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Although the U.S. economy has restored the full number of jobs lost during the COVID-era shutdown, New York City is still 176,000 jobs smaller than it was in 2019, making it the slowest to recover among major U.S. cities, The New York Times reported.
City and state lockdown mandates cost New York a million jobs during the first two months of COVID War in 2020, according to the NYT.
More than any other American city, New York’s economy relies on a mix of commuters, tourists, and international travelers. They have been slow to return, so businesses need fewer people to serve the smaller number that has come back.
As a result, most of the missing jobs are in the hotel, restaurant, and retail industries, which are the jobs most accessible to the largest number of people and typically employ a greater proportion of young, minority, and undereducated workers.
The city’s July jobless rate was 6.1 percent, compared to 3.5 percent nationwide; New York’s unemployment rate for workers ages 16 through 24 is 20.7 percent.
In contrast, industries that allow remote work, such as financial services and tech, have returned to pre-COVID employment numbers. In fact, the city’s tech sector now boasts more jobs than it had before COVID, the NYT said.
The discrepancy between white and blue collar jobs has worsened economic inequality. The number of New York residents receiving government aid has shot up by a third since February 2020 when the COVID invasion began.
This year, the number of tourists arriving in the city is expected to reach 85 percent of 2019’s record number of 66.6 million, according to the city’s tourism office.
However, those visitors are spending less money while in town than they did before 2020, the office noted.
In the past, out-of-towners who stayed longer and thus spent the most tended to be business and foreign travelers, who still have not returned in their pre-COVID numbers.
State officials recently cut their forecast for this year’s growth in jobs from 4.9 percent to 4.3 percent, now saying the state would not restore 2019’s number of jobs until 2026.
The officials cited the “new normal” of remote work and the loss of New York City residents who migrated out of the state as the chief drag on job growth.
PUBLISHER’S NOTE: Early in the COVID War, we forecast the permanent contraction of economic ecosystems in urban centers that depend on commuters and other visitors from out of town, of which New York City is the prime example.
TREND FORECAST: As we detailed in “Financial Squeeze Tightens on Office Landlords” (12 Jul 2022), the real estate and financial industries, along with municipal governments, are struggling to figure out what to do with office buildings that are largely empty or with downtowns seeing a fraction of their past commuting workforce.
Landlords are stuck in the middle. We reported in our “Real Estate Industry Update” of 13 April 2021, that Fitch Ratings has calculated that allowing the nation’s office workers to spend a day and a half at home each week would reduce office space needs enough to cut landlords’ profits 15 percent; three days a week would slash 30 percent from profits, Fitch said.
A move to transform empty commercial towers into apartment blocks has run into trouble, which we noted in “New York’s Plan to Turn Empty Hotels to Housing Not Working” (5 Apr 2022). Office buildings typically have centralized plumbing, little soundproofing, windows that are sealed shut, and are not designed to allow natural light into all corners.
Zoning regulations also often stand in the way of any such change.
That leaves many downtowns’ commuter-dependent retail and services sectors bereft of customers. Most businesses that died during the COVID shutdown will either stay dead or return in some other form—perhaps sharing space with other retailers or open only limited hours.
Municipalities lie under the wreckage. Property taxes make up half or more of most cities’ revenue and taxes are based on property values. Empty storefronts and less-valuable office towers shrink the tax bases cities need to pay for services—and fewer services make a city a less-desirable place to live, driving residents out (as happened during the COVID War) and reducing revenues even further in a downward spiral.
In an effort to pay their bills and salvage their investments, some creative office landlords will offer empty offices to yoga studios, massage clinics, coffee-and-book shops, and other retailers—perhaps even satellite campuses for colleges—to create a new ecosystem for tenants that would allow them richer workday and after-work lives without having to leave their buildings.