New York’s unemployment crisis stands out among all states; job opportunities evaporate for thousands of young city residents
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.
While the national jobs report last Friday, January 7, showed a moderate 200,000 employment gain, the unemployment rate dropped to 3.9 percent. In recent decades, a four percent unemployment rate has almost always signaled a healthy, if not tight, labor market.
However, given the extreme lopsided economic impacts of Covid-19 and the erratic recovery trends experienced in recent months, this certainly doesn’t feel like a healthy labor market. Instead, it feels like a fragile economy, with the outlook clouded by the fastest inflation trend since the early 1980s and increasing talk about the Federal Reserve Bank being likely to soon start raising interest rates to dampen consumer demand, and with it, jobs.
Moreover, although a 3.9 percent national unemployment rate may give rise to mixed policy signals in Washington, the current employment and unemployment data in New York State and City are not at all ambiguous. New York City’s 444,000 pandemic jobs deficit in November was 9.4 percent, more than three times the national figure. Through the first 11 months of 2021, New York City gained back 205,000 jobs, raising to 54 percent the share of jobs recovered from the steep losses in the first two months of the pandemic during early 2020. That’s after 19 months of “recovery.”
In its recently updated forecast, the City’s Independent Budget Office pushed out by nearly a year-and-a-half – to late 2025 – the point at which the city’s pre-pandemic jobs level would be reached. Considering the disproportionate impact of Covid-19 job dislocations and New York City’s experience following the three most recent economic downturns here (early 1989-93, 2001-03, and 2008-09), this means that unemployment rates for Black and Latinx workers could stay in double digits for the next two to four years. (See the figure below.) As of the third quarter of 2021, while white unemployment in New York City was eight percent, it was 13 percent for Blacks and 12 percent for Latinx workers. The 2020-2024 period could turn out to resemble the last set of bars in this figure.
Nationally, there has been much talk of late of the “Great Resignation” on the part of workers, emboldened by a low unemployment rate context to quit less-desirable jobs in historic numbers and exercising much greater choice than usual regarding when and where to work. Undoubtedly, there are elements of a trend along these lines among some workers in some parts of the country, and even among some New York City workers.
But we need to keep in mind how different the unemployment situation is in New York. Both the state and the city are outliers compared to the broad national picture. The latest data show that New York State ranks lowest or second-lowest among all states in job openings, hires, and quits. New York’s pandemic jobs deficit is much greater than in all other large states, and the same holds for New York City compared to other large cities.
While many older workers have retired during the pandemic, New York City’s overall labor force participation rate (the measure of workers who are either employed or actively seeking jobs) is slightly higher than before the pandemic, whereas nationally, it is about 1.5 percentage points below the pre-pandemic level. In short, New Yorkers are looking for work to the same degree they were before the coronavirus struck. They’re just finding jobs in much smaller numbers. No age group in New York City has been hit harder by the pandemic’s economic impact than young adults, ages 20-24. That’s not surprising considering their heavy presence in industries hardest hit by job dislocations, including food services, clothing retail, and arts and entertainment. The two figures below, one for males and one for females, show the trend in the labor force participation and employment rates. The employment rate is technically the employment-to-population ratio, that is the share of all persons who are employed. While labor force participation shows willingness to work, the employment rate reflects the degree of success in finding work.
The overall trends for young males and females are similar. Labor force participation and employment rates fall off in the first six months of the pandemic, then participation essentially rebounds to where it was pre-pandemic. However, while employment picks up a little at first, it then flattens, for males and females, for most of the past year.
Pre-pandemic, the gap between the labor force participation and employment rates was four percentage points for women and five percentage points for men. As of the third quarter of 2021, however, the gaps for both were far greater: 12 points for women and 19 points for men. Employment rates in that quarter were also under 50 percent for both, standing at 45 percent for women and 47 percent for men.
(There are also some differences in the male and female employment trajectories. The employment rate for young women falls more steeply, by 25 percentage points between the first and third quarters of 2020, but it also partially rebounds more than for males.)
These numbers underscore the worrisome job market challenges facing New York City, particularly its young workers, as the third year of the pandemic approaches. In the third quarter of 2021, the unemployment rate for the city’s young females ages 20-24 was 17 percent, and for young males, it was a staggering 27 percent. Underemployment rates, factoring in involuntary part-time work and discouraged workers, were 23 percent and 32 percent, respectively.
The Center for New York City Affairs will release a policy brief later this week outlining proposals for State leaders to consider this year to mount an active labor market response to New York’s unprecedented Covid-19 unemployment crisis. It will be available at: http://www.centernyc.org/covid19-economic-impact
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