When the pandemic forced the shutdown of much of the New York City economy in mid-March, Agatha O’Brien lost her accounting support job that paid $24 an hour.
Her partner, the father of their then-four-month-old, also lost his job. But after a few weeks in limbo, the social safety net kept them afloat.
O’Brien’s regular unemployment amounted to $475 a week and her partner received $450 a week. When the special $600 a week was added to their checks the $2,125 allowed them to pay their $1,650 rent for a studio apartment in Flushing, Queens, buy food and clothes for their fast-growing son, and spend some money on extras.
Now, with the $600 benefit expired, O’Brien is back to just the basic necessities.
“You don’t have a lot left,” said O’Brien, 32. “We can’t pay for anything else.”
The latest employment numbers, released Thursday, show that the city regained 56,000 jobs in July, reflecting the impact of the city’s nearly complete Phase 4 reopening.
But any boost the jobs bring to the economy barely begins to offset the loss of the $600 benefit for O’Brien and estimated 1.2 million New Yorkers collecting traditional unemployment. And it’s just one of the major hurdles the city’s economy will face over the rest of the year.
The economy is being hurt by the unwillingness of corporations to call their workers back to their offices, especially in Manhattan. Also coming into play: the decisions of untold thousands of New Yorkers to leave the city and the overall uncertainty that has businesses barely treading water.
Economic Outlook ‘a Lot Worse’
“While it is very welcome that infections are ebbing, the economic prospects today are a lot worse than at the end of March or early April,” said James Parrott, the economist at the New School who has been closely tracking the local economy and issuing a series of in-depth reports.
New York lost 914,000 jobs in April as the shutdown rippled across the economy, or about 20% of all the record-high 4.7 million jobs that existed in February.
Despite the gains of the last three months, employment in the city remains 702,000 jobs below the record in February. The Independent Budget Office’s forecast for a year end job loss figure of about 600,000 may be too optimistic.
While the nation’s unemployment rate in July fell to 10.2%, New York’s barely budged Thursday, coming in at 19.8%, near Great Depression levels.
And Parrott believes that the official number, compiled from a survey of households, understates the job losses because of problems with the way the information was collected. In a report released last week, he estimated the real jobless rate for the city was at 33% with The Bronx at an unprecedented 41%.
The end of the $600 a week benefit means about $500 million less a week for people like O’Brien in the city. “The loss of that supplement means real hardship for hundreds of thousands of New Yorkers and the resulting reduction in spending will further erode the job numbers,” Parrott said.
Empty Office Space
The office districts of Manhattan continue to be eerily empty, a situation that is likely to continue until at least the new year, depressing economic activity.
Months ago, Google told its workforce, which numbers 7,000 in New York mostly in Chelsea, to work from home until next summer. Earlier this month, Verizon sent word to its office staff to work from home for the remainder of 2020.
A survey by the Partnership for New York City earlier this month showed just 8% of employees have returned to the office as of mid-August. Only 26% of employees are expected to return by the end of the year, with a total of 54% expected back by July 2021.
“The survey reflects growing uncertainty among employers and employees about when the pandemic will be over and how quickly the city will recover,” said Partnership President Kathryn Wylde. “In the absence of a clear set of solutions for the complex health and economic challenges facing the city, business decisions are on hold.”
While there is no good data on how many people have left the city, a sharp decline in rents and a rise in vacancy rates shows the number must be in the tens of thousands if not higher. The Elliman Report for August showed a 10.1% decline in effective Manhattan rents in July to an average of $3,167, the biggest annual drop in almost nine years of record-keeping.
The Manhattan vacancy rate rose for the third consecutive month, hitting 4.33%, an unprecedented level. Rents weakened in both Brooklyn and Northwest Queens as well.
Meanwhile, uncertainty about the future chills business people.
‘There is No Plan’
Karen Auster’s experiential marketing company was thriving, particularly on work for The Related Companies’ properties like Hudson Yards and the Bronx Terminal Market.
She’s pivoted her Dumbo-based firm to a company that works on ideas to transform communities, and helped the borough’s Chamber of Commerce raise $750,000 for its Brooklyn Fund for businesses in need. Still, she’s halved her staff of four and isn’t sure what comes next.
“I’m a planner and there is no plan here,” she said. “It’s about navigating the unknown and and taking it one day at a time.”
The de Blasio administration declined a request for an interview about what the city could do to improve the economic outlook.
Weekly new unemployment claims for New York City have averaged 30,000 over the past two weeks compared with almost 150,000 during the peak in the early spring.
President Donald Trump’s plan to offer $300 a week in additional benefits to unemployed workers if states request the money has been hamstrung by questions if it is legal or can be implemented quickly.
Tech giants Facebook and Amazon remain committed to the city.
Facebook agreed to lease all 730,000 square feet of office space in the renovated Farley Building in early August, bringing its total footprint in the city to more than 2 million square feet of office space. Amazon recently bought the former Lord & Taylor building on Fifth Avenue for offices.
“When you see leases like Facebook and Amazon, it is clear leaders do see this as a temporary issue,” said James Whelan, president of the Real Estate Board of New York. “It says there are better days ahead and this is about managing to get to those days.”
Meanwhile, O’Brien is preparing to file for food stamps with the help of Public Health Solutions, which provides services in low-income and immigrant communities.
CEO Lisa David notes the nonprofit’s client base is expanding.
“Our food stamp and WIC [women, infants and children supplemental nutrition] program has seen a lot of new people coming in,” she said. “People who have never relied on government services, wouldn’t have qualified and who have no idea how to get access to services.”
The number of city residents receiving food stamps jumped by 200,000 in recent months to 1.7 million and those getting cash assistance increased by 50,000 to 380,000 in the last three months.
While opposition to the $600 payment centers on the belief that it discourages people from seeking work, O’Brien says that simply isn’t true in her case.
Despite her once healthy benefits, O’Brien continued to apply for other accounting positions. “There are not as many jobs as the government seems to think,” she said.
She is hoping her accounting firm reopens despite the fact her firm specialized in restaurants, the hardest hit sector of the downturn.
“I had been in that job for three years,” she noted. “I still look forward to working with them again.”