Here is your March economic recovery update from THE CITY. We publish a new analysis of the city’s employment, job and fiscal indicators each month.
New York City’s recovery from the pandemic is almost complete, according to recently updated job numbers from the state Labor Department.
The city gained a little more than 20,000 jobs in January and February — many in the leisure and hospitality sector.
With total employment at 4.7 million, New York has regained 96% of the jobs it lost in the pandemic.
Overall, the city’s jobless rate inched up to 5.4% in February, from 5.3% in January.
But people are counted as unemployed only if they have actively looked for work in the past month, so economists regard a decision to job-hunt as a sign that workers on the sidelines believe they can find a job.
The increase may also indicate that fears of catching COVID are ebbing and that child care is more available — two pressures that kept New Yorkers from seeking employment.
The city’s workforce has increased by 40,000 in the past 12 months and the labor force participation rate is at a decade-long high at 61.7%.
Bank Crisis Hits NYC?
Nonetheless, the city faces two significant headwinds — a short-term one from the bank crisis and a longer-term challenge as businesses embrace technology as a way to reduce their payrolls.
Economists say there is no way to tell if the bank crisis will derail the strong national economy, primarily because banks will be forced to impose stricter rules for lending, slowing growth.
Locally, the crisis has already resulted in the closing of Signature Bank — a key real estate lender in New York, especially to rent regulated apartment buildings.
Meanwhile, the Wall Street firm Credit Suisse, which employs thousands of people in the city, is likely to be drastically scaled back after its forced merger with Swiss financial giant UBS.
Preparing for Automation
But even if the bank crisis is resolved, restoring the kind of strong job growth the city saw after 2008, when it added an average of 90,000 jobs each year, may be difficult as companies automate.
Consider two examples.
Soon Alfredo Angueria will open his fourth restaurant in The Bronx — but this one will be different.
The Tex Mex outlet, called Bodega Social, will be operated with only three workers. Customers will order on their phone. When they get to the restaurant, they will scan their QR code and either pick up their food by using it to open hot or cold lockers, or sit down, scan the code and have their food delivered to their table.
“I have to get by with fewer people,” Angueria said.
In Long Island City in Queens, founder and president Stephan Steiner just spent $1.5 million on a HP printer with the latest technology as he races to keep his high-end printing and visual communications company GSB Digital competitive. He expects revenues this year to be about $13.5 million, about the same as 2019, but he is getting by with 80 workers instead of the 100 he employed before the pandemic.
“We are trying to do whatever we can to automate,” Steiner said.
The Center for an Urban Future issued a report in 2018 that argued that almost half a million jobs in New York City were threatened by technology. A follow-up study in 2021 said that those positions were primarily held by people of color — with 51% of Hispanic men aged 18 to 25 holding vulnerable jobs, as do 48% of black men the same age, the highest of any group.
“It seems pretty clear that employers faced with rising labor costs and all sorts of disruptions from the pandemic are reluctant to return to 2019 levels,” said Eli Dvorkin, editorial and policy director at CUF.
He notes that this is especially true in industries still struggling, like restaurants and hotels. “But increasingly automation isn’t unique to those industries. Back office, administrative and accounting are areas where technology is allowing more work to be done by computers,” he added.
That’s clear on the factory floor at GSB Digital, where operators at even some of the company’s basic machines use a computer to control their machines. While starting pay is around $20 an hour, those operating the most expensive and sophisticated machines can make more than $75,000 a year, Steiner said.
Given New York’s high costs for labor, he feels compelled to increase his use of automation. He recently lost out on a bid for a major contract because the customer wanted to work with a company with lower wages in a place such as Pennsylvania.
Labor costs are an obsession for Angueria. He has had to increase the wage he offers to $20 since the pandemic to keep the workers at his restaurant group, which is anchored by the Bronx Drafthouse near the courthouse and Yankee Stadium.
On usually slow Mondays at the Drafthouse, the bartender is also the server. And he acts quickly if business is more sluggish than anticipated.
“We keep an eye on sales on an hourly basis, so if it looks like it’s a slow day, I am cutting staff almost immediately,” he said.
Dvorkin of the Center for an Urban Future says the loss of jobs will be offset by new jobs created or augmented by technology — but that too many New Yorkers are not prepared for those positions.
“It raises the floor for the kinds of computer and digital skills New Yorkers are going to need,” he said.
Dvorkin and other experts are eagerly awaiting a long-promised report from the administration of Mayor Eric Adams to outline how to overhaul the city’s workforce programs. Tens of thousands of graduates of New York City school don’t have the most basic knowledge needed to land even an entry-level job at a company like GSB Digital.
“The mayor needs a bold strategy to upskills New York’s workforce to become better prepared for a new economy, one that focuses on making digital and basic computing skills as fundamental to an education as numeracy was in the past,” he said.
Will Grand Central Madison Boost Office Occupancy?
With office occupancy stuck at 50% on a typical workday in the New York region and about 65% at the city’s most modern office buildings, Midtown Manhattan leaders are hoping the opening of the Grand Central Madison station serving the Long Island Railroad will give a boost to the neighborhood.
A little more than 50,000 people used the station earlier this week, the MTA said. Data collected by the Grand Central Partnership showed a 25% increase in people at Grand Central Terminal who traveled from Long Island ZIP codes compared with the period before the station opened.
“Those people will come and spend money in the neighborhood and help invigorate our retail,” said Fred Cerullo, president of the Partnership, at an event touting transit investment in the neighborhood this week.
He noted that 89 new retail outlets opened in territory of the Grand Central Partnership in 2022, mostly food and beverage places, and there are an additional 35 being built out now.