- Unemployment: Cities have permanently lost 400,000 jobs during COVID-19 pandemic as many shift to suburbs
- Black, Latino workers hurt most
- 'The virus wasn't going anywhere'
- Millennials raising families in suburbs
- NYC Lost a Record 631,000 Jobs to the Pandemic in 2020. So What’s Next?
- Historic Decline
- Many Jobs ‘Gone for Good’
- Remote Chances for Return
- Holiday Hopes Bloom
Unemployment: Cities have permanently lost 400,000 jobs during COVID-19 pandemic as many shift to suburbs
Job loss numbers skyrocketed during the COVID-19 pandemic, but not everyone was counted as unemployed. Here's how the unemployment rate is measured. USA TODAY
Olly Smith worked as a restaurant consultant in New York City when the COVID-19 pandemic struck in March. He left his Manhattan apartment and worked remotely from his weekend house in Hillsdale, New York, quickly tiring of Zoom meetings.
But when his boss said he had to return to the office in July, “it didn’t feel safe,” he says. “I was not excited.”
So Smith, 41, quit and decided to pursue a longstanding dream by opening a gourmet food shop in nearby Millerton, New York, hiring two employees.
Although he’s earning about one-third of his former salary, “I don’t really care,” he says. Noting the job generates far less stress, he adds, “I being my own boss.”
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It’s not just people who are fleeing cities for suburbs during the pandemic.
So are jobs.
The pandemic has wiped out about 400,000 jobs in large urban areas, with about 175,000 of the positions shifting to the suburbs and smaller cities, according to estimates by payroll processor Gusto an analysis of the 100,000 or so small businesses it serves that was provided exclusively to USA TODAY.
Olly Smith, 41, quit his job as a restaurant consultant in New York City and opened a gourmet food shop in the suburbs. (Photo: Handout)
“The recovery so far has been almost entirely concentrated in suburban areas,” says Gusto economist Luke Pardue. “The urban areas have been hit harder.”
Many Americans have moved – temporarily or permanently – from big cities to less densely populated suburban and rural areas during the outbreak, largely to reduce the risk of contagion.
But many of those new suburb-dwellers could well be working from home for companies still based in the city. The Gusto data suggests the pandemic may be dealing a bigger blow to the vibrancy of America’s urban centers by destroying the office and restaurant jobs that have served as their lifeblood.
“When people move cities and work remotely from suburbs, economic activity shifts along with them,” Pardue said.
Overall, the U.S. has recovered 12.5 million, or 56%, of the 22.4 million jobs shed last spring, when states shut down restaurants, malls and other businesses, and professional service firms cut positions as they reeled from the ripple effects, Labor Department figures show. Many of those workers were furloughed and have been rehired, while others have been permanently laid off.
The pandemic has wiped out about 400,000 jobs in large urban areas nationwide, an analysis shows. (Photo: Getty Images)
In fact, the recovery from the coronavirus recession is still a work in progress. Many of the jobs eradicated in cities are ly to come back after vaccines become widely available, life largely returns to normal, and restaurants and shops reopen or ramp up operations.
Gusto, however, removes a job from its payroll tally only if a small business permanently eliminates it, indicating some of the job losses in cities could be long-lasting.
By that measure, staffing totals for its small business clients in suburbs and smaller cities grew 9.
1% from early March through December, similar to the year before, while employment in larger cities increased just 4.7%.
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By contrast, each year from 2017 to 2019, small-business employment growth in larger cities significantly outstripped gains in suburbs, according to the Gusto figures.
Black, Latino workers hurt most
Across the economy, Gusto estimates that employment in big cities rose by about 400,000 fewer jobs than it would have from March through December if not for the pandemic, an analysis of its own and Labor Department figures. About 175,000 of those jobs have shifted to the suburbs – through companies moving or stepping up hiring in those areas – while 225,000 have been permanently lost, the firm reckons.
Chicago Crosby is one of thousands of New Yorkers who make their living collecting cans and bottles. If residents are ordered to shelter in place to stop coronavirus spread, it could threaten the livelihood of some of the city's poorest. (March 17) AP Domestic
It’s no secret what’s driving the trend. Cities have suffered more COVID-19 cases than suburbs because of their higher population densities.
As a result, city governments have imposed tougher social distancing restrictions and Americans have voluntarily avoided crowded urban areas, hurting economic activity.
In recent months, people in cities have spent about 5% less time outside the home than those in suburbs, according to Gusto’s analysis of Google Mobility data.
The change has disproportionately hurt Black and Latino workers, who are more ly to live in urban areas, the study says. It recommends that Congress channel more federal aid to small businesses in larger cities.
