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 The Five Borough Report

 

Five Borough Report   June 2003

 

Unemployment and Joblessness in New York City

 

Mark Levitan

 

It has been over two years since the demise of the dot com boom and Wall Street’s tumble from exuberance to funk. Although the local recession first took hold at the high end of the city’s economy, much of the subsequent burden has been shouldered by New Yorkers farther down the income ladder.

New York City’s Unemployed

It is the young, the less educated, Blacks, Hispanics, and men who have suffered a disproportionate share of the decline in employment. Workers aged 16-19 and 20-24 make up 3.2% and 10.2%, respectively, of the City’s labor force, but 8.9% and 20.1% of the unemployed. Workers with the least schooling are overrepresented among the unemployed. Those with less than a high school diploma are 16.9% of the labor force but account for 27.4% of the unemployed. By contrast, workers with a Bachelors degree or higher are 34.9% of the labor force but only 21% of the unemployed.

Black residents make up 31.9% of the unemployed but only 23.7% of the labor force. Hispanics comprise 28.2% of the unemployed and 24.0% of the labor force.

Blue collar workers hit hardest

This is not a “white collar recession.” White collar workers -- executives, managers, professionals and technicians -- are under-represented among the unemployed, while blue collar workers -- craft, machine operatives, laborers -- are over-represented. Executives and managers make up 14.5% of the labor force but only 9.1% of the unemployed. Blue collar workers, by contrast, are 20.2% of the labor force, but are 30.0% of the unemployed.

Impact of the Recession: Declining Rates of Jobholding

Even before 9/11, New York City’s economy was contracting. Employment in September, 2001, was 48,000 below its December, 2000, peak. Then came 9/11, and by December the City had lost 141,000 more jobs. Overall, the unemployment rate jumped from 5.7% in 2000 to an average of 8.3% in April,2003.

However, the unemployment rate does not capture the full extent of the recession’s impact. Workers are considered to be unemployed only if they are actively seeking work, and looking for a job in a recession is a discouraging experience. To the extent that some groups rates are more likely to become discouraged and stop actively seeking work than others, unemployment rates will understate the disparate impact of the recession across demographic groups. The employment-population ratio -- the proportion of the working age population with paid employment -- provides a better measure of joblessness and of this “discouraged worker” effect.

The employment-population ratio for men dropped 5.0 percentage points between 2000 and 2002, while the ratio for women dropped a more modest 1.6 percentage points in the same period. Young men have been hit especially hard. The employment-population ratio for young men 16-24 plunged 9.7 percentage points to 36.4%, compared to a 1.2 percentage point dip for young women to 40.4%. The dramatic collapse in jobholding by young men puts their employment-population ratio four percentage points below that of their female counterparts.

Among men, the most disadvantaged groups have suffered the steepest declines in jobholding. The employment-population ratio for Black men fell by 6.1 percentage points to 58.1%, while the drop for Hispanic men was even more dramatic, a 7.0 percentage point plunge to 65.5%. The decline for White men was a more modest 4.2 percentage points, to 73.6%.

What must be done?

The City labor market is in what may become an extended slump. Continued weakness on Wall Street and the city and state fiscal crises will retard growth for some time to come. Without effective action in Washington to provide economic stimulus, job opportunities for out-of-work New Yorkers may be few and far between. Programs that will bolster spending and spur economic growth should be at the top of the federal agenda. Among the needed policies are three essential initiatives.

Extend Unemployment Insurance A further extension of unemployment insurance would not only alleviate hardship among the unemployed but would bolster consumer spending and stimulate economic growth. Benefits flow toward areas with the greatest unemployment, and unemployed workers quickly spend their benefit checks on life’s necessities.

Provide Revenue for the States When State tax revenues fall, they must raise tax rates or cut expenditures. Both reduce spending and deepen or prolong recessions.

Create a Transitional Jobs Program Money is available to put New Yorkers back to work. The Lower Manhattan Development Corporation should establish an emergency transitional jobs program, such as that proposed by the Labor Community Advocacy Network (www.lcan.org). This would make use of wage subsidy funds, giving cash-strapped employers the ability to put thousands of people back to work in a relatively short period of time. Moreover, these subsidies could be utilized in conjunction with funds from the federal Workforce Investment Act to provide participants with new skills along with new jobs.

                                 -- Excerpted from “A Portrait of Inequality: Unemployment and Joblessness in New York City 2002”, CCS Data Brief #8, Community Service Society, Feb. 2003, www.cssny.org

June 2003

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