A local deli in Harlem, remains shuttered amid the coronavirus pandemic on July 1, 2020. Photo / September Dawn Bottoms, The New York Times
While the national jobless rate has rebounded as many states started to reopen, New Yorkers continue to lose jobs and seek benefits.
New York City, hit hard by the coronavirus pandemic, is mired in the worst economic calamity since the financial crisis of the 1970s, when it nearly went bankrupt.
The city is staggering toward reopening with some workers back at their desks or behind cash registers, and Monday it began a new phase, allowing personal-care services like nail salons and some outdoor recreation to resume. Even so, the city's unemployment rate is hovering near 20 per cent, a figure not seen since the Great Depression.
What was intended as a "pause" has dragged on so long that for many workers, furloughs are turning into permanent job losses. The sudden shutdown of the city nearly four months ago threw at least 1 million people out of work and threatened the survival of many of their employers.
The layoffs continued in June as some employers gave up hope of a quick recovery or ran out of the federal aid they were using to maintain their payrolls.
Kelvin L. Rolling, 48, was among those affected. A taxi dispatcher at Kennedy International Airport for the past five years, Rolling said he thought he was one of the lucky ones who would hold on to his job despite the plunge in traffic at the airport.
But then in June he was laid off on short notice.
With the city trying to kick-start its economy and in the midst of a phased reopening, Rolling said, "It seems like you would be calling people back, not laying people off."
The pandemic set off an immediate and sweeping reversal of fortune that the city has never before endured, economists said. Most past financial crises were "like a prolonged illness," said Frank Braconi, a former chief economist for the city comptroller's office.
"This was like a heart attack," he said.
Entire industries — restaurants, hotels, theaters and museums and galleries — went from operating at full throttle to being practically shuttered.
Economists said they feared that the fallout would soon spread to other sectors, like education, health care and professional services. Wall Street, a main driver of the city's economy, appears somewhat insulated for now because the markets have rebounded and several of the biggest banks have pledged not to lay off workers during the pandemic.
Many businesses, including restaurants and hotels, are expected to close for good. The picture has grown even grimmer since officials delayed indefinitely the reopening of indoor dining.
While the national unemployment rate fell to 11.1 per cent in June, New York City's rate reached 18.3 per cent in May, the highest level in the 44 years that such data has been collected. (In the Depression, unemployment is estimated to have reached 25 per cent.) The numbers for June will be released July 16.
The highest the city's unemployment rate reached during the Great Recession following the financial collapse in 2008 was about 10 per cent. For a decade after that, the city steadily added jobs, reaching a record-low unemployment rate of 3.4 per cent in February.
The setback has been quick and steep.
Officially, about 670,000 city residents were out of work in May. But the real number is higher because many unemployed people, like workers in the country illegally, do not fit the government's official definition of unemployed.
Even with the restrictions on operating beginning to loosen, workers are still getting bad news from their employers.
When Veronica Carrero, 37, was invited to a virtual staff meeting last month, she hoped to hear that the furlough that had left her collecting unemployment benefits for the first time was ending. Instead, she was told that it would last at least three more months.
The government benefits she has been relying on do not match the salary she was earning as an executive assistant for a travel and entertainment company in Manhattan. But she and her family have been getting by in their Bronx home because her husband has continued working.
The uncertainty about when and if her employer will need her again makes Carrero anxious. If the additional US$600 in weekly benefits she has been collecting from the federal government expires at the end of July as scheduled, she may have to start looking for another job.
"It kind of throws you completely off course," Carrero said. "I don't even want to make any plans for next year.''
The losses have been particularly significant among people of colour: About 1 in 4 of the city's Asian, Black and Hispanic workers was unemployed last month, compared with about 1 of every 9 white workers, the city comptroller's office said.
"New York City is experiencing deep and enduring unemployment, mostly by low-income workers of color, and the city is facing a sluggish recovery with double-digit unemployment," said James Parrott, director of economic and fiscal policies at the Center for New York City Affairs.
Parrott estimates that the city's total job loss since February — counting all the workers in the country illegally and gig workers — could be as high as 1.25 million.
Adam Kamins, a senior economist with Moody's Analytics, said the city is in for "a long slog" to recovery compared with other parts of the country.
New York "was hit harder than anywhere else" and has been "among the slowest cities to reopen," he said.
Residents of the city have filed nearly 1.4 million new claims for unemployment benefits in the 15 weeks since the pandemic began. And the flood of claims is not abating: In the week that ended June 27, the number of new claims filed rose in Brooklyn, while falling only slightly in the city's other boroughs.
The state was so ill prepared to have to pay out so much so fast that it quickly exhausted its unemployment insurance trust fund and had to borrow from the federal government. That debt is US$3.4 billion and rising — more than any other state has had to borrow.
Some employers, like John Fitzpatrick, who owns two hotels in Manhattan, have laid workers off twice during the pandemic.
Fitzpatrick said he put most of his staff on furlough when the city was locked down in mid-March. Then, when he received a payroll-protection loan from the federal government in April, he rehired most of them, as Congress envisioned when it approved the program's creation.
But in June, with no resumption of tourism on the horizon, he had to lay them off again, he said.
Fitzpatrick closed one of his hotels and has kept a small crew operating the other one, near Grand Central Terminal.
A second-generation hotel operator, Fitzpatrick has struggled to hold his business and his staff together. He started tearing up as he described how disappointed his late father would have been to learn that a business bearing the family name had shut down.
With Broadway theaters dark through the end of the year and spectators barred from the US Open tennis tournament, he said, "We don't see any pickup at all until September at the earliest."
By then, he said, not all of his competitors will have survived. "Some of these hotels are not opening again," Fitzpatrick said.
With business and leisure travel at a standstill and no rebound in sight, the city's tourism-dependent businesses have been devastated. About 250,000 of the jobs lost have been in hotels and restaurants.
One of the city's best-known hotels, the 399-room Omni Berkshire Place in Midtown Manhattan, has already closed for good, eliminating 268 jobs.
Dozens of layoff notices have been filed each week by employers unsure of what to tell their workers about the future. Junior's, a family-owned group of restaurants in New York City and Connecticut known for its cheesecake, has warned more than 600 employees that furloughs that started in mid-March will be extended indefinitely.
Alan Rosen, the owner of Junior's, said he was confident he would eventually reopen the company's two restaurants near Times Square. But for now, he said, he is moving cautiously.
In mid-June, he reopened the bakery counter at the flagship location in Brooklyn near the Barclays Center. For that, he brought back about 15 workers, with plans to rehire about 10 more, he said.
With only outdoor dining allowed in the city, he said he could not yet predict when he would call back more workers to reopen the other restaurants.
"If all things were perfect, all these people would still be working for us," he said. "These are tough decisions we have to make."
Without the usual influx of tourists this summer, the city will continue to lose jobs into the fall, and possibly well beyond, some economists said. The city's Independent Budget Office projects employment will continue to decline until early next year, said its director, Ronnie Lowenstein.
"The situation here is so much worse than it has been elsewhere that I think New York City residents are going to be facing an extended period of what we're facing now," Lowenstein said.
Written by: Patrick McGeehan
Photographs by: September Dawn Bottoms
© 2020 THE NEW YORK TIMES
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