 percent from June 2019 to June 2021. The real wage picture likely has deteriorated in recent months with the pickup in inflation. The CPI rose 6.9 percent over the 12 months through October 2021. 

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