New York City’s job growth shrinks further in January, but the annual employment revision reveals an overall increase and significant changes for several industries
Private job growth in New York City shrank to 4,500 in January, the slowest monthly pace since January 2022. However, annual revisions to city employment statistics, which were reported on March 9th and which cover the period from January 2020 to December 2022, reveal an improved picture of the city’s economic recovery from the pandemic-induced jobs shortfall, showing the city wasn’t as far behind the nation as previously thought.
The annual revisions to the payroll employment and the household unemployment data series are more significant than in most years, reflecting the turbulence the local economy has been through since the onset of the pandemic three years ago. How do these revisions affect our assessment of the local labor market?
The total NYC job count as of December 2022 was revised up by 45,000, about one percent, with most of that revised job growth occurring in the last quarter of 2021.
Whereas the pre-revision data for December 2022 showed that NYC had regained 91 percent of private jobs lost during the first two months of the pandemic, the new data show that NYC has regained 97 percent of the early pandemic private job loss as of January.
Face-to-face industries still have 125,000 fewer jobs than before the pandemic, with arts and entertainment, retail trade, and manufacturing enduring double-digit percentage losses.
Large upward job revisions in hotels (5,400) and restaurants (20,000) reduced their combined pandemic jobs deficit to five percent below February 2020 levels, and there were large positive revisions in finance and insurance employment (15,000).
Low-paying jobs in home health care and individual and family services account for an even larger share of industries with net job gains over the past three years, and a significant downward employment revision in the employment services industry offsetting a reported gain in the pre-revision data.
While the city’s unemployment rate was revised downward by about one percent for the last half of 2022 (the revised data also show a slight uptick from 5.1 percent in December to 5.3 percent in January), significant racial and ethnic unemployment disparities persist. The size of the city’s working age population and labor force also are still lower than pre-pandemic levels by 380,000 and 170,000, respectively.
Revised employment levels but a similar overall pandemic pattern
The table below provides a detailed view of the revised employment levels by industry, divided into the three industry categories we’ve been tracking in the wake of the Covid-19 pandemic. Overall, New York City’s pandemic jobs deficit compared to February 2020 is down to 35,000; the deficit among private sector jobs is 24,000. While essential and remote-working industries have surpassed their pre-pandemic job levels by considerable margins, the 125,000 face-to-face industries job deficit amounts to 6.2 percent compared to the February 2020 level.
What the January jobs data show
January’s 4,500 seasonally adjusted job growth in New York City reflects a continuation of the slowing job growth in the last half of 2022. Monthly private job growth averaged 17,600 for the second half of 2022, compared to a monthly average of 21,300 for the year’s first half. Government employment was reported to have increased by 12,000 in January. But significant revisions (including a large upward revision in local government employment for July and August, likely a result of increased Summer Youth Employment Program enrollment, and downward revisions averaging 13,000 for the other months last year) complicate having a clear understanding of the trend in government employment. So we focus here on private sector employment.
The small positive January private job gain appears to be mainly the result of smaller than normal seasonal job reductions in retail, hotel, and restaurant employment, yielding slight positive January seasonally adjusted employment changes in those industries. There also was a seasonally adjusted increase in health care and social assistance (including childcare services) employment. On the other hand, there was an estimated 5,000-6,000 reduction (on a non-seasonally adjusted basis) in tech-related employment in January, and also small reductions in movie and television production and financial activities.
New York’s near-term employment outlook will be colored by the upcoming layoff of 900 Google and 600 Goldman Sachs employees in April, according to Labor Department filings. Initial New York State unemployment insurance claims rose by five percent in February compared to a year ago, after falling for most of the past two years.
New York City and State still lagging the national recovery
Even with the employment revisions released on March 9, New York City’s pandemic recovery still lags the national trend, as indicated in the chart below, which tracks changes in private employment levels relative to February 2020.
As the U.S. was surpassing its February 2020 private employment levels last spring, New York City overtook New York State overall in its recovery, reversing the erstwhile pandemic trend of the statewide employment rebound outpacing the city’s. As of January, New York City was 0.6 percent (or around 24,000 jobs) below its February 2020 mark, while the state at large remained at 1.2 percent below, a shortfall of nearly 100,000 jobs. The national private job count in January was 2.4 percent above the February 2020 level.
For the second year in a row, New York City recorded faster private job growth than the nation – 5.6 vs. 3.3 percent from January 2022 to January 2023, and 7.6 vs. 5.0 percent from January 2021 to January 2022. Still, because the job falloff in the first two months of the pandemic (March and April 2020) was so much steeper here than in the rest of the country, New York City is still catching up.
Digging deeper into the revised job numbers
Every year in early March, the State Labor Department releases revised monthly payroll employment data for the previous three years based on more complete administrative data compiled in connection with the collection of employer unemployment insurance taxes. The administrative data lags the monthly survey data by about six months. In periods of rapid economic change, revisions not surprisingly are greater, since the usual monthly survey is based on a sample (subset) of all businesses and such periods are usually characterized by greater turnover among businesses.
Thus, given the greater economic disruption experienced by New York City, it is not surprising that the degree of revision was greater locally than at the national level. The Bureau of Labor Statistics reports that the March 2022 national employment level (the national revisions are based on administrative data through March of the prior year) was revised upward by 0.3 percent, while our calculations show the New York City employment revision for March 2022 was 1.3 percent higher than previously reported.
The table below shows the industries that had the largest upward employment revisions over the past two years. Food services and drinking places led the revisions with an upwardly revised job count of 20,100, or seven percent (relative to December 2021). This category includes restaurants, bars and coffee shops – bars and coffee shops have both regained all of the jobs they lost in the first two months of the pandemic. The greatest proportionate revision was for hotels, with a 14.3 percent upward adjustment, followed by building services with a 7.7 percent revision.
Three-fourths of the increases (42,000 of the 54,600 overall private revision) occurred during the fourth quarter of 2021. Downward revisions in the private sector total in the middle quarters of 2022 largely offset moderate upward adjustments in the first and fourth quarters. All of the net upward revision for private colleges and universities for the past two years occurred during the fourth quarter of 2021. The benchmarks for finance & insurance jobs were shifted meaningfully upward, a rare change that accounts for most of the revisions to the remote-working category.
Sharp downward revisions were recorded in movie and television production and in employment services, with both industries experiencing downward job revisions of about 11,000, roughly nine percent in both cases. Based on pre-benchmarked data, both industries had been included in our table of 20 growth industries. Changes in the industry classification system used by the Department of Labor make it hard to pinpoint how the tech industry was affected by the revisions, but our best sense is that there might have been a very slight upward employment adjustment through last December.
Updated population estimates in the Census Bureau household survey
On March 9, the Labor Department also released annual adjustments to the Census Bureau household survey that is used to estimate the unemployment rate and other labor force characteristics. As noted earlier, the revised household survey for New York City now shows smaller, but still significant, declines in the size of the city’s working age population and labor force. Employment according to the household survey (which is different that the payroll employment survey of businesses that was revised to reflect more complete administrative data discussed above) also rose. The labor force participation rate, which had recovered its pre-pandemic level based on the previously reported data, was revised very slightly upward by 0.2 percent to 61.2 percent for December 2022.
The city’s employment population ratio was revised upward by 0.7 percent to 58.1 percent in December 2022. In the January survey, the unemployment rate ticked upward from 5.1 percent to 5.3 percent because the size of the labor force rose more than the increase in employment.
A future Economic Update will delve more deeply into labor force trends when household survey data for the full first quarter of 2023 are available.