New York City ended 2023 with slow job growth; Employment rates surpassed pre-pandemic levels for Black and white (but not Hispanic) workers
From December 2022 to December 2023, private sector jobs in New York City rose by 54,900, or 1.3 percent. On the one hand, this was a welcome development, defying economic forecasts that the United States would face a recession in 2023. However, this job growth is also much smaller than the growth seen from December 2021 to December 2022, when private sector jobs in the city grew by 232,900, or 6.1 percent (See Figure 3). Furthermore, not all industries experienced similar growth over the past year.
In New York there is a high level of occupational segregation by race, ethnicity, and gender. Therefore, industry-specific differences in job growth may help explain the uneven labor market experiences by race and ethnicity in the second half of 2023. For example, the city’s white employment rate reached its highest level this century. The Black employment rate also grew in the last half of 2023, surpassing its pre-pandemic rate. Meanwhile, Hispanic workers still have not returned to their pre-pandemic employment rates.
Last spring, the Center for New York City Affairs (CNYCA) identified a widening Black-white unemployment rate gap in the first quarter of 2023, but found a halt in its widening by the second quarter of the year. By the fourth quarter of 2023, there was a 5.8 percentage point gap between Black and white unemployment rates in New York City. This difference is smaller than the 9.9 percent gap earlier in the year, but it is still above pre-pandemic levels. Figure 1 presents this data with a four-quarter moving average to smooth out volatility.
Figure 1
Black New Yorkers also experienced growth in their labor force participation and employment rates in the last two quarters of 2023. This suggests that the decline in the Black-white unemployment rate gap is driven more by Black workers securing jobs than by discouraged Black New Yorkers dropping out of the labor force. While these are hopeful signs, more progress is needed. A legacy of systemic racism has resulted in an economy where the national Black unemployment rate is typically twice the size of the white unemployment rate. However, New York City’s Black unemployment rate in the final quarter of 2023 was three times the size of the white unemployment rate. And even though the city’s Black employment rate surpassed pre-pandemic levels in the second half of 2023, that level remained lower than rates 10 years ago (see Figure 2).
Figure 2 illustrates changes in employment rate by race and ethnicity over the past decade. It shows a few compelling shifts in the post-pandemic period. First, both Black and white employment rates have grown compared to before the pandemic. This means a larger percentage of New York City’s Black and white working age population are finding work. And while the Black employment rate is still far from higher rates in recent history, the white employment rate in the second quarter of 2023 was the highest this group experienced in the 21st century.
Second, Figure 2 illustrates very different trends for Hispanic New Yorkers, who have a lower employment rate than before the pandemic. The Hispanic employment rate also began declining in the second half of 2023. This trend is also accompanied by slowing growth in labor force participation among Hispanic New Yorkers, compared to the Black and white workforce. Hispanic New Yorkers are below their pre-pandemic employment rate today and fewer Hispanic New Yorkers are actively participating in the labor market as a result. Additionally, the city’s Hispanic employment rate has now returned to the employment rate of Black New Yorkers, a rate it had surpassed in 2015.
Figure 2
Workers of color continue to face challenges in recovering from the pandemic. This is a cause for concern given the uneven growth of jobs by industry and the slowing growth of the city’s economy overall.
Figure 3 compares the 2022 and 2023 job growth in New York City by industry. It affirms CNYCA’s report “New York’s 2024 Economic and Budget Outlook,” which found a significant change in the city’s industrial composition, which was different from trends in national industrial composition. For example, since the pandemic job growth nationally has been most pronounced in transportation and warehousing. However, in New York City that industry experienced slow job growth in 2022 and a six percent decline in 2023. In New York City, this industry overwhelmingly employs men and, prior to the pandemic, Hispanic workers comprised the largest share of this industry in the city. Meanwhile, New York City’s largest post-pandemic growth industry, health and social services, saw steady growth in the number of new jobs in both 2022 and 2023. Prior to the pandemic, these industries predominately employed women of color, with Hispanic women predominating in social assistance and Black women predominating in health care.
Furthermore, slow job growth from December 2022 to December 2023 resulted in actual job declines in many face-to-face industries. In the previous year, all industries, with the exception of private educational services, experienced job growth. However, many face-to-face industries, such as retail trade, manufacturing and arts, entertainment and recreation, were still far below their pre-pandemic levels in 2022. The additional job declines in these sectors in 2023 represent a further shrinking of industries that had reliably employed a large number of New Yorkers before the pandemic. These declines impact specific groups of workers – based on their gender, race and ethnicity, or educational attainment level – when they comprise a large share of an industry’s workforce.
The rate of economic growth can have a significant impact on job seekers of color in particular. Many researchers have examined the historical relationships between macroeconomic growth and labor market outcomes of different races in the US and found that in recessions and periods of slow growth employment rates for Black people fall more than employment rates for white people. And in periods of sustained high growth, employment rates for Black people rise faster than they do for white people. Given this and the city’s existing labor market inequalities by race, it is important for the City, State, and private sector to work together to continue to grow the city’s economy and remove labor market barriers that disproportionately impact workers of color. This is even more pressing now, given the slowing of job growth in 2023, and projections from the Office of Management and Budget (OMB) and New York State Division of the Budget that predict even slower economic growth for 2024.
Figure 3