Annual Average CES Employment Data for 2019: Before the Coronavirus New York Had A Growing Budget Crisis Despite A Massive Boom

The Bureau of Labor Statistics released rebenchmarked Current Employment Survey data, with 2019 annual average data (the average of all 12 months), last week.  While it seems as if it were ancient history, it is worth looking at this data now, because it shows how New York State benefitted from a massive employment boom from the peak of the prior economic upturn in 2008 to what seems certain to be the peak of the expansion that just ended in 2019.  An employment boom that dwarfed the increase from 2000 to 2008, and exceeded the U.S. average in percent gains, even though New York is a slow population growth state.  A boom that was concentrated in New York City.

And yet by the end of 2019 the City of New York, the State of New York, and the MTA were already facing budget crises.  Service cuts, tax increases, fee increases and deferred maintenance to the point of a future drastic infrastructure decline were already on the table.  And now, no doubt our elected officials and the special interests they represent will use the coronavirus and an excuse for all of the above.  They should not be allowed to get away with it.  Just as the business crisis was caused not by the virus, but rather by all the debts businesses piled up to pump up stock prices and executive pay, as everyone across the ideological spectrum seems to be saying (the subject of my prior post).  So the fiscal crisis was coming one way or the other, due to similar heists over the past 25 years.


The first spreadsheet with data used in this post is here.

Ces-NY 2000-19

In New York and a few other fortunate places where tech is booming, the fact that later-born generations and regular people, the serfs, have become poorer and poorer compared with the executive/financial class, the political/union class, and the generations now age 62 or over, has been offset by the fact that so many more people are working.  These additional workers have been the cash cows that postponed a state and local government fiscal crisis here.


CES data shows that from 2008 to 2019, Government sector employment increased by just 6,300 in New York City.  Private wage and salary employment in the Educational and Health Services sector, which is mostly in property tax exempt institutions, increased by 318,700, but other private sector employment increased by a stunning 496,900.  In the prior economic upturn, from 2000 to 2008, NYC private sector employment outside the Education and Health Services sector actually fell by 23,300.  This is a stunning turn of events for a fully developed city that was already built to a high density.  It is amazing this many people can even be squeezed in.  No wonder rents and sales prices have soared.

New York City’s workers have had to carry the tax burden of a declining Upstate NY.  There, private wage and salary employment outside the Educational and Health Services sector fell by 120,400 from 2000 to 2008, and by another 30,800 from 2008 to 2019. In the Downstate Suburbs, in this case tabulated as Nassau, Suffolk, Westchester, Rockland and Orange counties, “other” private employment edged up by 8,000 from 2000 to 2008 and increased by 44,600 from 2008 to 2019.  Government sector employment fell from 2008 to 2019 in both Upstate NY and the Downstate Suburbs, offsetting 2000 to 2008 gains.


On a percentage basis, the big wage and salary employment gains were in Educational and Health Services across the board, with 2008-2019 increases of 19.8% in Upstate NY, 28.9% in the Downstate Suburbs, and 43.3% in New York City.  The rest of the private sector lost 1.7% of its jobs Upstate, compared with a small gain of 3.5% for the Downstate Suburbs and a substantial gain of 19.8% for New York City.

The Current Employment Survey, a survey of businesses, only includes actual wage and salary employees.  It thus excludes the “gig economy,” all those workers toiling without steady hours, without employer contributions to their Social Security and Medicare, without unemployment insurance.  The social safety net was never modernized to include these workers, who are a soaring share of the economy, especially in New York.  They are included in Bureau of Economic Analysis Local Area Personal Income data, based on the number of workers filling out Schedule C, Profit or Loss From Business (Sole Proprietorship), on their income tax returns.


From 2008 to 2018, BEA data asserts, the number of private wage and salary jobs in New York City increased by 695,934 – slightly less than the gain of 723,300 as measured by the CES.  But in addition, the number of self-employed “proprietors” increased by 469,316.   From around 300,000 in the 1970s, the number of self-employed proprietors in NYC has increased to nearly 1.5 million.

In the Downstate Suburbs, the increase of 148,589 in self-employment over a decade exceeded the increase of 114,417 in private wage and salary jobs. The same was true in Upstate New York, at 74,541 and 34,348 respectively.

Some of this “self-employment” may consist of “side hustles,” rather than people’s main source of income.  But that is true of wage and salary positions too – many people now hold more than one part time and/or temporary job at a time to get by.  In addition, these are jobs located in New York City – many of the workers commute in from elsewhere.  Revised household-based data from the BLS on the number of employed residents of New York City, including the self-employed but with multiple job holders counted only once, shows an increase of just 203,040 from 2008 to 2019.  So people are apparently working multiple jobs to pay their rent and taxes.  There was a small decrease from 2017 to 2019 in NYC, but an increase of 68,116 for the metro area as a whole.  So perhaps young NYC workers have had enough and are getting out.


The huge boom in New York City wage and salary employment, and self-employment, allowed slow population growth New York State as a whole to match U.S. percentage employment gains from 2008 to 2019, despite slower growth elsewhere. New York City and (a few other places around the country) were flooded with cheap young workers who paid taxes without getting much in public services and benefits, even as Upstate NY, the suburbs, and much of the country was left with an aging population that was falling out of the labor force.