“The recovery so far has been almost entirely concentrated in suburban areas. The urban areas have been hit harder.”
Luke Pardue, economist with Gusto
Pardue notes that its small business customers skew slightly more heavily to professional service firms, especially tech companies, but largely reflect the overall labor market.
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With most white-collar employees working from home, many restaurants, shops and barbers in central business districts have closed, downsized or moved to more sparsely populated areas with fewer COVID-19 restrictions. Yet even job growth at finance, professional service and consulting firms fell sharply in urban areas last year, the Gusto data shows, while gains in those industries accelerated in the suburbs.
Some companies may have moved their offices to outlying areas for more space amid the outbreak, Pardue says. Others relocated as their employees and other urban residents left the city. And some suburban restaurants, shops and law firms stepped up hiring as activity in the surrounding area picked up, while their urban counterparts pulled back hiring.
'The virus wasn't going anywhere'
Smith, the Hillsdale, New York, resident, says several things fell into place to clear the way for his gourmet food shop, called Westerlind Pantry.
A low-rent space was available in a former department store. Millerton has no grocery stores and just one convenience store.
And the area has seen an influx of New Yorkers who are working remotely and moved there temporarily or permanently, as well as retirees.
“I see customers just desperate to spend money,” he says, noting he eventually may open several businesses.
Smith says he “enjoyed the city life and all it offers” and sometimes “misses being in a bustling bar.” But he’s grateful for the safer, open spaces and 10-minute commute to work in Hillsdale.
“It just made me question the kind of life I wanted,” he says. “The virus wasn’t going anywhere … and the impact on the fast-casual (restaurant) industry was going to be seismic. I thought, ‘I can use my skills here.’”
A recent Federal Reserve study of credit records, which list current addresses, found that the net migration of people from urban to suburban neighborhoods averaged 56,000 a month after the pandemic’s onset in March, double the rate from 2017 to 2019. About two-thirds of the increase was the result of fewer people moving to urban areas, while about one-third stemmed from residents leaving, according to the study by the Federal Reserve Bank of Cleveland.
Migration was greater in areas that had more deaths from COVID-19, more people working from home and fewer small businesses that remained open, the study found. Americans are also heading to suburban and rural areas for bigger living spaces as they spend more time at home.
Millennials raising families in suburbs
The rising fortunes of America’s suburbs during the crisis have intensified longer-term demographic trends. Millennials moved to cities in droves in the 2000s. But many are now in their mid-30s and leaving for the suburbs as they marry and have children, according to real estate consulting firm RCLCO.
“Where cities were the center of gravity for the economy for as long as we can remember – we’ve lost that over the last year,” says economist Adam Kamins of Moody’s Analytics, who studies regional economies.
But he says much of that could be recovered. As vaccinations spread and the pandemic eases, Americans, especially young professionals, will ly return to living and working in cities for the cultural amenities and nightlife, especially with an anticipated decline in housing prices in some urban districts, Kamins says.
Restaurants previously limited to takeout service will step up hiring while new eateries replace those that have closed. And firms that laid off receptionists and administrative assistants as employees worked remotely will bring on support staff as workers trickle back to the office, at least some of the time.
“When cities begin to recover more meaningfully,” Kamins says, “people will begin to come back.”
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NYC Lost a Record 631,000 Jobs to the Pandemic in 2020. So What’s Next?
A year after the pandemic threw New York into turmoil, THE CITY is examining the shaken-up jobs market — including the varying impact on different sectors and evolving predictions of what’s to come. Up first: a look at the raw numbers behind the pain of the city’s biggest economic downturn since the Great Depression.
The statisticians closed the books Thursday on the jobs lost in New York City in 2020: 631,000, the largest one-year decline since reliable statistics began being compiled after World War II.
The damage has been so great that local experts on the city’s economy see a difficult effort over several years to regain those positions, whose loss has brought pain to legions on top of a COVID-19 death toll that just passed 30,000, hitting the most vulnerable New Yorkers hardest.
The economic impact has also proved disparate, with sectors tourism upended, even as Wall Street prospers. Predictions for the city’s long-term and short-term prospects, meanwhile, are in flux as news of vaccination progress mixes with a host of unknowns.
Still, the passage of President Joe Biden’s $1.9 trillion federal aid bill — dubbed the American Rescue Act — has other economists sharply raising their forecasts of how much the national economy will grow this year. Mayor Bill de Blasio and some local executives agree.
“This now supercharges our recovery,” the mayor said Monday as passage of the bill seemed certain. “This is the thing we needed.”
There is no doubt about how the pandemic has devastated New York’s economy.
