Has New York City Recovered from the 1970s? Employment of City Residents

In my previous post, I celebrated the moment when the legendary (to New York regional economists) 1969 New York City private wage and salary employment peak, as measured by annual average data from the Department of Labor establishment survey, was finally surpassed in 2012.  While the number of self employed people working in the city soared to more than 1 million in 2011.  These, however, are estimates of the number of people working in the city, including the hundreds of thousands who commute in.  The number of employed city residents, including the increasing number who commute out to the suburbs, is something else entirely.

The employment level of city residents had started to fall even before the 1970s.  The working age middle class was moving to the suburbs, leaving the less well off retired behind, and the city’s population skewed older.  Hundreds of thousands of Afro Americans from the South Atlantic states, and Puerto Ricans, moved north to the city expecting to take factory jobs, but those jobs moved south instead, and one million people were on welfare by the end of the 1960s.  The percentage of New York City residents who were in the labor force, working or looking for work, had been above the U.S. average at the time of the 1960 Census of Population, mostly because city women were more likely to work outside the home.  But the share of city residents who were in the labor force was far below average at the end of the 1960s, a gap that only started to close in the late 1990s.  How far have New York City residents come?

I last examined this question a few year ago using data from the New York State Department of Labor and the U.S. Bureau of Labor Statistics.  In June 1983, the very month I graduated from college, just 54.1% of NYC adults were in the labor force compared with 65.1% of U.S adults.  That was a huge gap of 11.0%.   See attached spreadsheet.

Household Data BLS July 2009 NYC-3

One thing that had happened, according to Census data tabulated later by NYC Planning, is that the large increase in the share of U.S. women in the workforce during the 1960s, 1970s and 1980s didn’t occur in New York City.  The gap as measured by the BLS, which demands proof that those who are not working are actually looking hard for a job, was always larger than it was in decennial census data, for which people fill out their own questionnaires (or at least are supposed to).

As of June 1995 the NYC labor force participation rate had edged up by 55.2%, but with the entire Baby Boom in the workforce and women long since taking a near equal role there, the U.S. rate had risen as well to 67.2%.  The gap between the two was 12.0%, an all time high.  The number of employed city residents was just above 3 million, down from a peak of 3.15 million in July 1990.  New York was the city that didn’t work.

But then the gap began to close.  By July 2009, during the early stages of the Great Recession, the city’s labor force participation rate had risen to 61.8%, and the national rate had slipped to 66.2%.  The gap was just 4.4%.

Unfortunately the NYS Department of Labor and Bureau of Labor Statistics no longer provide estimates of labor force participation below the national level.  Whether this was done to save money by getting rid of the estimate of the working age population, or to avoid controversy since the national labor force participation rate continues to fall as Baby Boomers retire or drop out, I don’t know.  What we do have is an estimate of the number of people in the labor force and the number of employed city residents, as shown in the spreadsheet below and its included graph.

NYS DOL_laus_sa

What the data can tell us is that the New York City labor force was at an all-time high of more than 4 million as of early 2013.  Elsewhere in the U.S. falling labor force participation, as young workers are frozen out and aging workers are forced into early retirement, has become a national issue.  The aging of the Baby Boom, and the strain of a dependent aging population that did not save (and in many cases did not stay with its children during all of childhood) is now a national concern.  But it will not be as much of a problem in New York City, where young, educated refugees from other places in the U.S. with declining economies, and immigrants from poorer countries, continue to arrive.

The number of employed city residents, unlike the number of people working in the city, has not completely recovered from the Great Recession, one reason that unemployment remains high.   But that number was 3.66 million in January 2013, or 929,000 more than it had been during the dark days of early 1977.  It had been more than 3.7 million not too long ago and on the present pace of gain will be again soon.

For a more up-to-date measure of labor force participation, we must turn to American Community Survey data collected by the U.S. Census Bureau.  The same data national Republicans want to eliminate as the suburbs and Sunbelt face hard times for the first time since the 1930s.  In the attached spreadsheet table.

