NYC's Economic Recovery Still 'Uneven'

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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning again, everyone. Now to one of the most important local stories of 2022 and how it sets up 2023, as we continue to look at the year and review the enduring uneven economic recovery from the pandemic in New York. Though the unemployment rate has declined sharply, that's good news and the city added about 200,000 jobs in 2022, not all the jobs lost in the early pandemic days have been recovered. A few key sectors, we'll talk about them are a slouching. Indeed, there have been some ups and downs this year.
We're going to ask you on the phones to help us report this story, but a new story from the nonprofit news organization, The City offers a journalistic look at some of the signs of growth, as well as the indicators of incompleteness as Greg David calls it. Greg David, who covers fiscal and economic issues for The City, and directs the Business and Economics reporting program at the Craig Newmark Graduate School of Journalism at CUNY joins us now. Hi, Greg. Always good to have you. Happy New Year. Welcome back to WNYC.
Greg David: Thanks, it's glad to be here and glad to talk about my favorite subject.
Brian Lehrer: Let's start with the good, what's gone well? Where's business booming?
Greg David: 200,000 jobs, that sounds good. It was good. Tourism came back a lot better than we thought not fully recovered but we almost doubled the number of tourists in New York this year compared to 2021. I think that recovery was stronger than anticipated. What was really good in 2022? Well, two things that are important for 2023. Wall Street for most of the first half of the beginning of the year was strong. Of course, it got us through the pandemic. Now that story's changing, and tech, there're problems in tech, but New York's tech sector seems pretty robust and has really built itself into something important for the economy.
Brian Lehrer: We'll get back to Wall Street, we'll definitely get back to tech. Let's stay on tourism for a minute as you say it rebounded more than expected. Can you give us some details of that? Is it international tourists? Is it visitors from the New York suburbs? How is tourism coming back?
Greg David: It's mostly domestic tourist, and it's all part of the big pandemic rebound in the sense that people who are stuck at home for too long have just decided to travel. Yes, there are some international tourists back. They're coming from our traditional markets of the UK, Europe, and Canada but they don't include the Chinese and that's a very important factor. We have about 88% of the tourists are domestic these days, in the peak year of 2019, that figure was only about 80%. The suburbs though are a big problem. The suburbanites are not coming into the city.
Why are they not coming into the city? Well, the best guess is their fear of crime. You can see the impact of that on Broadway because Broadway has not recovered. It's certainly better than it was but it's clearly running well below its peak numbers. The most likely reason for that is [unintelligible 00:03:31] is that suburbanites who come in to see a show, maybe stay overnight, are just not willing to do that at the moment.
Brian Lehrer: We saw it in the election results where Republicans took four seats specifically in the New York suburbs, and almost nowhere else in the country. In other good news, economically, you reported most of the residents who left Downtown Manhattan when the pandemic started, have returned, which, in turn, has brought the downtown Alliance's monthly pedestrian count up to about 5.5 million people that's Lower Manhattan that's equal to pre-pandemic levels. It's not just tourists who are back, but also presumably many of the New Yorkers who fled in the early days of the pandemic?
Greg David: That's right. We don't know exactly how many have come back, we figured about 300,000 people left, but downtown is one area and of course, Brooklyn's done very well too, Brooklyn is the star of the recovery in every way you can count. Also, you can see this recovery this return of people in the great run up in rents, which at least for now is ended. Rents would not be going up if people had not returned and started wanting to live in New York again so that's definitely another good sign.
Brian Lehrer: Listeners help us report this story. We can take your calls on the state of New York's economic recovery from COVID at the end of 2022. What's the end-of-year economic headline from your industry or line of work? 212-433-WNYC, 212-433-9692 or tweet @BrianLehrer. Your questions welcome as well, for my guest Greg David, contributor covering fiscal and economic issues for The City and director of the business and economics reporting program, and ravage fiscal reporting program at the Newmark Graduate School of Journalism at CUNY. Help us report this story. Maybe the way I'm framing this question is a weigh-in for you.
What's the end of Year Economic headline from your industry or line of work, listeners? 212-433-WNYC. Maybe some of you off today for this holiday week, who were out in the workforce most of the time, have a take on that that other people might benefit from hearing what's the end of the year economic headline from your industry or line of work? 212-433-WNYC, 212-433-9692 or tweet @BrianLehrer. All right, Greg, we did some of the good news. Now some of the bad news. The subhead for your story reads packed hotels and budding new businesses can't hide looming weaknesses, like a sagging tech sector and Wall Street's woes. Let's turn to those developments. In what ways is the tech sector lagging?
