New York’s Uneven Economy
Although the COVID pandemic caused double-digit unemployment levels in 2020, the nation’s recovery has been rapid. Unemployment decreased quickly in New York and the country, dropping to 4.4% percent in New York and 3.5% in the nation in July 2022. The recently announced July number for the United States is as low as pre-pandemic unemployment levels in late 2019 and early 2020. New York’s rate is slightly higher than in early 2020 – 4.4% vs. 3.9%.
In most New York metropolitan areas, unemployment rates were near the 3.5% national level in July. Unemployment in most of Pennsylvania, Ohio, West Virginia, Maryland, and Delaware was significantly higher. But the five counties in New York City, with forty percent of the state’s population, had high levels. The highest rate in the state was in Bronx County – 9.1%. Brooklyn had 6.8%, Manhattan had 5.2%, Queens had 6.1%, and Staten Island had 6.4%.
Change in Employment: 2013-2022
New York’s employment grew by 6.8% in the past decade, a little greater than half the national rate. But, because employment growth was concentrated in a few western and southwest states, jobs grew faster in New York than in 24 states. Many northeast, midwest, and plains states had relatively slow growth. Alaska, Connecticut, Vermont, North Dakota, Louisiana, Wyoming, and West Virginia lost employment.
New York’s employment growth was near the average for the region. Five states – Delaware, Massachusetts, New Hampshire, New Jersey, and Virginia had greater growth; eight had less. Only Vermont and West Virginia lost jobs during the period.
Change in Employment: 2020-2022
Since the Pandemic hit in 2020, employment levels have rebounded strongly nationally, reaching pre-pandemic levels in July. But, employment growth was concentrated in parts of the South, Texas, and the Mountain states. In most states, current employment levels are within a few percent of those in March 2020. Nationally, employment was 0.4% higher in July 2022 than in March 2020. New York’s employment level was 2.4% lower, ranking 45th nationally.
Recovery in New York, New England, and the Midwest continues to be a little slower than the nation’s, with most state employment levels still below 2020. New York employment in July 2022 was 9,492,300, 2.4%% below March 2020. The differences in employment change between states in the region were minor – less than 4% – between the worst and best-performing states. Overall, for the Northeast-Mid-Atlantic region shown here, employment was 1.1% lower.
The low unemployment rates in New York and the nation reflect the so-called “great resignation” – the decision of some workers to leave the workforce. In many cases, older workers chose to retire rather than continue to work during the COVID pandemic. A researcher at the St. Louis Fed, Miguel Faria-E-Castro, found that 2.6 million additional people retired.
Although the labor force has recovered to the point that it is almost as large as before the Pandemic, its growth remains below the trend before COVID. Because labor availability is below the pre-COVID trend, unemployment levels are very low, and many employers have difficulty finding needed staff. Hotels, restaurants, and other leisure services have had particular problems and continue to operate in many cases with limited hours or services.
The New York Metropolitan Area
The job performance of the New York metropolitan area, where nearly two-thirds of the state’s residents live, is critical to the economy of the state as a whole. Forty percent of the state’s residents live in New York City. Although New York City’s unemployment levels are the highest in the state, the city’s job growth shows a different picture.
New York City’s job growth between 2013 and 2022 was 14.2%, nearly twice that of all New England and Middle Atlantic metros, which grew by 7.9%. Between 2013 and 2022, employment in the metropolitan area grew by 9.5%.
New York City drove the metropolitan region’s growth between 2013 and 2022. Long Island’s increased by only 3.2%, while employment grew by 3.6% in Orange, Westchester, and Rockland Counties.
Employment change in the New York Metropolitan area during the post-pandemic recovery markedly weakened from the pace of the past decade. Differences between regional metropolitan areas were minor. The New York Metropolitan area lost 1.7 percent of its employment between March 2020 and June 2022, slightly greater than the change in all metropolitan areas.