ACS Employment 2011 NYC & US

According to this data, 63.1% of New York City residents age 16 and up were in the labor force in 2011, still less than the 64.7% for the New York metro area as a whole (and thus well below the rate for the New York area suburbs) but only slightly less than the U.S. average, now just 64.0%.  The gap is just 0.9%, though as mentioned Census Bureau data always showed a smaller gap than BLS/DOL data.

What’s more, 69.6% of New York City males were in the labor force, working or looking for work, in 2011 according to the ACS, still below the New York metro area average but above the 69.4% rate for the U.S. as a whole.  The entire gap in labor force participation can now be explained by women, with 57.4% of NYC women age 16 or more in the labor force compared with 58.9% for the U.S. as a whole.  Specifically parents of children.  While in New York City 59.3% of families with children under age 6 have all parents in the labor force, the U.S. figure is 64.6%.  While in New York City 65.6% of families with children age 6 to 17 have all parents in the labor force, that figure is 70.6% nationally.  Of course New York City children are still far more likely to have only one parent living with them.

ACS data also provides information of the types of income earned by New York City households.  The share with earnings from work in 2011 was 77.5% according to this source, much not less than the 79.0% for the New York metro area as a whole and barely different from the 77.7% rate for the U.S. as a whole.  On the other hand, New York City households were still more likely to have income from cash welfare and SSI in 2011, despite the huge drop in the cash welfare caseload since the mid-1990s.  In the city 12.0% of city households had such income, compared with 8.8% for the entire New York metro and 8.2% in the U.S.

There are two likely explanations for this.

First, the city attracted/created a “welfare generation” from the 1960s to the early 1990s, when its welfare rolls were much higher than they have been since.  In 1990, according for data compiled for me at City Planning at the time, only one third of the heads of New York City households with public assistance income had been born in New York State, with far more coming from the South Atlantic states from Virginia to Florida and from Puerto Rico.  When people who do not have work income recorded for 40 quarters reach age 65, they do not qualify for Social Security and Medicaid. Instead they “retire” to SSI and Medicaid.  And the share of New York City households receiving Social Security income in 2011, at 24.3%, was well below the U.S. average of 29.0%.  Some of NYC’s excess SSI caseload likely results from former welfare recipients age 65 and over, though many such people move to places where SSI goes farther.  When the “welfare generation” passes on, New York’s relative level of welfare dependency will fall.

Second, in borderline cases (excluding the worst disabilities) being disabled is an economic condition as much as a physical one.  When the labor market is tight and businesses lack other options, they will often put up with and try to get value from people with mild disabilities.  Such as mild retardation that makes them more difficult to train, mild mental illness that restricts their ability to interact with the public, and obesity, diabetes, and back problems that limit their physical productivity and cause frequent absences.  Businesses are much less likely to hire such people in recession, when healthy young college graduates are readily available at the minimum wage.  Thus “economic disability,” particularly among aging workers with growing health problems, soars in recessions.

In New York City, according to ACS data, the share of households receiving SSI increased from 5.7% in 2009 to 7.8% in 2010, perhaps as their unemployment insurance ran out.  But this could reverse if unemployment falls toward 5.0% and businesses run out of other options.  Some of the “disabled” would then be able to get jobs again.

A couple of other notes from the latest ACS data.  Because of the structure of our economy, New York City residents are more likely than the national average to work in high paid management, business, science and arts occupations, and more likely to work in low-paid service occupations. They are less likely to work in blue-collar occupations.  And, after large New York corporations automated, outsourced and relocated “back office” jobs out of the city during the deep early 1990s recession, city residents are less likely to work in sales and office occupations.  The blue collar and “pink collar” jobs are middle class jobs, and the city has fewer of them.

City residents are more likely than the national average (and far more likely that those in the suburbs) to be self employed in their own unincorporated business, and less likely to be government employees.  The city has big taxes, not big government, with lots or retirees, not workers, and many of New York City’s own employees, particularly the best-paid, live in the suburbs, not the city.

In summary, with regard to the employment of city residents New York City has not fully recovered from the 1960s and 1970s.  But it is getting close, and the gap is closing fast, both as city residents become more likely to work and those elsewhere in the U.S. become less likely.  The gap could be gone in a couple of years.  It could re-open, but this time in the other direction, thereafter.