Greg David: Well, the tech sector, we've got big layoffs at the biggest tech firms around the whole country and they're affecting New York. Facebook, now called Meta and Amazon, and Twitter have all made layoffs that have affected New York. We do know that the amount of venture capital money coming into the city is declining, it's still substantial and we'll have to see what the full effect of that is.
Brian Lehrer: What do you see longer term for Tech? I know you just said we'll have to see over time, but with some of those giants, actually laying off people, in fact, but our world becoming even more digitized at the same time. With some of the companies still acquiring real estate in New York, even while having more work from home, is the hunger for people with programming skills in our area likely to win or not so much?
Greg David: I don't think it's likely to win. It's pretty clear that tech is important. There was this very important survey from the Center for Urban future followed by another survey from Abney, which just shows how important Tech has become in the city. I often talk about Wall Street accounting for 23% of all the income in the city, but Wall Street and tech together account for just under a third of all the income in the city so that's important.
New York has become the number two tech center in the country behind only Silicon Valley and San Francisco, we have a very broad-based industry here, it employs directly more than 120,000 people. If you want to measure it a different way there are 300,000 tech workers in the city, it's become a very important part of our economy. I think it's here to stay, it's here to stay in a big way. The big companies may no longer be the drivers of it though so we'll just have to see how this all shakes out.
Brian Lehrer: Why has New York risen to that point of being the number two tech jobs hub in the country behind Silicon Valley?
Greg David: Well, first of all, we have this boom in the '90s and led by this great company DoubleClick. Of course, DoubleClick is why Google is their biggest tech employer with more than 12,000 people because they bought DoubleClick. Originally, it was a combination of ad salespeople and tech people. We've broadened out, we've created all these tech companies ranging from Warby, Parker to health care companies, online healthcare companies with huge aspect of it here. We've got all these consumer products companies that have originated.
New York just had all these industries that were ripe for being turned into tech companies. The people who came to New York when we were booming, and people flooded New York when we were booming, came here and created all these very interesting tech companies and most of them are surviving. The stocks are way down, it's clear, but the companies are still hanging in there and in many cases hiring.
Brian Lehrer: Here's a call from Nancy in Melbourne in New Jersey that might in a certain way be related, though I don't think it's what she's going to say to start out. Nancy, you're on WNYC. Thank you so much for calling in.
Nancy: Oh, my goodness, Brian, I'm so excited to be on your show. I love it. [unintelligible 00:10:04]
Brian Lehrer: Thank you.
Nancy: I am in the contract furniture industry. I don't know if I'm allowed to say the company that I work for.
Brian Lehrer: It's up to you.
Nancy: It's called Steelcase. It has been around for over 100 years. We're looking at trying to help the top Fortune 500 companies get their employees back to the office, which I think ties into your conversation about the economy because it has a ripple effect too. People don't go into their office, they don't go out to lunch. They don't use the [unintelligible 00:10:46]
Brian Lehrer: They're not buying office furniture.
Nancy: They're not buying office furniture, yes, which is a big deal. We have had many clients of ours reinvent their workplace. We just did a really exciting event at our showroom talking about hybrid collaboration, because we know that the number one reason people do go back to the office is to collaborate. Those experiences have to be really stellar. They have to be better than what you can do from your living room on a Zoom call.
We're looking at, I think, it's reinventing work and how people work, what they think work is, this four-day workweek that people are talking about and the experimentation that's going on. I think it's a major underreported revolution that's going on about workers and the workplace [unintelligible 00:11:38]
Brian Lehrer: I'm curious, Nancy, for you at Steelcase or anyone else in that industry that you described as contract furniture sales. What would the furniture be? If people are reinventing their offices and their office designed for the hybrid era, what does that mean they're buying? What does that mean your designers are designing?
Nancy: We're designing, primarily, around spaces for focus. When people come in, they want private spaces to do a private phone call or a one-on-one virtual collaboration. The hybrid collaboration really is spaces with flexible furniture in it different spaces that look like their lounge setting. They're highly immersed with technology, the event [unintelligible 00:12:32]
Brian Lehrer: People to join remotely and really be part of the meeting.
Nancy: Exactly. 60% of the meetings that are going on in the workplace are hybrid. You have some people who are virtual and some people who are in the space. They have to be really flexible. As I said, technology-infused environments to support those best experiences. We're focused on equity engagement so that everybody has the same experience. Whether you're in person or you're virtual, everybody has a voice and everybody feels that they're getting the same thing out of the experience.
