Quarantine unemployment in New York: who suffered the most, what is the situation among immigrants

In May, the number of New Yorkers working was 900 thousand less than in February. The unemployment rate in the city is estimated at 19,9%. What the authorities need to do to improve the situation is reported https://www.izakayasushilounge.com Office of the Comptroller of New York.

Employment in New York

Recently, national employment rates for May 2020 were released. The figures presented in the report gave a glimmer of hope for economic recovery after the devastating consequences of the closure of enterprises in March, when quarantine was introduced due to the outbreak of COVID-19.

Thus, the unemployment rate in New York fell from 14,7% in April to 13,3% in May. Total employment increased by 2,5 million jobs. At the same time, employment in the private sector increased by 3,1 million compared to April.

Bars and restaurants won the most, recovering 23% of losses between February and April, and showing an increase of 1,37 jobs in May (although hotel occupancy continued to decline, and 148 thousand people lost their jobs).

The numbers are encouraging as more states prepare to loosen some of the restrictions imposed by the lockdown - provided a new wave does not occur.

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However, analysis of the recently released data shows that the New York economy has a long way to go to recover. Contrary to the national picture, the city's unemployment rate rose to 18,3% in May from 15,8% in April - and a historically low 3,4% in February, according to the Bureau of Labor Statistics (BLS). There were 900 fewer New Yorkers employed in May than in February. In addition to the 534 new unemployed since February, more than 380 workers have lost their jobs in total.

Table 1: Change in employment in New York, February 2020 - May 2020

Unemployment Continues to Grow

An analysis of the Census Bureau's Current Population Survey (CPS) data from the current population survey shows the same upward trend in employment, allowing a more thorough study of demographic differences in the employment situation.

The CPS data, which, unlike the BLS data shown in Table 1, is not seasonally adjusted, shows the city's overall unemployment rate at 19,9%. The unemployment rate for men, which in February was equal to the city average of 3,5%, in May rose to 21,5%, and among women - slightly less sharply - to 18,1%.

Among racial and ethnic groups, unemployment growth was the sharpest among people of Asian descent, increasing from 3,4% in February to 25,6% in May. The unemployment rate among Hispanics and blacks (non-Hispanics) also rose sharply, amounting to 25,1% and 23,5%, respectively. Indicators among whites (non-Hispanics) also rose from 2% in February to 11,8% in May.

Chart 1: Change in unemployment rate by demographic, February-May

Youth unemployment rate

As it turned out, young people were most affected by the lack of work. The unemployment rate among young people aged 16 to 24 years increased sharply during the pandemic (Chart 2), reaching a staggering 35,2% compared to the level that existed before the pandemic, which was 6,6%.

In contrast, the unemployment rate among workers 55 years of age and older rose from the pre-pandemic level of 3,1% to 14,1%, which is 5,8 percentage points lower than in the whole city.

Chart 2: Change in unemployment rate, February-May, by age group

Immigrant unemployment rate

The unemployment rate among immigrants, who make up 43% of the city's working-age population and which is an integral part of the economy, also rose sharply. In May, the figure was 3,4 percentage points higher than the May's total of 23,3%, 19,7 percentage points higher than the pre-pandemic level (Figure 3).

Despite the lack of reliable data on the number of foreign workers who work informally, it is believed that they constitute a significant part of the workforce of the city. Born abroad, they are deprived of the opportunity to receive unemployment benefits here, in New York, as an indigenous population.

Like their US-born American counterparts, Asian immigrants have faced a sharp rise in unemployment, rising from 4,6% in February to 26,3% in May. The sharpest growth, however, occurred among Hispanics, among whom the unemployment rate rose to 30,8% in May, up from 3,3% in February. Black foreigners, who had an unemployment rate of 5,5% in February, had the lowest among all foreign groups, and the unemployment rate in May was 15,9%.

Notes

Persons whose ethnicity is defined as Hispanic can be of any race. In this report, blacks (African Americans), whites, and Asians are not Hispanic.

Figure 3: Change in unemployment rate, February - May, foreign workers

Labor force participation rate

Labor force participation rate is the ratio of the labor force (employed and unemployed) of a certain age group to the total population of the corresponding age group, calculated as a percentage. This indicator in New York showed a sharp drop.

This category of people includes pensioners, people with disabilities, students and those who perform home care responsibilities.

There is also a relatively small percentage of people who are not part of the workforce who would be ready to take up the job, but have not actively searched for it over the past 12 months. Often the reason for this is that they are not satisfied with the prospects of employment.

The blockage, which struck the city’s economy so suddenly, not only sharply increased the number of unemployed, but also led to an increase in the number of people not included in the workforce. Most often this category includes people who have indicated “other” reasons than retirement, disability, school, or home care responsibilities.

Since February 2020, the city's labor force participation rate has dropped by an unprecedented 7,6 percentage points, from 61,5% to 53,8%. In contrast, the US labor force engagement rate fell from 63,4% in February to 60,8% in May.

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Labor force participation rates declined significantly among each demographic (Figure 4). The share of men in the labor force fell from 69% in February to 62,3% in May. A slightly more significant drop - by 8,5 percentage points - was observed among women. The share of foreign workers decreased by 6,7 percentage points to 52,2%.

The largest decline was noted among African Americans, whose labor force participation rate fell 12,6 percentage points to 47,4%. Whites, Asians and others saw declines of 7,1 and 10,6 percentage points, respectively, while Hispanics fell 2,7 percentage points.

Chart 4: Change in the labor force participation rate, February-May, disaggregated by demographic group.

Conclusions

The difficult situation with unemployment requires the reaction of both the federal government and the city. At the federal level, it is necessary to extend the payment of weekly unemployment benefits in the amount of $ 600 under the unemployment compensation program. This program expires next month. In addition, general financial assistance must be provided to state and local governments that continue to face the urgent needs of their residents for services without sufficient resources.

At the city level, the extremely high youth unemployment could be mitigated by reinstating the summer youth employment program, which was cut off by the administration of New York Mayor Bill de Blasio in April. This would provide income and jobs for 75 thousand young people living in cities.

Finally, the city needs to expand and streamline opportunities for enterprises belonging to minorities and women, who were hit hardest during the economic downturn. As New York and all of America strive to open new businesses, it is important to help existing businesses that play the role of the country's economic engine.