In February, before the pandemic forced the shutdown of the economy, the national unemployment rate was 3.5%. The jobless rate in New York City was 3.4%, a historic low, and the state labor department counted a record 4.698 million jobs.
Now a recovery divide is growing between the city and the rest of the country. The latest figures, released Thursday, put New York’s unemployment rate at 16 % compared with 8.4% nationwide, following the city’s hemorrhaging of 689,000 jobs from its peak.
While the nation remains mired in a severe downturn, almost nowhere is the economy worse than New York City, once the epicenter of the coronavirus pandemic and now the epicenter of financial pain. Economists emphasize different reasons for the city’s woes while business leaders remain frustrated that more isn’t being done — especially by city officials — to revive the economy.
Thursday’s decision by Mayor Bill de Blasio to delay school buildings’ opening for a second time poses yet another hurdle.
“The health concerns are real and we are not going to see everyone coming back,” said Jessica Walker, president of the Manhattan Chamber of Commerce, in the borough that has experienced the biggest decline in economic activity. “But we have to make sure we are telling a story so people can feel safe returning to work.”
Mayor Bill de Blasio, who had been castigated in a strongly worded letter from more than 170 CEOs and all the borough chamber presidents for deterioration in the local quality of life, apparently got the message earlier this week.
He called for companies to start to bring their workers back to the office and said he would do the same for city workers.
“It’s time to start moving, more and more,” de Blasio said at a press briefing Tuesday. “I think everyone should start the process now of determining how to do that. For a lot of smaller and mid-level employers, of course, start to bring people back as soon as you feel ready.”
Among Worst in the Nation
The road back will be very difficult.
New York City suffered the worst job loss among 82 metropolitan areas comparing July to the same month in 2019, according to Moody’s Analytics, which considers the city’s suburbs separate regions. The city’s unemployment rate in July essentially tied New York with Los Angeles and Las Vegas for the worst in the nation.
Two major reasons account for the disparity, according to James Parrott, an economist at the New School. First, the severity of the epidemic has made officials more cautious about reopening the economy than the rest of the country.
Secondly, the decline in what Parrott terms “face-to-face” industries has been more than 2.5 times the nation. These sectors — hotels and food services, administrative services, arts and entertainment, transportation and retail — account for half of the jobs lost.
Barbara Denham, an economist at Moody’s Analytics, also notes significant declines in so-called export industries — those that make products or provide services for people outside the city.
Export industries provide a big boost to a local economy because they inject outside money into the area. For example, all the actors, writers, technicians and support staff on a Netflix production in the city are paid with money the streaming outfit collects from people around the world.
Looking to Manhattan
The immediate focus of economists and business leaders is on Manhattan.
A New York City Partnership study found that less than 10% of “major employers” had reopened their offices as of mid-August. But since Labor Day a few well-known companies have begun recalling workers.
Goldman Sachs has instituted a rotation plan and J.P. Morgan Chase is requiring some senior managers in its trading and sales divisions to return to the office next week. Chase had to send some traders home this week after one of them tested positive for the virus.
“Manhattan isn’t a ghost town but you can feel the foot traffic is so much lighter,” said Walker, whose organization has created a dashboard tracking business activity. It shows that compared to February, apparel store traffic is down more than 40%, while hotels and offices have seen a 50% drop.
The ribbon-cuttng Tuesday for One Vanderbilt at Grand Central, the city’s second tallest and, at $3 billion, most expensive office tower ever built, presents another test of corporate confidence in the nation’s biggest business district.
The 77-story building is 70% leased to companies that include law firms Greenberg Traurig and McDermott, Will & Emery and the financial firms the Carlyle Group, Sentinel Capital Partners and TD Bank.
Andrew Mathias, president of the tower’s majority owner, SL Green, acknowledged that the pandemic had slowed leasing to additional tenants but said the future looked promising.
“I think we would have been around 80% [leased] probably without the pandemic,” he told Crain’s New York Business. “The pandemic definitely put four, six months on ice, but we’re starting to see activity pick up again.”
‘Food Lines are Growing’
The key will be restoring confidence in the mass transit system, says Walker. The Manhattan Chamber chief takes the D train from her home in Harlem to her Midtown office several days a week and says she finds it clean and safe.
“Many businesses have made their workplaces safe,” she said. “The public doesn’t know the subways are safe.”
One business leader earlier this week painted an optimistic scenario for the coming weeks that hinges on two big “ifs” — one of which is now in flux.
“If… the back-to-school process goes well people will give a sigh of relief,” said Carlo Scissura, CEO of the New York Building Congress, whose members include builders and unions. “Then if indoor dining does well it will get people moving ahead and get businesses back and to bring back employees.”
But even if Manhattan comes back to life, more trouble is looming for the other boroughs — especially Queens and The Bronx, which have the highest unemployment rates in the city.
New York State has paid out $43.7 billion in unemployment benefits to 3.5 million New Yorkers over the past six months, representing over 20 typical years’ worth of benefits paid.
With the end of the $600 extra pandemic unemployment benefit, the amount being disbursed will be reduced by more than half for those on traditional insurance. As of last week some 1.4 million city residents were collecting unemployment — 687,000 traditional benefits based on their pay, with a maximum of $504 a week, and another 752,000 the $600 pandemic benefit for freelancers and gig economy workers.
“Bringing people back to the office may make Manhattan feel safer, but it will have no impact in the low-income neighborhoods where the food lines are growing and where even if small business opens, they will not have customers with money,” said Kathryn Wylde, CEO of the Partnership for New York City, which represents much of the business community.