Brian Lehrer: So interesting. Nancy, thanks for checking in on that. Greg, I said that was going to relate to what you were just describing about the tech sector. Here's how I wonder how you think it does. We had a guest from Cranes recently, your old journalistic employer, after they did an article on the companies with the best retention rates in New York this year. It's the great resignation and all of that. People losing workers, and who are the companies that people are choosing to stay at high levels.
The common thread, according to the Cranes guest, was companies that allow a lot of work from home, people really like it, especially in the tech sector, and finance, and advertising, those kinds of professional sector industries. When you talk about New York being the number two hub for tech jobs in the country behind Silicon Valley, how much will it matter, how much will it no longer matter if tech is the industry that's being most flexible about working remotely?
Greg David: We have to see about where this whole remote thing ends. I think there's a lot of confusion about what the story is here. The New York Region has an occupancy rate of about 50%. New York City's a little higher in which we're getting about 60% of our offices occupied every day but they're not being occupied five days a week. We're defaulting somewhere between three and four days a week in the office, although, you brought up finance, they're the toughest.
Most of the Wall Street firms are requiring five days in the office and getting it done. Of course, something very important happened in November when the mayor and the governor outlined their new New York plan which was an effort pretty broad brush at the moment to reinvent our business districts, primarily Midtown, which is suffering the most. At that point, Eric Adams, who had been campaigning for most of this year for companies to bring back all their employees, indeed, he's required city employees to come back, finally said that some version of remote is here to stay.
There are the sky is falling group. There's a study out of Columbia which says that property values in places like New York City are going to punch by 40%. If they do, that's a disastrous number for the city. Secondly, you brought up the issue of industries that are lagging. There are three, leisure and hospitality, construction and retail. Well, the lagging of these three industries is primarily because people are not back in the office.
Our vacancy rate in offices is approaching 20% and that's a big problem. Leasing activity has slowed as companies decide what they've got to see what the future is like. I'm not prepared to say I know what the future is like. I'm not prepared to say if people are going to work remotely forever. If there's an economic downturn, people think bosses will require more in-office help or the people who lose their jobs are the ones who are working remotely.
This is one of the big questions to answer for next year. It leads me to the one number I want the listeners to really think about, and that number is 85%. New York City has recovered only 85% of the jobs that were lost in the pandemic. The country as a whole has recovered all the jobs that have been lost in the pandemic, and they've even, in recent months, gone to a new record with a million additional jobs.
We will look to 2023, where we have some important problems not recovered unlike the rest of the country. There may be places that are worse like San Francisco, but 85% is not a good number. The Adams administration hates it when that number comes up but it is the most important number we have.
Brian Lehrer: Dan in Brooklyn says he has a report from the field of medicine. Dan, you're on WNYC. Hello.
Dan: Hi. In medicine, we make a distinction between objective data and subjective data. Subjective data is how the patient is feeling, and objective data is what we see from our various means of study for patients.
Brian Lehrer: Measurements.
Dan: I would say that while we are not doing very well, or as well as we want to be doing on the objective data subjectively, the way people have been trying to be resilient in the course of the corona, either through illusions or through effort or through actually finding ways around it is absolutely amazing. I think that, subjectively, people are really holding themselves together in ways in which I would have never expected them to, and overcoming the objective failure in a way that can't be explained. They keep kicking, they keep moving, and they find ways to keep going. I really think that's admirable.
Brian Lehrer: Thank you very much, Dan. Appreciate that thought. Chavisa in Brooklyn, you're on WNYC. Hello, Chavisa.
Chavisa: Hello, thanks for taking my call. I run a small nonprofit arts organization where I'm a member of CoSA, which is a Coalition of the Small Arts Organizations in New York City. I think that the headline this year for nonprofits in general and probably small arts nonprofits would be funders declare emergency over small nonprofits they're dying. For the last few years we've gotten an influx of emergency funding and for some reason this year, that funding dried up. My message to funders is the pandemic is still going. People are still getting sick. People are still off work for many months for time because of long COVID, we are being hit with inflation. This is actually the worst funding year I've seen in about 10 years.
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Brian Lehrer: If it's hitting small arts organizations and you need more emergency funding or continuation of pandemic emergency funding, is it because the in-person audiences aren't coming back to pay their previous share or some other reason?
Chavisa: Sure. A lot of the funders, unfortunately, during the pandemic paused their funding which was really difficult for small arts organizations. At the same time, other funders amped up their funding and ended up making up the difference. Now those funders who amped up emergency funding have decided that the emergency is over and have stopped funding. A lot of the other organizations have not necessarily un-paused their programming or they've pivoted over the last two years or started giving less. That's one factor.
