Why N.Y.C.’s Financial Restoration Could Lag the Remainder of the Nation’s

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New York, whose diversified economy has resulted in unprecedented job growth in recent years, is now facing a greater challenge in recovering from the pandemic than almost any other major city in the country. More than a million people are unemployed and the unemployment rate is almost twice the national average.

The city had tried to protect itself from major downturns by moving from tying its fortune to the rise and fall of Wall Street. A thriving technology sector, a booming real estate industry and waves of international tourists had made Broadway, hotels and restaurants a success.

But now that the virus is rising again in the region, tourists are still staying away and hopes that workers would replenish the city’s office towers and support their businesses before the end of the year is fading. As a result, the recovery in New York is likely to be very slow and protracted, economists said.

“This is an event that is at the very heart of New York’s comparative advantage,” said Mark Zandi, chief economist at Moody’s Analytics, a Wall Street research firm. “Being global, stacked in skyscrapers and packed in stadiums: Exactly what made New York New York was undermined by the pandemic, was shaken by it.”

Mr Zandi said he expected New York to take about two years longer than the rest of the country to make up for any economic losses incurred during the pandemic. “It’s going to be a long slog,” he said, and it will last through 2023 for the nation and possibly 2025 for New York City.

So far, New York has found jobs more slowly than other large cities. By September, employment in the city was still down more than 600,000 jobs year over year, according to the state labor ministry.

In September, more than 2.3 million New York state residents were collecting unemployment benefits, said James Parrott, an economist at the New School’s Center for New York City Affairs. Of those, at least 1.3 million were city dwellers who were either unemployed or severely underemployed, he said.

Those losses are concentrated in five key industries – restaurants, hotels, art, transportation and building services – that are based on travel, tourism and doing business, Parrott said. Workers occupying office buildings have been laid off and are waiting for professional service staff to return to their offices.

“Many of the things we hailed as helping diversify the city’s economy in the Covid economy turned out to be huge liabilities,” he said.

The crater formation of the local economy can be seen in many blocks of Manhattan, where offices are mostly empty, the streets are lined with shuttered shops and restaurants, and usually busy hangouts like Bryant Park are eerily quiet.

The city’s struggle to get out of its financial hole and the looming possibility of major cuts in services and programs are likely to become a dominant theme in next year’s mayoral election, with voters judging candidates on their economic plans.

Vicki Been, the deputy mayor for Housing and Economic Development, disagreed with the economists’ predictions, saying the city is well positioned to “roar back” after fears of the virus subsided.

Mayor Bill de Blasio has put an emphasis on public health and the safe reopening of schools to pave the way for economic recovery, she said. And the factors that have made the city a magnet for employers, such as an educated and skilled workforce, remain firmly entrenched.

“This government and the previous government have worked very hard to diversify the economy,” said Ms. Been. “The ingenuity that we have, the talent base that we have, attracts more talent to the city and also attracts employers.”

Ms. Been said she expected the city’s office buildings to fill with workers and visitors to flock to restaurants and theaters.

“When tourism returns, people will want to come here,” she said. “I hear a lot of pent-up demand to return, but people need things that are safe and alive.”

However, tourist-dependent businesses appear to be experiencing a sustained downturn with no evidence of visitors coming to New York in significant numbers.

Managers of some office buildings have been calling their cleaners and security guards back in recent weeks, expecting office workers to return as the worst outbreak subsided.

But only a fraction has come back, and some big tech companies like Google have advised employees to work from home until next summer.

Managers of large office buildings say only about 15 percent of their tenants returned in early fall, said Denis Johnston, vice president of Local 32BJ of the Service Employees International Union, which represents 23,000 commercial cleaners in the city.

Due to the largely vacant buildings, employees like Yenny Hernandez haven’t had a paycheck since March and are waiting for the call to clean designer showrooms again.

Ms. Hernandez, 48, said 32BJ arranged for her health insurance to be extended by six months, but it expired in late September. Now she needs to dive into her savings to pay for medical follow-up appointments for her 20-year-old son Manuel, who underwent an operation this summer.

