With the Dow Jones stock index down more than 1,008 points Friday, it’s fair to wonder how New York would fare in a long recession. The city would start off weaker than it’s been in at least three decades — so it should start planning now for a decent recovery.
Jobs-wise, New York already is in a slump: It’s been recovering lost COVID jobs far more slowly than the country as a whole. As of July, New York was still missing more than 2% of its pre-COVID jobs in the private sector, or nearly 90,000. In fact, we’re barely running even with 2017 and 2018 job levels.
The whole country, by contrast, has 1.5% more jobs than it had in 2019. That’s not great, but it’s more than zero.
The jobs aren’t gone because employers can’t find enough workers. That’s true, to some extent, in higher-turnover businesses. But the city’s unemployment rate — people actively looking for jobs — is 6.1% percent, against a nationwide rate of 3.5%.
If we do suffer a jobs recession, it’ll be the first time since 1990 that we’ll do it without having regained the jobs lost from the previous downturn (that is, the jobs crash of 2020).
The type of jobs that we’re already lacking should be worrisome, too. We’re still missing 15% of our leisure and hotel jobs, sure — and they won’t return in full force until our Asian visitors, both business travelers and tourists, return in full pre-COVID force.
This explains why the hotel industry is so eager to house migrants. Yet whether you think it’s a good idea or not, that’s a cost to the taxpayer, not a boon.
But we’re also down high-paying positions. We’re missing 1.5% of our finance and insurance jobs, relative to 2019. The nation, meanwhile, has 2.5% more finance jobs. New York firms employ 50,800 investment bankers and stock and bond dealers, down 1,000 since summer 2019, for example, after half a decade of steady growth.
You might think the bankers all quit in a snit over their low bonuses, like some Goldman brats — er, bros, sorry — did last week, and went to work for the hedge funds. If so, it’s not showing up in the employment numbers.
Even the catch-all category of white-collar jobs not in the financial industry is hardly busting the charts, only up 1% since 2019.
Maybe everyone is suddenly lucratively self-employed or independently wealthy. But if not, we’ve got to start taking the stories of high-paying jobs moving to Florida and Texas (and even New Jersey, which has gained a few finance jobs) more seriously.
Sooner or later, absent a quick miracle, New York has got to reckon with the fact that the growth juggernaut that carried us through much of the past 20 years, since the 9/11 recovery, has stopped. Between 2003 and 2019, New York added a whopping 35% more workers to its private-sector tax base, growing from just under 3 million to just under 4.1 million jobs.
That growth covered a lot of governing mistakes — including the entire eight-year disaster of the de Blasio administration. Major tax revenues doubled between 2005 and 2020, from about $31 billion to more than $63 billion, growing three times as fast as inflation.
No wonder the young City Council has balked at the tiniest of tiny cuts, just seven-tenths of 1 percentage point, to the $31 billion education budget (more than Italy’s defense budget). The council has never heard of such a concept as a spending cut, or even keeping spending flat, so it just can’t deal.
The mayor should direct his budget office to create mock-up budgets so he can mull over what he would cut and how much in a real crisis, to save basic public services and keep the tax base.
He can read them over while he eats his $55 vegan fish — fully paid for, of course, he says, but a price that shows just how far away we are from urban reality.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.