I've also, just for my organization, seen this year a massive drop in small memberships and online sales to individuals that aren't major funders. Yes, you're right, that is drying up, in-person events are about like 1% of what they were previously. It's really hard to get people in the doors. There's a number of factors that are causing this to still be a huge emergency for nonprofits like mine.
Brian Lehrer: Chavisa. Thank you. Unfortunately,
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Greg, Go ahead.
Greg David: We do have an answer to that question and there was a very good article on the Metropolitan Opera in The Times this week. It all has to do with the stock market. The decline in the stock market has made many huge people who give lots of money to arts culture, whatever, paused their contributions because their portfolios at one point shrunk by something like 25%.
The Met Story said that people who'd made these big pledges have now put them on hold while they wait and see where the markets decline. Of course, the market decline is crucial to New York because Wall Street's so important to us. Wall Street profits are down more than 50% so far this year. We've already seen several thousand layoffs at various Wall Street firms and there was a report that Goldman Sachs could be laying off 4,000 people.
This is the major reason why the outlook for 2023 is so much different, so much slower than 2022. We gained some 200,000 jobs this year, but both the independent budget office and the New York City Controller, Brad Lander, predict a gain of only 50,000 jobs next year. If they're right, that means we are not recovering from the pandemic till 2024 or early 2025. There are a lot of uncertainties and a lot of this is due to the FED deciding to raise interest rates to control inflation, but we had an incomplete recovery in 2022 and we are going to have slow growth in 2023. That's what worries me a lot.
Brian Lehrer: Let me ask you this as a closing question. Back to your thought about the recovery being incomplete in terms of the percentage of jobs recovered in New York compare to the rest of the country, how does that intersect with the labor shortage, which would seem to be the opposite of that? Teaching, nursing, I'm not sure of teaching in New York but nationally, but also nursing and Policing NYPD recruitment difficulties in the news in the last few days.
All these fields and hospitality as well facing labor shortages because they've been so stressful in the pandemic era, I guess. Unions are rising up from the railroads to Amazon, to the new school, to the New York Times. New York is edging toward a possible nurses' strike. Many hospitals can't care for their patients like before because there aren't enough staff. How does the labor shortage, the fact that there aren't enough workers to fill a lot of the jobs, I'm sure also in industries I didn't name, intersect with the fact that the demand for labor isn't what it was before the pandemic? It's confusing.
Greg David: Needless to say, [unintelligible 00:24:41] confusing, unclear, who knows? Frankly, there is no good answer. I'm going to give you a couple possibilities here. First of all, I think I've taken this to saying there's a supposed labor shortage. I don't know when companies keep saying they can't find people, there are a whole series of questions you need to ask them. Have they raised their pay enough? What kind of people are they trying to get? Or are they just upset that there's a lot of turnover in the marketplace?
I think you really have to question people about that. Two, we do know that a lot of older people left the workforce. There's a huge growth in retirement. That is a problem that is affecting some people. Third, there's something that doesn't just add up here and I'll give you the statistic that worries me and the people I talk to the most, unemployment among men in New York City age 16 to 24 is now 25%.
It's going up, not down. Unemployment for all other groups is going down, including for women of that age. Many people are worried that it is possible that we have a whole group of people who are becoming disconnected from the labor force. If that's a problem and if that is true, that's going to be a huge economic and social problem for us. Many of the other explanations that we could have had don't apply anymore. One explanation that people like to say is that there were so many benefits in the pandemic that people built up cash cushions and didn't need to work. Clearly, we're well beyond that. COVID is still an issue.
There are still not enough people in, not enough daycare workers, for example. Maybe that is restraining some people coming back to the workforce but we don't fundamentally know. It is a great mystery to me why people in New York would continue to be saying there's a labor shortage when we're so short of our record in jobs when our unemployment rate is almost twice the national average. I don't have a solid answer. I've been asking everyone forever. I haven't heard anything that I'm willing to say this is the reason.
Brian Lehrer: Interesting. Theories and observations and reporting and acknowledgment of uncertainty from Greg David who covers fiscal and economic issues for the news organization, The City and directs the business and economics reporting program at the Craig Newmark Graduate School of Journalism at CUNY. Happy New Year again, Greg. Hope it is a happy new year for the New York City economy which you'll continue to recover. Thanks for continuing to come on with us.
Greg David: Happy New Year to everyone out there. I do hope that things pick up next year. Absolutely.

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