The single-year plunge in employment, measured from December 2019 to December 2020, is more than the 620,000 jobs that disappeared in the city’s “Great Recession” that lasted from 1969 to 1977 under mayors John Lindsay and Abe Beame.
The severe downturn following the 1987 stock market crash totaled 350,000 jobs lost. And jobs dipped by 227,000 in 2001-2003 after the dot.com bubble burst and 9/11. The city brushed off the Great Recession that followed the 2008 Financial Crisis with a relatively modest decline of 138,000 jobs.
the 1969-1977 crisis, one sector accounts for a significant portion of the losses. Then it was manufacturing, which shed 400,000 jobs. This time it is leisure and hospitality — which includes the food and lodging industries — that has seen 250,000 jobs disappear, a little more than half of those that existed at the beginning of 2020.
By total jobs lost, the other hard-hit areas include professional and business services (89,000), education and health services(69,800)and retail (67,100).
In percentage terms, leisure and hospitality is followed by manufacturing, transportation and retail.
The bottom line remains sobering: New York City jobs losses have been so great that an analysis by Moody’s Analytics found it suffered the worst employment losses of the 82 metro areas it tracks. Suburban areas didn’t do much better with Northern New Jersey ranked 74th, Westchester 73rd and Long Island 68th.
Many Jobs ‘Gone for Good’
Some experts are worried about the city’s near-term prospects, even as it appears that upcoming budgets City Hall and Albany will be balanced despite Gov. Andrew Cuomo’s travails.
“The American Rescue Plan is certainly laudable in providing triage for a pandemic-battered economy that should get us past the lockdown phase,” said James Parrott, a New School economist closely tracking local data.
“The latest extension of unemployment benefits will run out in September but hundreds of thousands of jobs won’t have come back by then and some portion will be gone for good.
New York City’s economy will still face a monumental task of repairing a labor market.”
‘Where will we be when the aid runs out?’
A March 1 update from the Independent Budget Office was headlined “A slow and fragile recovery” and projected that the city would not regain all the jobs lost by the end of 2025.
“Where will we be when the aid runs out, how long will it take to get arts and entertainment back and how fast will the leisure and hospitality sector rebound?” IBO Executive Director Ronnie Lowenstein asked in an interview with THE CITY earlier this month.
Another hurdle came into the spotlight again Thursday when the Partnership for New York City released its latest survey, which showed only 10% of workers have gone back to their offices. The percentage expected to return by September declined slightly to 45%.
Remote Chances for Return
Employers expect more than half of their workforce will continue to work remotely at least part of the time. If that happens, the ripple effect will make the recovery a long-term proposition.
“The labor market is characterized by permanent job loss, severe long-term unemployment and the need to retrain tens of thousands of workers for different occupations and industries,” Parrott added.
However, the passage of the Biden aid package and the vaccine rollout has other economists turning much more optimistic about the national economy — a trend that could help New York.
Economists surveyed by The Wall Street Journal in the past week boosted their average forecast for this year’s increase in Gross Domestic Product to 5.95% from 4.87% last month. Analysts with Goldman Sachs say the economy could grow 7.7%. Either would be the U.S. economy’s best gain since 7.9% in 1983.
Broad economic trends have bolstered two crucial sectors in the city and could do so for more areas this year.
Wall Street last year is believed to have produced profits of $45.8 billion, the second highest ever and nearly double the previous year. A strong stock market, a wave of highly lucrative initial public offerings and low interest rates, which reduce borrowing costs, all have contributed to the good times for the industry.
While the city’s economy is no longer as dependent on Wall Street as it once was, the sector still accounts for 20% of all private sector wages and 18% of all state tax collections, mostly because its average wage of $407,000 is by far the highest in the city. Wall Street’s success is the primary reason state and city tax collections have proved far higher than expected.
Holiday Hopes Bloom
Meanwhile, the pandemic inspired shift to online has also bolstered the city’s growing fast-growing tech sector, which too has thrived in the pandemic. Venture capital invested in New York companies last year almost matched the record of 2019.
“The pandemic has been a tailwind for tech if anything,” said Ben Sun, a founder of Primary Venture Partners, which just raised $150 million to invest in New York startups. “We see so many great companies in New York where founders coming out that say this is a great time to start a company.”
Some in the tourism industry even see reason to hope for a strong holiday season in New York. Matt Hurlburt, general manager of the Kimpton Muse in Times Square plans to reopen the hotel on March 24.
“I feel good about the end of the year being our best time period in 2021,” he said. “I base that on expectations of the vaccine rollout, that case counts will be lower, that people have pent up savings and that people want to get out and start to get on the road again.”
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