With the Dow Jones stock index down more than 1,008 points on Friday, it’s fair to wonder how New York would fare in a long recession. The city would start weaker than it has been for at least three decades – so it should start planning now for a good recovery.
In terms of jobs, New York already is in times of crisis: it recovers lost COVID jobs much more slowly than the country as a whole. As of July, New York was still short of more than 2% of its pre-COVID private sector jobs, or nearly 90,000. In fact, we’re barely running even with 2017 and 2018 employment levels.
The country as a whole, on the other hand, has 1.5% more jobs than in 2019. It’s not great, but it’s more than zero.
Jobs do not disappear because employers cannot find enough workers. This is true, to some extent, in high-turnover companies. But the city’s unemployment rate – people actively seeking work – is 6.1%, compared to a national rate of 3.5%.
If we experience a jobs downturn, it will be the first time since 1990 that we do so without having recovered the jobs lost in the previous downturn (i.e. the jobs crash of 2020).
The kind of jobs we are already missing should also be worrying. We’re still 15% short of our leisure and hospitality jobs, of course – and they won’t come back in full force until our Asian visitors, whether business travelers or tourists, come back in full force pre- COVID.
This explains why the hospitality industry is so eager to accommodate migrants. Still, whether you think it’s a good idea or not, it’s a Cost for the taxpayer, not a godsend.
But we are also losing well-paid positions. We are missing 1.5% of our jobs in finance and insurance, compared to 2019. The country, meanwhile, has 2.5% more jobs in finance. New York firms employ 50,800 investment bankers and stock and bond brokers, down 1,000 since the summer of 2019, for example, after half a decade of steady growth.
You might think bankers all quit in the blink of an eye because of their low bonuses, like some Goldman brats – uh, bros, sorry – did last week and went to work for hedge funds. If so, it does not show up in the employment figures.
Even the catch-all category of white-collar jobs not in the financial sector is barely at the top of the rankings, having increased by only 1% since 2019.
Maybe everyone suddenly becomes a lucrative self-employed or a wealthy freelancer. But if not, we need to start taking the stories of high-paying jobs moving to Florida and Texas (and even New Jersey, which gained a few finance jobs) more seriously.
Sooner or later, in the absence of a quick miracle, New York must reckon with the fact that the growth juggernaut that has carried us for much of the past 20 years since the 9/11 recovery has stopped. Between 2003 and 2019, New York added 35% more workers to its private sector tax base, growing from just under 3 million to just under 4.1 million jobs.
This growth covered a plot governance errors – including the entire eight-year disaster of the de Blasio administration. Major tax revenues doubled between 2005 and 2020, from about $31 billion to over $63 billion, growing three times faster than inflation.
No wonder the fledgling city council balked at the slightest of small cuts, just seven-tenths of a percentage point, to the $31 billion education budget (more than Italy’s defense budget). The board has never heard of such a concept as cutting spending, or even keeping spending flat, so it just can’t process.
The mayor should direct his budget office to create mock budgets so he can think about what he would cut and how much in a real crisis, to save basic public services and preserve the tax base.
He can read them again while he eats his $55 vegan fish — fully paid, of course, he says, but a price that shows how far we are from urban reality.
Nicole Gelinas is editor-in-chief of the City Journal at the Manhattan Institute.