Here is your January economic recovery update from THE CITY. We publish a new analysis of the city’s employment, job and fiscal indicators each month.
New York City’s economy continued to add jobs at a painfully slow pace in December, adding to fears that the city is unlikely to recover all of the nearly 1 million jobs it lost in the pandemic until late 2024 or even 2025.
The city posted a seasonally adjusted employment gain of 13,500 for December, according to data released by the state Labor Department Thursday — meaning that the city has recovered only 88% of the number of lost jobs. The nation as a whole, meanwhile, has exceeded the pre-pandemic record by approximately 500,000 positions.
The city’s three lagging sectors — leisure and hospitality, construction and retail — showed only minimal gains despite a surge in tourism that should have boosted retail, hotels and restaurants. The only bright spot was a gain in warehouse jobs.
New York City’s unemployment rate ticked up to 5.9%, far higher than the 3.5% figure for the nation as a whole.
The data reported Thursday will be revised in early March using unemployment insurance tax information, which often is more accurate than the surveys used for the monthly jobs and unemployment report.
Where did all the workers go?
The city’s unemployment rate of 5.9% would be much higher if the city’s workforce hadn’t declined by 300,000 between February 2020 and October 2022, according to an in-depth report issued Thursday by James Parrott, director of economic and fiscal policies at the The New School’s Center for New York City Affairs, with co-author L.K. Moe.
Parrott argues that most of the decline is due to people leaving the city for the “suburbs, upstate or elsewhere.” The largest decline since the first quarter of 2020 was among workers ages 25 to 34, concentrated among people with children aged 4 or younger. Another big drop occurred among people 55 to 64, with some of them no longer working or looking for work, and others leaving the city. Like the rest of the nation, the city has seen a drop in its share of seniors 65 and older working, as more baby boomers opt for retirement.
As people left the city during the pandemic, the number of city residents with jobs declined by 9%, according to the report. (The city’s employment number tracks jobs in the city, which are held by both city residents and commuters.)
The state labor department reported 3.99 million individuals in the labor force in Dec. 2022, down from 4.31 million individuals in the same month in 2019.
Yet other signs show a glimmer of a turnaround in workforce participation. The labor participation rate — the percentage of the population aged 16 or older who are either employed or actively searching for work — has risen to 61%, a level that has only been reached before in April and May of 2010.
Parrott deflates the myth that gig work has soared as the result of the pandemic. His research estimates total gig workers at about 180,000, up only a few thousand from the pre-pandemic number.
Back to the office?
Average workday office occupancy in New York City jumped up to 47%, as New Yorkers settled back after the holidays into their COVID-era normal work routines. But there are no signs that in-office work will increase substantially in the near future, fueling concerns about the fate of New York’s office buildings and tax revenue.
In the fourth quarter, office leasing was 30% lower than the average rate over the last five years, according to the real estate firm CBRE. It reported “negative absorption” of 2 million square feet, meaning companies gave up more space than was leased. The vacancy rate was a worrisome 18%.