Tech Industry Troubles Aren’t as Bad for Workers as You Think
Peloton may be shedding jobs, but many tech firms are hiring in New York City, with growth up 4% in just six months, a new study finds.
The headlines say New York City’s tech sector is in trouble. The data says the city’s tech firms are still growing.
Last week Peloton, the home exercise company whose revenues and stock soared in the pandemic, announced another set of layoffs, this one of 500 employees, reducing its workforce by half from its peak last year. Its chief executive said the company has six months to prove it can survive as an independent company.
Google, the city’s largest tech employer, instituted a hiring freeze last month. Facebook is considering reducing its global workforce by 15% and recently gave up a 200,000- square-foot lease on Park Avenue to consolidate its office space.
Even young startups are retrenching. Typical of a series of announcements was the news over the summer that the online pharmacy startup Capsule was cutting 13% of its staff.
But despite those dire headlines, tech employment in New York City grew by 4% in the six months between February and August, according to an analysis by James Parrott, an economist at the Center for New York City Affairs at the New School, as hiring at other firms more than offset the layoffs.
“We all knew there would have to be some course correction following the pandemic,” said Jason Myles Clark, executive director of the trade group Tech:NYC. “Our tech ecosystem has emerged to the point where a market downturn won’t have an impact on long-term viability. This can be the preeminent industry for the city by 10 years from now.”
In May, the group’s poll of 350 executives found that 71% said they were expecting to keep hiring tech workers in 2022.
One major source of the hiring are the startups which continue to make New York their home. While venture capital invested in New York companies fell 14% in the second quarter, it still totaled almost $9 billion.
Curastory, a new company that aims to help content creators build their businesses across platforms like YouTube and TikTok, plans to increase its staff by 50% this year to 15 as it emphasizes college athletes who now can be paid for endorsements and selling their images.
“I need to hire account executives,” said Tiffany Kelly, the founder.
Meanwhile, a report issued Tuesday by State Comptroller Tom DiNapoli as well as a comprehensive study by the Center for an Urban Future highlight how important tech has become in the city’s economy.
In the five years from 2016 to 2021, tech employment in the city soared by a third to 172,570, its highest level ever. Total wages more than doubled and the average annual salary reached $228,620, the third highest in the city behind only Wall Street and management of companies, according to the comptroller.
Getting to these numbers requires some creative calculations. Since there is no official government-designated tech sector, economists combine various subsectors to come up with a total figure of jobs at companies whose primary business involves technology.
The comptroller report leaves out online shopping, for example, but includes telecommunications, which others do not. Using slightly different criteria, Parrott puts the total number of tech workers at 260,000. The Center for an Urban Future splits the difference at 193,000 in 2021.
The number of tech startups in the city now tops 25,000, the Center for an Urban Future determined — more than double the 10,000 or so that existed a decade ago.
While many tech jobs are high paying, one in five do not require a college degree, Parrott notes, and could become a lifeline for New Yorkers who lost jobs in retail, leisure and hospitality in the pandemic. Tech companies pay substantially more for these non-college positions than their previous employers.
New York is far more diverse than other tech centers. Black and Hispanic people comprise about 20% of the industry workforce here compared to less than 10% in the San Francisco Bay area or Boston.
But it still doesn’t reflect the city as a whole, since 54% of its employees are white compared with a citywide average of 40%.
“My latest report about New York City’s tech sector shows that while the industry has grown rapidly over the past five years, diversity within the sector is lagging behind other industries, particularly in terms of racial and gender makeup,” said DiNapoli, who has overseen pension fund investments of $296 million in 170 New York technology companies.
“For the tech sector to continue growing — and to do so in a way that makes the industry more diverse and equitable — sound public policy and workforce investment strategies at the city and state levels will be key.”