NYC’s young workers don’t require much of the government other than parks, recreation, culture – and mass transit, which was allowed to degrade. All the money they paid was sucked up and sent elsewhere.  Mostly to retroactive pension increases for public employees passed from the mid-1990s through the present.  Meanwhile, the real estate industry jacked up their rents and forced them to pack into less and less space – raising property tax revenues.  For the City of New York and State of New York budgets, if not for the people who pay into them and hope to perhaps get public services out of them, this was the best it could possibly get.

The Downstate Suburbs matched the U.S. average percentage gain in self-employment.


Returning to the CES and wage and salary employment alone, the data shows the impact of the NYC tech, media and entertainment boom from 2008 to 2019. (The chart excludes Educational and Health Services and Government).  These activities are located in the Professional and Business Services sector, which added 190,600 wage and salary jobs in the city from 2008 to 2019, and Information, which added 41,000.  In contrast the Financial Activities sector, which drove prior NYC expansions, added just 18,800 jobs over those years, many in Real Estate and not in high-paid Wall Street firms.

The collective incomes of these TAMI – technology, advertising, media and information — workers, plus tourists, led to consumer spending that boosted NYC Retail Trade employment by 46,400, Leisure and Hospitality employment by 154,900 and Other Services employment by 33,900, during the 2008 to 2019 period.  Thanks to the coronavirus, the TAMI workers are presumably working from home as of the date of this report, with most of the Retail, Leisure and Hospitality and Other Services workers unemployed.  And many are “gig” workers without unemployment insurance.

Information sector employment fell in the Downstate Suburbs and Upstate NY, presumably due to downsizing in the Telecommunications industry (which should really be assigned to the Utilities sector instead).  But Professional and Business Services managed gains of 20,700 in the Downstate Suburbs and 10,700 in Upstate New York, with Leisure and Hospitality up by 44,400 and 40,600 respectively.

Many Leisure and Hospitality jobs Upstate are supported by those dining out on the retirement income of former employees of firms such as Carrier, General Electric, Delta Auto Parts, Xerox, and Kodak.  When those retirees die, that income source dies with them.  As it is, Retail Trade employment fell by 3,800 in the Downstate Suburbs and 22,700 in Upstate NY from 2008 to 2019.


New York City added another 95,600 wage and salary jobs from 2018 to 2019, a 2.1% gain and the latest (and for a while perhaps last) in series of large increases.  The portion of the private sector outside the Educational and Health Services sector, however, accounted for less than half (46.2%) of that increase.  The Educational and Health Services sector alone accounted for more than half of the gain (50.4%), with the Home Health Care industry by itself accounting for 28.2% of jobs gained – more than the rest of Educational and Health Services put together.  The Government sector accounted for 3.4% of the gains in wage and salary employment.

Lets move on to a few of the charts I’ve done in past years, located in this spreadsheet.


Local Government1

As noted, Government sector employment is retrenching in the Downstate Suburbs and Upstate New York and rising in New York City.  But this follows a long period when the reverse was true.  Compared with 1990, 2019 local government employment was 4.9% higher in NYC, 17.5% higher in the Downstate Suburbs, and 11.7% higher in Upstate NY.

One reason:  local government employees in the part of New York State outside New York City are included in the New York State pension system, one of the best-funded public pension systems in the country.  But local government employees in New York City, including New York City Transit workers, are part of the separate New York City pension system, one of the worst funded in the country.  So a much higher share of NYC personnel spending is going to the retired.

Even though the same New York State Legislature has set the rules for both pensions systems for more than four decades.  And NYC taxpayers have contributed far more to the pension funds, as a percent of the public payroll, than taxpayers in the rest of the state over those decades.  More, in fact, than taxpayers have contributed to public pensions anywhere in the country.  The reason for the difference between the two pension systems has never been explained, and is not allowed to be discussed.  Although both the NYC and NY State comptrollers were in on the deals that created this situation, when they were in the state legislature.


Meanwhile NYC Home Health Care industry employment continues to surge, although rebenchmarking reduced the increase for past years, at a rate that makes one wonder of all those employees and the seniors they serve actually exist.  New York State has a $6 billion deficit caused by the Medicaid program.  I think the reason may be found right here. The increase was 27,200 from 2018 to 2019, up from a gain of 25,500 from 2017 to 2018 and a gain of just 10,900 from 2014 to 2015.


The NY Times attributed the problem to an aging population, national trends, and the increase in the minimum wage to $15 per hour, as if that were a problem.   But NYC’s growth in Home Health Care employment exceeds national trends, especially when measured per 1,000 people age 75 or more, and especially in Brooklyn, as I showed here (starting in the middle of the post).


And NYC Home Health Care employment has, in particular, surged far faster than employment in the rest of the state, even though most Home Health Care services are provided to seniors, and most of those are funded by Medicaid. The state NY State legislature sets the Medicaid rules for both parts of the state.

Compared with the explanations that are out there, I’m afraid this one seems more likely to be a major factor. Filmed in late 2019.  They’re smart.  Who isn’t?