Highlights:

• While the number of private payroll job grew only 0.5 percent from June to August, New York City experienced stronger job growth than the nation over the past year – a promising sign given the city’s slow recovery from Covid and the impact of the Fed’s now-relaxed policy of maintaining high interest rates to curb inflation.

• Unemployment in New York City ticked up to 5.2 percent in August, inching further away from the city’s historically low unemployment rate of 3.8 percent in 2019. Meanwhile, the city reached its highest recorded labor force participation rate ever in August 2024, at 62.7 percent. 

• U.S. Census data released this month shows that the city’s poverty and child poverty rates (18.2 percent and 24.5 percent, respectively) were unchanged from 2022 to 2023 and are still over two percentage points higher than in 2019. 

• Job growth and decline by industry reveals concerns about job quality. Jobs with a history of low wages in the city’s health care and social assistance industry continue to be the driver of job growth in the city, offsetting recent losses in other sectors with a history of higher wages, like finance, information, and administrative services. 

The number of private payroll jobs grew 0.5 percent over the past quarter (from June through August 2024), according to seasonally adjusted data released by the New York City Office of Management and Budget last week. This growth resulted in 20,700 new payroll jobs in the city.

However, the city’s private employment did grow 1.8 percent over the past year – a slight uptick from the previous year. This rate of job growth is stronger than U.S. job growth – at 1.4 percent – over the same period (from August 2023 to August 2024). This occurred despite the Federal Reserve’s maintenance of high interest rates, and may be attributed to the fact that the city’s economy is still recovering from the pandemic, having just surpassed pre-pandemic job levels in November 2023. 

Data from New York State’s Department of Labor estimates that the city’s labor force participation rate (the percent of working age people who have a job or are looking for a job) reached 62.7 percent in August 2024 – the highest in New York City since this statistic first began being recorded in 1976. This demand for work has partially contributed to the city’s unemployment rate increasing to 5.2 percent in August 2024 when seasonally adjusted. The city’s unemployment rate had finally dipped below five percent in March 2024, suggesting that slow and steady growth was finally bringing the city back towards its historically low unemployment rate of 3.8 percent in 2019.  While the city has fewer working-age residents compared to before the pandemic, this high labor force participation rate and higher unemployment rate amounts to an estimated 219,200 city residents who were looking for work in August but unable to find any.

Data released by the U.S. Census Bureau earlier this month shows that there was no change in the poverty and child poverty rates in New York City between 2022 and 2023. An estimated 18.2 percent of city residents and 24.5 percent of children live below the federal poverty line. Both of these rates are more than two percentage points higher than they were 2019, when the city’s poverty and child poverty rates were 16 percent and 22.2 percent, respectively. The data also shows that the rate of poverty has increased not just among those who are unemployed (a group that has grown since 2019) but among part-time workers as well. The poverty rate among those who worked part-time or part-year increased from 17 percent 2019 to 19.4 percent in 2023.  In New York City today, having a job isn’t a sufficient pathway out of poverty. Good wages and stable employment opportunities – including consistent hours and year-round work – are needed to reverse this trend.

Not all jobs provide the same quality in terms of wages, benefits, and hours, so job growth and decline by industry in the city has a significant impact on New Yorkers’ economic opportunities and wellbeing.  Payroll job growth over the past quarter was concentrated in health care and social assistance (10,900) and educational services (11,100), which helped to offset job decline in government (-7,600), information (-4,700), administrative services (-4,200), construction (-3,300), and professional, science, and technical services (-2,900). These shifts in industries where jobs are located continue post-pandemic trends, with growth in healthcare and social assistance jobs the driving force in bringing the city back to and now beyond pre-pandemic job levels.  Figure 1 illustrates job growth and decline by industry in New York City, comparing pre-pandemic February 2020 to August 2024.

Figure 1

A more granular analysis of job growth over the past year reveals some causes for concern. Figure 2 provides a list of the 10 industries in New York City that have experienced the greatest job loss and gain over the past year (from August 2023 to August 2024). The city continues to lose jobs in some of the main categories included above, like certain retail and construction subsectors. However, the city also lost jobs in some subsectors of finance, information, and administrative services known to offer higher wages (investment banking, accounting, streaming and social network platforms) as well as the temp sector. 

On the job gains side, we continue to see growth in some of the lowest-wage health care and social assistance sectors (home health care services, individual & family services, child care). The city also experienced a rebound in some core face-to-face industries vital for the city’s tourism industry, like full-service restaurants, traveler accommodation, and performing arts. Additionally, strong growth in employment at private colleges over the past year is almost half of the job growth needed to bring this subsector back to pre-pandemic employment levels. 

Figure 2

The Federal Reserve’s decision last week to lower interest rates by 50 basis points provided a boost of optimism for economic prospects. Nevertheless, lowering interest rates won’t change the city’s economy overnight, and it’s not sufficient to address the job quality issues plaguing New York City today and contributing to the local rise in poverty. Given the growth in the health care and social assistance sector, and the unique ways government indirectly and directly supports job growth and quality in these sectors, policymakers at the federal, state, and city level need to work together to improve the quality of these jobs. 

Furthermore, Figure 2 highlights how consumer spending and preferences can play a role in creating and destroying local jobs (consider specific retail and restaurant categories, for example). There are other goods and services in high demand in New York City today that would spur job growth but face significant investment obstacles. For example, there is a huge demand for affordable housing and, as Figure 1 illustrates, a large construction workforce in need of jobs. There is a clear opportunity for the City and State to mobilize this local talent that can both put a dent in addressing the housing crisis and create new jobs. However, realizing this opportunity necessitates bold, innovative local policy solutions and private sector partnerships.