The big catch: New York City’s renewed vibrancy hides deep economic pain

Things look very different in New York. Some high-end parts of the labor market appear to be doing well, but overall the city’s employment situation is still much worse than before the pandemic. In 2019, the unemployment rate was about the same in New York as the nation as a whole. In January (the most recent month for which city data is available), it was almost twice as high.

Here is the comparison for U-6 unemployment, which is only estimated annually for the city.

These are estimates for New York City residents. The Bureau of Labor Statistics also publishes statistics on wage employment in the city, which includes those who commute from the suburbs, and there the gap with the rest of the country is even greater. Wage employment in the city in January was still 6.2% lower than just before the February 2020 pandemic.

How’s that with skyrocketing rent reports and tech workers flocking to town? On the first, New York City doesn’t exactly have a lot of flexibility on housing supply. Building new housing is extremely difficult, and less than half of the city’s existing rentals are at market rate (the rest are either rent-regulated or part of a government housing program), so a Sudden increase in demand can cause prices to rise sharply for these apartments where prices may actually move. When it comes to tech jobs, some have really moved to the city. News, the industry “supersector” that encompasses software, games, and most internet companies (as well as publishing, broadcasting, and movies), is the only supersector that has created jobs in New York over the past two years – although only 8,000 jobs.

New York has many well-paying jobs in finance, consulting, media, and other fields that have weathered the pandemic well, and because of that, its tax revenue continues to surprise on the rise. But most New Yorkers don’t have jobs like that — the city’s median household income is about the same as the nation’s — many are still looking for work. It’s no coincidence that New York had the lowest quit rate of any state in January (1.9%, compared to 2.8% for the whole of the United States) and is at the level or near the lowest level for over a year now. The “big quit,” which mostly involves lower-paid workers moving on to better jobs, has bypassed New York.

The numbers cited here are all from January, when the city’s omicron wave had just peaked. As more office workers return and international tourists arrive in greater numbers, employment in leisure and hospitality, retail and other sectors is likely to continue. to progress. Then again, January was before Russia invaded Ukraine, the Federal Reserve raised interest rates, and a second Covid omicron wave began to gain strength overseas. “The US economy is very strong and well positioned to handle tighter monetary policy,” Fed Chairman Jerome Powell said last week. New York City’s economy, not so much.

More other writers at Bloomberg Opinion:

• New York beats San Francisco for the best talent: Conor Sen

• The World Doesn’t Need Financial Hubs Anymore: Paul J. Davies

• Markets care more about inflation than job creation: Jonathan Levin

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was editorial director of Harvard Business Review and has written for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market”.