Jobs in private sector close to pre-pandemic levels, alongside a shrunken public sector and shifts in the city’s industry composition
With total private jobs bouncing back in May following a seasonally adjusted decline of 16,000 in April, the number of jobs in the private sector in New York City is now only 14,000 short of the pre-pandemic peak.
As of May 2023, the city had regained 99 percent of the private sector jobs lost as a result of the pandemic, recovering 16,000 private sector jobs in May alone. However, those jobs have not all returned to the same industries, as the city has now experienced a significant shift in its industrial composition, impacting how and which people are able to find employment in the city today. Furthermore, while the private sector has largely rebounded, the public sector has not, shedding over 25,000 jobs in the past three years and continuing to lose jobs in the past three months. This trend impacts city residents’ employment prospects and potentially their experience of public services and infrastructure.
The unemployment rate amongst New York City residents has been relatively stable since January 2023, hovering in the 5.3 to 5.4 percent range. This trend continued as it remained flat at 5.3 percent in May. Meanwhile, during the past six months, the labor force participation rate has been growing steadily as more people either return to work or return to looking for work. This growing labor force participation rate, alongside a flat unemployment rate, is a sign that many New York City residents returning to the labor market are finding jobs. This is a modestly promising sign, especially considering the Federal Reserve’s efforts to combat inflation by slowing economic growth through continuous interest rate hikes between March 2022 and May 2023. The relative stability of the local unemployment rate, despite national trends and macroeconomic conditions, shows that fears of recession and other economic instability have not reversed the trend of growth in New York City’s local labor market.
Nevertheless, New York City has not been completely immune to economic challenges in the past few months. As noted above, the 16,000 jobs added in May 2023 offset a loss of 16,000 jobs the previous month. In April, the four-week moving average of initial unemployment claims spiked from eight percent to 35 percent above year-earlier levels, likely the result of layoffs, including a combined total of 2,800 layoffs at Goldman Sachs, Google, Amazon, and Humana at Home. By late May, the year-over-year increase in the four-week moving average of initial unemployment claims was back down to 12 percent, while continued claims remained slightly elevated at 19 percent above the four-week moving average compared to the previous year.
While layoffs at large firms have not spilled over into the economy more broadly, the city’s economy is on a more tumultuous path in recent months than the slow and steady recovery from the pandemic that has characterized the past three years. This pattern is expected to continue over the summer. Firms with more than 50 employees are required by law to announce upcoming layoffs in WARN notices filed with the New York State Department of Labor. Recent WARN notices show additional layoffs at large technology, finance, health, and restaurant firms announced for July and August.
While the number of jobs in New York City is important, what industries and occupations those jobs are in also has a huge impact on employment demographics and on household incomes.
The Center for New York City Affairs (CNYCA) began tracking jobs by three relevant categories at the start of the pandemic: essential, face-to-face, and remote-working industries. Three years later, these categories are still relevant because workers in these three categories experienced the pandemic differently and in long-lasting ways.
For example, despite monthly declines in the number of jobs in remote-working industries in recent months, the number of jobs in this category is still above pre-pandemic levels. However, the remote-working nature of these industries encourages workers to reside outside the city, or even outside the tri-state region. (CNYCA estimates that roughly a quarter of such typically high-income jobs were already held by non-resident commuters to New York City before the pandemic.) This is one major reason that the unemployment rate of New York City residents is still one percentage point higher than its pre-pandemic rate, despite the total number of payroll jobs at New York City firms being so close to pre-pandemic levels and even as there are now hundreds of thousands of fewer residents in the city.
Meanwhile, all face-to-face industries are still not back at pre-pandemic job levels, and many of these industries continued to see employment declines in the past three months. (Exceptions to this trend were in accommodations and food services, where 12,600 new jobs were added in the last three months, as well as manufacturing and construction, which added 1,300 and 300 jobs, respectively, over that period.) Most notably, jobs in retail clothing, and jewelry stores have declined 25 percent since the start of the pandemic, a total decline in 16,900 available jobs.
While jobs in warehouses and delivery may have increased, as consumers have shifted to shopping online, these jobs are not necessarily easy for retail workers to transition into. First, many delivery jobs require having a drivers’ license, which is not as common in a city so committed to public transportation. Second, warehouse and delivery jobs are concentrated in outer-borough areas of the city not easily accessible by public transportation, compared to retail jobs in commercial districts. Most importantly, while consumer spending is still high despite inflation and unemployment rates, the growth of jobs in warehousing and delivery simply does not match the loss of retail jobs. Since the pandemic, the number of warehouse and courier jobs has increased by 4,400 jobs in the city, filling only a quarter of the jobs lost in retailing. (However, this data collected by the Bureau of Labor Statistics does not include people working as independent contractors, which is likely significant in both warehousing and delivery industries.)
While jobs in courier and warehouse industries have grown in the past three years, jobs in the transportation sector at large have declined. Much of this is driven by a loss of a quarter of all jobs in ground passenger transportation, such as for school bus and tourism bus drivers.
Lastly, while the shrinking of the public sector is notable, it is also complex. Even as government employment has shrunk there has been a simultaneous rise of 31,900 social assistance jobs between February 2020 and May 2023 (non-seasonally adjusted). These jobs, while technically in the private sector, are largely in non-profit organizations, many with government contracts to deliver services to city residents. It is also worth noting that public sector jobs, as a share of total jobs in New York City, has been on a steady decline since the 1990s. The majority of those jobs lost were in City, not State or Federal, employment. The decline in public sector jobs, then, is not specific to the pandemic.
The loss of government jobs in the city’s labor market is also a contributing factor to the city’s large black-white unemployment rate gap. Recent CNYCA estimates show the Black unemployment rate in the first quarter of 2023 at a high of 12.2 percent, while the white unemployment rate was only 1.3 percent. Prior to the pandemic, City, State and Federal government combined had the largest share of Black workers in the city (an estimated 35 percent of workers compared to 21 percent of workers across all industries in the city).
Government service involves a wide variety of occupations requiring different levels of skill, education, and on-site functions. As public sector employment declines, it is critical to evaluate industries where employment is growing, to understand what relatable opportunities they offer to Black workers. Health care and social assistance industries have seen job growth during the pandemic and also over the last month. These industries also had a large share of Black workers in New York City prior to the pandemic (32 percent and 31 percent, respectively). However, many segments of these industries offer lower wages than the public sector. Meanwhile, higher-paying jobs in many remote-work industries, like technology, finance and insurance, and professional services, which have also experienced job growth throughout the pandemic, have a diversity problem. Only 12 percent of jobs in remote-working industries in general were filled by Black workers prior to the pandemic. Additionally, while these sectors have seen overall growth in jobs during the pandemic, in recent months they have seen a decline in jobs as major employers, (Facebook, Google, Morgan Stanley, and Goldman Sachs), have laid off current employees or have announced layoffs slated for this summer.