BY E.J. McMAHON
New York State’s unemployment rate has fallen sharply since the economically devastating pandemic lockdown last spring. But as state Comptroller Thomas DiNapoli points out in his latest economic report, the jobless rate doesn’t tell the whole story.
In September, the state’s seasonally adjusted unemployment rate of 9.7 percent was down 2.8 percentage points from the previous month, the second biggest improvement in any state. The state’s official unemployment rate had hit a record of 15.3 percent in April.
Based on unemployment claims and a monthly survey of a statistical sample of New York households, the unemployment rate represents the number of state residents aged 16 and over who are looking for work but unable to find it, divided by the labor force, which is the total number of New Yorkers aged 16 and over who are ready, willing and available to work, including both the employed and unemployed. DiNapoli’s report notes:
Unfortunately, a deeper dive into the Bureau of Labor Statistics data reveals troubling context: New York State’s workforce [labor force] declined by nearly 363,000 last month, a 2.3 percentage point drop from August (based on preliminary figures), while the number of individuals officially considered unemployed declined by 302,000. In short, the unemployment rate went down in large part because of the decline in New Yorkers counted as working or seeking employment. Such a decrease in the size of the workforce may indicate that individuals have ceased searching for a job actively.
On closer inspection, it’s even worse. Assuming the number holds up in re-estimates, New York’s September labor force decline of 362,889 residents was the largest monthly drop on record in the state—exceeding even the decline in April, when most New Yorkers couldn’t seek work. Excluding the pandemic period, the September change in New York’s estimated labor force was by far the largest decline on record—easily exceeding dropoffs in job seekers during severe recessions and months affected by severe weather—dating back to the start of the current statewide statistical series in 1976.
DiNapoli’s observation on this point bears repeating: a shrinking labor force “may indicate that individuals have ceased searching for a job actively.” The job market is so bad that many New Yorkers have—for now, at least— stopped looking.
Although there has been significant and steady improvement since the spring, and many of the initially unemployed have found or regained employment, New York’s jobless ranks continue to add tens of thousands of newly unemployed people every week. During the week ending Oct. 24, another 52,566 initial unemployment claims were reportedly filed with the state Labor Department. This represented a decline of roughly 7 percent compared to initial claims the previous week—but an increase of 286 percent over the same week in 2019.
Worse, the number of employed New Yorkers also dropped in September, by nearly 61,000 below the August estimate, to 8.25 million. While that’s an improvement over the dreadful April total of 7.7 million, the September figure is still below any pre-pandemic employment total in New York since 1996.
In other words, New York’s unemployment rate was down in September mainly because the number of people seeking work was down—not that they’re finding jobs.
Labor force ups and downs
Prior to the pandemic, starting with the onset of the Great Recession in 2008, the combination of falling unemployment rates and a shrinking labor force was concentrated in economically struggling regions of upstate New York, as frequently noted in this space. By contrast, during the economic recovery, the jobless rate decreased in downstate suburbs and New York City, even as their labor forces expanded.
That has all changed since the novel coronavirus hit New York in March, however. The longer-term trends in labor force trends are illustrated by the chart below.
As shown, the declining upstate labor force bottomed out in mid-2019, 5 percent below the 2000 level and 10 percent below the peak just before the start of the Great Recession in December 2008. It had begun to increase slowly until the pandemic shutdown hit in March, at which point it tumbled in April, shot up in July to its highest level in nearly five years, then resumed decreasing in August and September.
The New York City trend had been strong with increases in the city labor force starting in 1995, peaking at roughly 13 percent above the 2000 level before slightly decreasing in 2018 and 2019, then dropping sharply when the pandemic hit in April. The downstate counties of Long Island and the Hudson Valley had lower labor force growth than the city, but higher than upstate’s, with a similar pattern of a crash during the pandemic, a recovery in July, and another drop in August.
The employment statistics for September could be revised in future reports. However, combined with slowing growth in the number of private payroll jobs based in the state, the data suggest a worrisome weakening in New York’s recovery.
E.J. McMahon is a senior fellow at the Empire Center for Public Policy.