New York’s northern suburbs had the weakest job performance (-3.5%), while Long Island had the smallest losses (-1.4%). New York City’s were slightly larger (-2.3%). Employment performance in the New Jersey – Pennsylvania portion did better, increasing by 0.2%.
Upstate Metropolitan Areas
Although the New York metropolitan area had significant job growth between 2013 and 2022, upstate’s performance has been much weaker. Albany-Schenectady-Troy (3.2%), Dutchess-Putnam (1.1%), and Kingston (0.2%) were the only metros that had job growth in upstate New York. Every other upstate metropolitan area saw job losses between 2013 and 2022. Elmira lost more than 10% of the jobs in 2013, while Binghamton lost more than 8%.
Upstate’s economic performance over the past decade has been weaker than the average of all regional metropolitan areas. The median employment change for regional metropolitan areas was 3.7%. Nationally, the median difference was 8.3%. For upstate metros, it was -0.9%.
Since the COVID Pandemic began in 2020, upstate metropolitan area employment has declined by 3.4%. Although upstate’s recovery since the Pandemic has been weak, in many cases, the differences between the performance of upstate metropolitan areas and the median of regional metropolitan areas (-2%) have been small.
The Watertown-Fort Drum area has had the smallest job losses (-1%) among New York metropolitan areas. Ithaca had the second smallest loss (-1.9%). The weakest recoveries were seen in Elmira, which lost 6.9% of jobs, Utica-Rome, which lost 5.1%, Kingston, which lost 4.1%, and Binghamton, which lost 4%.
Unemployment Rates and Employment Change Diverge
The New York City area has higher unemployment than the rest of the state. Still, its employment growth over the past decade has been far more robust and is almost twice that of the regional metropolitan area average. Upstate New York counties, in most cases, had lower unemployment than the nation but, in most cases, lost jobs. We would generally expect high levels of job growth to be associated with low levels of unemployment, but that has not been the case here. The difference reflects the population decline and stagnation seen upstate and the population growth in the New York metro area.
Over the past decade, the New York metropolitan area, with two-thirds of the state’s population, has shown relatively strong job growth compared with other regional metros. Growth within the New York area has been concentrated in New York City, which saw job growth of more than 14% since 2013. Most upstate metropolitan areas lost employment between 2013 and 2022, except for three metros in the Hudson Valley – Albany-Schenectady-Troy, Dutchess-Putnam, and Kingston. But even the growing upstate metros had relatively little growth – 3.2% or less.
The recovery of New York’s metropolitan areas has differed since the COVID pandemic hit in March 2020. The New York metro area has done slightly better than typical metropolitan areas in the region – losing 1.7% of employment compared with the two percent loss of all regional metro areas. Even so, unemployment rates in New York City are the highest in the state. The relatively high level of unemployment shows that the city has significant untapped workforce capacity.
Job change in most upstate metros in the region lagged slightly, though Elmira, Utica-Rome, and Binghamton had significantly larger losses. At the same time, upstate metros have low unemployment rates, suggesting that there is little opportunity for job growth given upstate’s stagnant population.
Upstate’s lack of population growth is not unique – much of the northeast and middle Atlantic region saw relatively slow population growth. Most growth was concentrated around the northeast corridor between Boston and Washington. Like the rest of the nation, population and employment change in rural areas and smaller metros have lagged that in major metropolitan areas.
Although several factors have contributed to the weak population and employment performance in places like upstate New York, one significant cause is the lack of opportunity they provide for people with relatively high levels of educational attainment.
Because income differentials for college graduates are greater in major metropolitan areas with higher percentages of them, it is difficult for most upstate rural and metropolitan areas to retain them. The income difference between college and high school graduates is twice as large in the top 10% of counties by the percentage of college graduates compared with the 10% with the lowest rate. Most places with high percentages of college graduates and large income differentials are in the New York metropolitan area. In many upstate areas, the median incomes of college graduates are relatively low.