Now that the COVID-19 “emergency” is officially in the rearview mirror, how far is New York’s economy from its pre-pandemic normal level of employment and business activity? And how does this compare to other states?
In normal times, the economic rebound from some recessionary low point can be most closely tracked by focusing on monthly federal and state employment statistics that have been “seasonally adjusted” to reflect the economy’s well-established cycles of production and consumption. However, those cycles were severely disrupted during the pandemic, as the economist Alan Blinder pointed out in this recent Wall Street Journal commentary. The subhead on his piece sums up the problem: “How do you seasonally adjust for a socially distanced Christmas?”
When seasonal adjustments are shakier than usual, the alternative is to compare the latest data exactly a year apart—for example, from May 2020 and May 2021. This year, however, such results are severely distorted; measuring from the extraordinary lows of 2020, recent 12-month growth rates are wildly and misleadingly beyond historic norms.
As the state and nation enter the first post-pandemic summer with few or no restrictions on commercial and social activity, the best available gauge of true normality is same-month data for 2019, the latest full year before the sudden and partial collapse of the economy in late March of 2020.
Start, then, with Current Employment Statistics, reflecting full- and part-time jobs on business payrolls by location of the employer. By this measure, private employment nationwide last month was 4.7 percent below the May 2019 level. In New York, the gap was more than twice as large at 9.9 percent— the second biggest such decline of any state (tourism-intensive Hawaii was still down 15.7 percent from the level of two years ago).
The 2019-2021 change in jobs number for all 50 states plus D.C. are mapped below.
Note that while New Jersey, Connecticut and Massachusetts were also hit exceptionally hard by the pandemic last spring, their employment levels are all closer to normal than the Empire State’s. Aside from Hawaii, the only states around 9 percent below their May 2019 private employment levels were Alaska and Louisiana. Among other large states, Florida (-3.4 percent) and Texas (-1.8 percent) were much closer to normal, and even California (-5.7 percent) was not far above the national norm.
Turn now to the separately calculated Local Area Unemployment Statistics, also on a non-seasonally adjusted basis. New York’s statewide unemployment rate in May was 6.9 percent, sixth highest among all states; the national rate last month was 5.5 percent.
Unemployment amid a labor shortage?
Given New York’s sluggish jobs recovery as measured by payroll and unemployment rate data, why are many employers ranging from New York City restaurants to the State Fair in Syracuse complaining they can’t find workers? The answers from some economists range from a lack of child care to increased out-migration of workers in response to the pandemic. But it seems clear that one major factor, especially for individuals who might normally work in lower-wage jobs, has been the federally funded enhancement and extension of unemployment benefits.
President Biden’s American Rescue Plan extended the time limit on eligibility from 24 weeks to 53 weeks for individuals who previously collected state or federal unemployment compensation (UC) but exhausted those benefits. It also extended, through Sept. 4, an extra $300 a week of federally funded unemployment benefits. Not counting that amount, pre-pandemic unemployment benefits in New York typically averaged about $350 per week, with the maximum benefit capped at $504 per week.
As of June 5, according to the U.S. Labor Department, New York State accounted for 747,917 in continuing Pandemic Emergency Unemployment Compensation claims—a whopping 14 percent of the 5.2 million national total, although the state was home to barely 6 percent of the nation’s pre-pandemic civilian labor force.
In an effort to goad more workers back into the labor market, 25 states have taken steps to end their participation in the enhanced benefits program by July 10. However, Governor Cuomo and legislative Democrats clearly have no interest in adopting a Senate Republican proposal to end the enhanced benefits in New York.
You may also like
Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!