The ‘Double Whammy’ That Is Slowing New York City’s Job Growth

Since the start of the year, nearly six million jobs have been added in the United States. The unemployment rate has plummeted to 4.2 percent, close to where it stood before the pandemic. But in New York City, the economy appears to be in a rut.

After gaining 350,000 jobs in the last months of 2020, employment has slowed considerably this year, with just 187,000 jobs added since March. The city’s unemployment rate of 9.4 percent is more than double the national average, and its decline in recent months was largely caused by people dropping out of the labor force.

From the start of the pandemic, no other large American city has been hit as hard as New York, or has struggled as much to replenish its labor force. Nearly a million people lost their jobs in the early months of the pandemic, and thousands of business closed.

As the city plunged into its worst financial crisis since the Great Depression, the unemployment rate skyrocketed, peaking in June 2020 at 20 percent. Nearly every industry — from construction to finance to social services — has fewer people employed now than before the pandemic swept into New York in March 2020.

Nearly two years later, New York has added back a little more than half the jobs it lost, according to the state Labor Department, far less than the rest of the country, underscoring how the pandemic ravaged some of the city’s core economic engines like tourism, hospitality and retail.

The protracted pandemic has shut out tourists and scared off the crush of suburbanites who filled office towers every weekday — a “double whammy,” said Andrew Rein, president of the Citizens Budget Commission, a nonprofit watchdog group. Just 8 percent of office workers were back at work five days a week in early November, according to a survey by the Partnership for New York City, a business group.

“Commuters and tourists consume a lot of the same stuff,” Mr. Rein said. “They consume, in a certain sense, the vibrancy of New York City.”

Their absence has contributed to the loss of more than 100,000 jobs in the city’s restaurants, bars and hotels, plus nearly 60,000 additional jobs in retailing, performing arts, entertainment and recreation. The reopening of Broadway theaters and the high rate of vaccinations has provided a boost this fall that lowered the city’s official unemployment rate to 9.4 percent in October.

But the rise of the Omicron variant could threaten the fledgling recovery just as the next mayor, Eric Adams, takes office in January. Mr. Adams has pledged to use the full resources of city government to reinvigorate the economy, creating a citywide jobs training and placement program.

So far, the city has regained fewer than six of every 10 jobs it lost since the pandemic began in early 2020, while the nation as a whole has regained more than nine out of 10 lost jobs, said James Parrott, an economist with the Center for New York City Affairs.

“It certainly looks to me like we’re going to have a much slower, much more drawn-out recovery,” Mr. Parrott said.

The short but sharp pandemic recession was particularly painful for those in lower-paying service jobs: Positions in retail, restaurants and hotels help underpin the city’s economy and were the first to be cut in spring 2020. The jobs have been slow to reappear while a large share of their customers — office workers — have still not returned to the city’s business districts.

The story is far different for one major industry and its employees, finance, which has thrived, with companies like JPMorgan Chase posting record revenues during the pandemic.

In the two previous recessions — those that started in 2000 and 2008 — Wall Street shrank and the city lost tens of thousands of high-paying finance jobs. This time, the job losses on Wall Street have been minimal, helping tax collections to hold up as the city has continued to collect income tax from high-paid professionals who are working remotely.

“Wall Street is having a banner year, and they did really well last year,” said Ana Champeny, deputy research director at the Citizens Budget Commission. “That has helped prop up the city’s income tax revenues and business tax revenues.”

A strong employment rebound has yet to take hold despite an easing of pandemic-related business restrictions over the summer, the ending of expanded unemployment benefits in September and the reopening of international travel last month.

An estimated 800,000 New York City residents, about 10 percent of the population, were receiving the benefits when they expired. Republican lawmakers and small business owners had blamed the benefits for discouraging people from working, though recent studies have shown that the extra payments most likely had little effect on labor shortages, which have continued after the payments ended.

Before the pandemic, the tourism industry in New York City employed 283,000 people, with the majority of those jobs in Manhattan. By the end of 2020, roughly a third of those positions had been eliminated, according to the New York State comptroller’s office.

When the city locked down early last year, almost all of its tour guides were laid off, and most have not been rehired, said Patrick Casey, a board member of the Guides Association of New York City who is out of work himself.

He had worked as a guide for New York Water Taxi, which operated a fleet of sightseeing boats, for more than 10 years before he was furloughed at the start of the pandemic. He had to fend for himself: Federal pandemic benefits have expired, and like many workers, he had exhausted his unemployment insurance.

Mr. Casey said he had hoped to be rehired, but he gave up and started collecting Social Security when he turned 65 in early December. “It’s going to take a long time for my industry to come back,” he said.

The pandemic has caused many workers to re-evaluate their own priorities, placing a greater importance on work-life balance, spending time with their families and protecting their health. It has led some workers to retire, while others are reluctant to rejoin the work force if it means taking a job that requires face-to-face interaction, economists say.

Louisa Tatum, a career coach at the New York Public Library in the Bronx, said that more people with college degrees were seeking advice, and workers were more selective about what jobs they were willing to accept.

While some businesses are hiring and some even have major staff shortages, many workers tell her that they are willing to wait to accept a position that pays well, has consistent hours and, in a reflection of how the pandemic has shifted priorities, offers greater flexibility for remote work.

“There is a desire to work remotely and for opportunities that don’t put them at risk of anything,” Ms. Tatum said. The biggest barrier, she said, is the lack of desirable openings.

For some industries in New York, the pandemic simply accelerated financial pressure that already existed. Retailers were already struggling with the rise of online shopping, and empty storefronts were adding up even on famed corridors like Madison Avenue.

The apparel manufacturing business, a bedrock industry in New York a century ago that employed hundreds of thousands of people, shed more than 4,000 jobs during the pandemic, leaving just 6,100 employees in the city as of October.

Taylor Grant was among those who lost a job in the apparel manufacturing trade. Ms. Grant, 25, accepted a job in early 2019 as a clothing designer at HMS Productions, a designer and manufacturer of women’s clothes sold at shops like TJ Maxx and Marshalls. Her office was in the garment district, the once booming textile neighborhood in Midtown Manhattan.

Ms. Grant said she had survived rounds of layoffs in spring 2020 and had worked remotely for a couple of months in Dothan, Ala., her hometown. She lost her job that summer.

Ms. Grant said she applied for a handful of jobs in the apparel business in New York through the rest of 2020, hoping to return while she still had an apartment in the city. Not one company responded, so she stoppled looking. She now works as a manager at a women’s boutique started by her mother, Frou Frou Frocks in Dothan, and has helped increase its online sales and social media presence.

“I definitely thought I would be with my company for at least five years,” Ms. Grant said. “Once I realized there were no job opportunities in New York, I decided to stay in Alabama.”

The Hotel and Gaming Trades Council, a union that represents more than 30,000 hotel workers in New York, still has thousands of members who have been out of work for nearly two years. The outlook is so bleak that union officials have been counseling members on how to find work in other fields, even nonunion jobs. But replacing jobs that paid $35 an hour and provided free family health care is a tall order.

“We have people waiting in line and anxious to go back to work,” said Rich Maroko, president of the union. “They’re having difficulty finding full-time work.”

Kazi M. Hossain, 59, had served drinks at Bar Seine in the HôtelPlaza Athénée in Manhattan for nearly 35 years when the pandemic forced the hotel to close in March 2020. It has never reopened, leaving Mr. Hossain without a full-time job for the first time since the mid-1970s.

He has supported his family in Queens by taking on part-time work and borrowing $100,000 from his retirement savings. “If the hotel opens in the next three months, I could survive,” Mr. Hossain said.