“I need my health insurance,” said Ms. Hernandez, who lives in a subsidized apartment in the Bronx. “My insurance covered everything.”

Since the end of March she has been getting by on regular unemployment benefits after tax of $ 441 per week. An additional government benefit of $ 600 per week expired in late July.

To cover the cost, she negotiated the rent in half to $ 687 a month and expected to be able to pay bills for her and her son by early next year if her layoff takes that long.

“I saved money last year and thank you God right now,” said Ms. Hernandez.

Even a reputable professional address like the Empire State Building struggles to win back tenants.

The 102-story building laid off workers in late summer after being called back from vacation, said Mariusz Dudziec, a utility company that has worked there for more than seven years.

Mr Dudziec, 27, said he hoped to get back to work soon but was behind several colleagues who had seniority above him. Since last spring, Mr Dudziec has been collecting unemployment benefits that are enough to cover his bills.

He missed the usual eddy of excitement around the building that usually attracts tourists from dawn until late at night. “It gets kind of boring being home,” he said in the East Village.

New York has so many large buildings that the occupation of those buildings is a significant source of employment. Last year around 43,000 people, including lobby agents, elevator operators, cleaners and porters, worked in commercial and residential buildings.

Although most buildings require at least skeletal personnel to operate and maintain systems such as air conditioning, building technology has suffered greater losses than most categories of workplaces. In September jobs fell by almost 35 percent compared to the previous year, which corresponds to a decrease of 14,400 jobs.

The decline is still far less than the devastation of tourist-dependent businesses like restaurants, hotels, and Broadway theaters, which will now be closed until at least May 30th. The performing arts and spectator sports have lost more than two-thirds of their professions.

More than 165,000 jobs have been lost in restaurants, bars and hotels. These three industries are more concentrated in New York than most other cities and contribute to their disproportionate share of the country’s job losses, said Zandi, chief economist at Moody’s.

“New York depends on industries being hit by the pandemic,” he said. “It’s a global city and the world economy is closed.”

Of the country’s 51 largest metropolitan areas, only two – Las Vegas and Los Angeles – had higher unemployment rates than New York in August, according to the Department of Labor.

The city’s official unemployment rate was 14.1 percent in September, compared to a national unemployment rate that fell from 8.4 percent to 7.9 percent in August.

The city’s five counties had rates between 18.8 percent in the Bronx and 10.9 percent in Manhattan, and unemployment was significantly lower in other parts of the state.

The effects on the city’s economy were historical. Before the virus, New York had by far the longest expansion on record. The city had created almost a million jobs in more than ten years of economic growth.

The city’s tourism agency, NYC & Co., has been eager to promote New York in other countries including China, Brazil and Australia, which has helped drive annual visitor numbers from 45.8 million in 2009 to 66.6 million in In 2019.

Under Mayor Michael R. Bloomberg, the city cultivated tech startups and attracted tech giants like Google by supporting educational programs, including the Jacobs Technion-Cornell Institute on Roosevelt Island.

Big Tech, including Google, Facebook, Amazon and Apple, has a total of 22,000 employees in New York and has hired thousands of workers this year despite the pandemic.

However, by the end of the summer, the city had regained only about 30 percent of the payroll offices lost in March and April.

“It’s pretty hard to work around the fact that we’re still shedding 500,000 to 600,000 jobs by the end of the year,” Parrott said, adding that those losses include the self-employed.

One of them could be Barbara Bonham’s job cleaning the bathrooms in an office tower across Fifth Avenue from Trump Tower. Ms. Bonham, 57, cleaned about 50 bathrooms every night before she was released in March.

Her health insurance expired in late September, a loss that worried her particularly because her older brother died of Covid-19. Ms. Bonham, who lives in Brooklyn, said she was one of four members of her union team waiting for a call back to work, which is contingent on more renters returning to their offices.

“Maybe I’ll go back in December or January,” she said.

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