Khaled Eltokhy and James Orr
January 20, 2025
By the start of 2024 New York City employment had reached its pre-pandemic level of 4.7 million jobs, and more than 55,000 new jobs were added through November. The city’s recovery from the significant pandemic-related disruptions defied some predictions though several city industries continue to face challenges. In this post we look at the industries leading the recovery and expansion of jobs, including the traditionally strong Healthcare and Professional and Business Services industries, along with Finance. We also look at industries where job counts have not yet recovered, including Retail Trade where the adverse effects of efforts to control the pandemic, as well as the increase in remote work, continue to have an impact. We then point to a number of factors that could impact the growth of city employment this year.
Employment Recovery in the Nation, New York State and New York City
New York was the epicenter of the Covid-19 pandemic. In the space of a few months in early 2020 there was a staggering loss of life in New York City and the efforts to contain the spread of the virus lead to the loss of over 950,000 jobs—approximately 20% of overall city employment. A significant number of deaths and job losses also occurred in other parts of the downstate area and upstate New York, as well as across the nation.
Figure 1 traces out the downturn and recovery of jobs in the nation, New York State and New York City. Nationally, the impact was substantial but less severe than that in the state or city. It took the state and city about four years to regain their pre-pandemic employment levels.
The recovery of employment has returned the unemployment rate in New York to roughly pre-pandemic levels. Figure 2 below shows the sharp rise in rates at the onset of the pandemic and their subsequent gradual reduction in the nation and in New York State and City. Unemployment rates in the city have ticked up recently and are now slightly above their year-ago levels.
Both the pandemic-related employment losses and the pattern of employment recovery have varied across industries. In Figure 3, the Healthcare and Social Assistance industry is shown to have had a relatively mild employment downturn and one of the strongest recoveries. The industry had been expanding prior to the pandemic and after some initial job losses employment continued to grow in part to meet the demand for pandemic-related services. Jobs here continue to grow with a sizeable share of the job growth in the home health care segment of the industry. Currently, the workforce is about 20 % larger than in early 2020.
Two office-using industries—Professional and Business Services and Finance and Insurance, which directly account for more than one million jobs in the city—saw relatively mild downturns and relatively rapid recoveries. Unlike the personal services industries, many of the occupations here do not require a lot of face-to-face interactions which allows workers to work remotely. Employment counts in the Professional and Business Services industry have only edged up recently while job counts in Finance and Insurance have seen a bit stronger growth. In the securities sector, or Wall Street, employment declined only slightly with the onset of the pandemic and has held fairly steady since then. Employment stability in this sector is critical: as of 2024, average annual incomes are approximately $470,000, and the sector generates over 15% of all earnings in the city.
Both the Retail Trade and the Accommodation and Food Service industries saw large employment declines at the onset of the pandemic. There is little substitute for face-to-face interactions here and the effective shutdown of the city to help prevent the spread of the virus took a huge toll. Employment in the Accommodation and Food Service industry has seen fairly steady growth, though not yet sufficient to regain the lost jobs. Employment in the Retail Trade industry continues flat to down. Prior to the pandemic jobs in several segments of the industry were declining and the pandemic-related declines in foot traffic due to remote working and the lack of tourists further eroded employment. The recovery has brought a return to employment in
several sectors, such as grocery stores, but e-commerce trends appear to be a factor stunting the recovery in sectors such as department stores.
A comparison of average employment levels in the period September to November this year with the similar period in 2019 shows some interesting job developments in the city. Job gains in the two transportation-related industries in Figure 4 below may not be at all surprising to residents and visitors.
The air transportation industry in New York City now employs almost 3,000 more workers than it did prior to the pandemic. The sector includes workers in airlines, airport operations, and airport enterprises, and passenger traffic at the region’s airports is up over its 2019 levels. Couriers and Messengers also saw employment surpass 2019 job counts. Workers here are engaged in delivering documents and packages and they may use bicycles, motor vehicles or public transportation. Employment in a third industry, Building Construction, has not yet reached its pre-pandemic level. This may be surprising to those out and about in the city as new construction and renovations certainly seem to be omnipresent.
A Closer Look at Residents, Office Workers and Visitors
There are likely now fewer people in New York City on any given day than before the pandemic. As the Covid-19 epidemic spread in New York City in early 2020, a number of residents opted to move out of the city. The latest estimates, July 2023, show 8.26 million residents currently in the city, a decrease of about 546.000 since the 2020 Census estimate, with the decline driven largely by these early movers. (These estimates exclude the increase in New York City’s shelter population in 2022 and 2023). While the net flow of residents out of the city continues, it has returned to its pre-pandemic volume, similarly with net international migration to the city. As a result, population losses have slowed considerably.
While the number of office jobs in the city now roughly matches or exceeds pre-pandemic levels, working remotely is a common feature of many of these jobs. One survey finds attendance in offices to be 72 percent of pre-pandemic levels and another measure similarly shows office visits are now about 80 percent of pre-pandemic levels. On this measure, each office worker is now out of the office on average one additional day each week. One direct effect is reflected in the high office vacancy rates in Midtown and Downtown Manhattan, and fewer workers in offices has also had negative effects on activity in nearby restaurants and retail businesses.
The figure below shows the city to still be a magnet for tourists.
After declining sharply during the pandemic, the number of both domestic and international tourists has rebounded. Spending by these visitors is crucial for multiple industries, particularly retail, and leisure and hospitality. While hotel occupancy rates have improved significantly, the number of tourists visiting the city in 2024 is still below its pre-pandemic number. The forecast has the number of tourists matching pre-pandemic levels this year.
Looking Beyond the Recovery
Employment in New York City is expected to grow but at a somewhat slower pace over the next several years. Even with this job growth, an ongoing issue is how many of the office workers will come into the city to work each day. A recovery to pre-pandemic levels would help several sectors, particularly Retail Trade, and some major firms have called for a return to a five-day week. However, a hybrid of home and office work appears to be a common office model.
A number of national factors are likely to affect the jobs picture in 2025. One is the potential impacts of the policies of the new administration. There is not enough information now to evaluate their impact, but potential changes to immigration policy, tax policies, and the amount and composition of Federal spending will likely affect the trajectory of city employment.
Local issues will have an impact as well. New York City just implemented a congestion pricing plan for the Manhattan Central Business District. The goals of the plan include easing traffic and improving air quality and using the revenue to support public transportation. The plan has been controversial and its costs and benefits will begin to play out this year.
The city will also have to continue to address the issues surrounding the more than 200,000 asylum seekers who have arrived in New York City since April 2022. Under its “right to shelter” mandate, the city must provide housing and basic services to those without homes. Currently, the city is providing shelter and services to approximately 65,000 asylum seekers. A recent report shows the city recorded expenditures of $5.2 billion in FY 2023 and 2024. Aside from the consideration of costs, it should also be noted that immigrants have historically always been a part of the New York City economy. Immigrants currently make up 36 percent of city residents and 43 percent of the city’s workforce. Analysts argue that new arrivals could help to bolster the city’s workforce and contribute to the economic recovery, and they urge the Federal government to do more to help the cities around the country that welcome new arrivals.
