A huge milestone was reached last week with what I believe to be insufficient fanfare, and Mayor Bloomberg will be leaving office with a huge feather in his cap. The New York State Department of Labor released re-benchmarked annual average employment data for 2012, and New York City’s private employment total, according to this measure, finally surpassed the peak it hit way back in 1969. It took 43 years to get back all the jobs lost in the 1970s. See Private Chart.
I say insufficient fanfare because for those who have followed statistics on the city’s economy for decades, the 1969 peak has loomed as a seemingly insurmountable barrier to the city’s recovery, spoken of each time it was approached. The city failed to regain all the lost jobs at the subsequent peaks in 1987, 2000, or 2007. Yet here we are today, when most of the United States remains well below the employment level achieved before the Great Recession, with many suburban and Sunbelt areas experiencing severe economic losses for the first time in decades, and New York City has finally reached a new high.
The rebenchmarking process nearly stole the thunder from this milestone, because updated information shows the city had more jobs in 2011 than had been previously reported. The 1969 figure had been an annual average of 3,250,700 non-agricultural private sector wage and salary jobs in New York City. The revised figure for 2011 was nearly as high at 3,247,400. The 2012 figure is 3,332,000, after gains of 94,100 and 84,600 jobs the past two years, among the largest increases since 1950. In 1977, the city’s private sector job count had fallen to just 2,680,100, or 652,000 fewer than in 2012.
The state’s monthly establishment survey data, part of the national Current Employment Survey program, is the most widely quoted measure of employment. But it is not the only one. Unlike the CES, employment data from the Bureau of Economic Analysis includes the self-employed: small business owners, entrepreneurs, freelancers, contract workers, and others who fill out IRS 1040 Schedule C instead of receiving W2s. It only comes out once a year, long after other data has been reported, and is not widely publicized. But it tells an even more dramatic story.
According to the BEA, the number of people working in New York City in the private sector, including both wage and salary workers and the self-employed, had already soared past the 1969 peak back in 2000. By 2011 it had reached 4,349,110, up from the 3,766,771 recorded in 1969 by more than 582,000. Private employment by this measure barely fell in each of the past two recessions, and is 528,000 higher than it had been in the year 2000. And this growth is due primarily to a boom in the number of self employed “proprietors,” as they are called by the BEA, with an increase of 456,000 from 2000 to 2011. The number of self employment situations in New York City, according to the BEA, exceeded 1 million in 2011, or nearly one in four private sector workers. See Chart 1 below.
Some have ignored this data in the past, since a freelancer can fill out more than one Schedule C for more than one type of self employment income (just as people can hold more than one job). Some have pointed to Census Bureau household survey employment data by Class of Worker, which generally reports lower figures. But I have long suspected that something big is going on, and that something is getting bigger. For one thing, the Census Bureau counts those who incorporate as wage and salary employees of their own corporation, not as people who are self-employed. That may be true in an accounting sense, but not in a sociological sense. These are not people earning wages that other people are responsible for collecting from customers.
In fact, a recent article in Crain’s New York Business supports the idea that there is a boom in self employment, well above and far beyond the city finally regaining all the wage and salary jobs it lost after 1969. “In 1991, 35,218 new businesses filed incorporation papers in New York City, the report by the Center for an Urban Future notes. By 2011, that number had increased to 65,658, an 86% spike in the number of start-ups.” Not all new businesses, and very few mere freelancers and contract workers, file the paperwork and pay the fees required by the New York State Department of State. “The cost of starting a new business is no small matter, especially for first time entrepreneurs. The amount can range from $60 to $2,100, depending on the type of entity that’s being incorporated. ‘Limited liability companies’ or LLCs are the most expensive, with an average cost of $2,000.” These figures are, in fact, huge, and although they are down from 2007, they have been rising recently.
With the 1969 wage and salary employment peak, as measured by New York State, finally surpassed, with subway ridership approaching levels not seen since before advent of widespread suburbanization and auto ownership, and with crime down to the level of the early 1960s, the question is raised. Has New York City finally recovered from the 1970s? May it be fairly compared not just with other older cities that have lost their industrial base to the Sunbelt and their middle class to the suburbs, but with anyplace else in the U.S.? Should its expectations be as high, or higher?
There was plenty of optimism in 1969 as well. I’ll consider the city’s situation, and level of recovery, in subsequent posts. But in the meantime, where is the parade (or at least the press conference)?