While New York City’s economy is back to pre-pandemic job levels, rising public assistance demand highlights the need for State and City action to increase income for city residents
New York City’s economy added 23,000 nonfarm jobs in September 2023 when seasonally adjusted, bringing the number of jobs here finally back to pre-pandemic levels. Meanwhile, the unemployment rate for New York City’s residents held steady at 5.3 percent in September 2023, which was accompanied by a slight decline in both employment and labor force participation rates. New York City’s unemployment rate has been relatively stable at 5.3 percent since Fall 2022, a rate that is 1.5 percentage points higher than both the city’s record low unemployment in 2019, and the national unemployment rate today.
One reason for this relative stability in the city’s unemployment rate, despite job growth, is that the percentage of city residents working or looking for work (the labor force participation rate) has increased over the past year and is at an all-time high (approximately 2.5 percentage points higher than before the pandemic). While the resident population and, therefore, labor force is smaller today, higher labor force participation and unemployment rates amount to 219,000 New York City residents who are actively looking for work but cannot find it. The contrast between a full jobs recovery and an incomplete employment recovery illuminates how New York City’s residents are not fully receiving the benefits of job growth in New York City today.
The steady, elevated unemployment rate for the past year is also a sign that the city has settled into this incomplete employment recovery for now. Economic recovery and growth have slowed as the Federal Reserve has continued and sustained interest rate hikes. By contrast, Federal stimulus programs enacted at the onset of the pandemic contributed to a rapid decline in the unemployment rate during the first two years of pandemic recovery, when New York City’s unemployment rate plummeted from 21.4 percent in May 2020 to 5.5 percent by May 2022. Those programs stabilized households, companies, and government services with the objective of injecting money into the economy to prevent a recession.
The past few months have marked the end of the remaining Federal pandemic programs supporting households. Emergency increases in SNAP benefits, for example, ended in February 2023. Data released in October 2023 from the New York State Office of Temporary and Disability Assistance (OTDA) shows that this has resulted in the average New York City household receiving 25 percent less in monthly SNAP benefits, translating to $126 less per month for households to spend on groceries and approximately $133 million less per month that the federal government will be injecting in the New York City economy for residents to spend.
In addition to the economy-wide growth that comes from households having money to spend, the last of the Federal pandemic programs specifically supported households in need – those without sufficient income to support their livelihoods. Since New York City’s economic recovery lagged the national recovery and its employment recovery is still incomplete for city residents, the need for public assistance has not subsided even as these programs have expired. In fact, the pandemic’s economic effects – both the impact on specific face-to-face industries and the rise in unemployment disproportionately experienced by groups historically holding low-wage jobs – have resulted in more people turning to public assistance. The October OTDA report provides enrollment and expenditure data through July 2023. Figure 1 illustrates the percentage change in recipients in three public assistance programs compared to February 2020.
While the value of SNAP benefits has eroded since February 2023, SNAP enrollment remains elevated. In fact, this data on SNAP enrollment likely underestimates demand. The Mayor’s Management Report released in September 2023 revealed that the City is only processing about 40 percent of SNAP applications within 30 days, while 93 percent of applications were processed within 30 days in 2019.
Medicaid enrollment also continued to rise in the first half of 2023, then began to decline in July. This is likely because the Federal pandemic-era suspension of an annual recertification requirement expired in July 2023. The process of now verifying recipients’ eligibility is expected to take up to 12 months, so Medicaid enrollment data for the foreseeable future may not be a good indicator of hardship as recipients engage with a more stringent bureaucratic process. In the coming months, a decline in enrollment may be a sign of declining hardship, as previous recipients find they are no longer income eligible for Medicaid. However, a decline in enrollment may also mask the possibility that people still in need of Medicaid are not being effectively communicated with about how to maintain their benefits.
Perhaps most stark is the continued rise in New York City residents’ enrollment in cash assistance programs, which is now 51 percent higher than in February 2020. Cash assistance programs such as the Federal Temporary Assistance for Needy Families (TANF) and New York State’s Safety Net Assistance (SNA) program have stricter eligibility requirements than SNAP and Medicaid. As with SNAP, far fewer applications in the city are now processed within 30 days (29 percent now compared to 95 percent in 2019). Nevertheless, households are accessing this program at an alarming rate, especially since the expiration of pandemic unemployment benefits in September 2021. Figure 2 illustrates the percent change in recipients of Federal and State cash assistance compared to February 2020. While both programs have seen an increase since September 2021, the State’s program has grown more rapidly; recipients are up 60 percent since the pandemic began. New York’s cash assistance program exists to fill the need of households unable to qualify for TANF, which has both strict requirements and a five-year lifetime cap on benefits. The growth in SNA recipients is likely due to the fact that TANF recipients have reached that time limit, but are still in extreme hardship.
Sustained and higher demand for public assistance despite bureaucratic obstacles and the decline in the value of SNAP benefits suggests that New York City’s labor market is not meeting cost of living needs of a portion of the working population. These programs subsidize employers’ ability to sustain workers when wages are too low. OTDA data reveals that 12 percent of cash assistance recipients had jobs in July 2023. A previous CNYCA analysis estimated that 13 percent of the city’s workforce received food stamps and 17 percent received Medicaid during the pre-pandemic years 2015-19. A recent CNYCA report demonstrated that New York City’s poverty rate rose to 18.3 percent in 2022 (a 2.3 percentage point increase from 2019) while median income fell by 6.9 percent. When households have less income, because of unemployment, low wages, or bureaucratic obstacles to public assistance, consumer spending can decline and further contribute to a slowdown in economic growth precisely when economic growth is needed to produce more jobs for New York City residents.
Given these realities, the City and State must prioritize maintaining and expanding public assistance programs in a period of sustained higher unemployment and to prevent further hardship and economic decline. The City must cut processing time for benefit applications and work with the State to eliminate other bureaucratic barriers. Other public assistance programs that cover basic necessities, like rental assistance, should be expanded and maintained. State and City policies can also increase wages directly by raising the minimum wage and industry pay standards. Legislative and administrative actions to incentivize or require businesses to improve compensation and other benefits will facilitate economic growth that can directly support workers’ livelihoods. This combination of policy actions can also boost consumer spending that can facilitate economic growth.