Despite all the layoffs on Wall Street (and in the media industry) and those faux-scientific statistics about how many jobs each Wall Streeter supports, NYC unemployment isn’t that bad yet — at least not compared to the rest of the country.
As of January, unemployment in the city lagged national unemployment by more than half a percentage point.
Ed Glaeser at Economix studies the dynamics of what’s going on:
New York’s relatively low unemployment level reflects a relatively modest decline in the city’s employment. Between January 2008 and January 2009, New York City employment declined by only 1.6 per cent, which constitutes a reduction of 60,000 employees. The biggest component of this loss was a drop of 20,000 in financial employment, about 4.3 per cent of the number formerly working in the financial industry there. Given the magnitude of the crisis on Wall Street, that seems like a pretty modest drop.
The rest of the drop in New York was shared by business services, construction, manufacturing and trade.
He has a few theories as to why:
- Cities have become better, more efficient economies and can naturally provide more employment than a similar sprawled-out population (this is a very charitable view, of course)
- New York City is getting propped up by the rest of the country through bailouts (almost definitely a contributing factor)
- We didn’t have much of a construction/home boom compared to many other states.
- Other sectors are picking up the slack of more abundant labour.
- It’s just a matter of time
Of these, we like the second one (New York is being propped up by the rest of the country) and the fifth that it’s just a matter of time.
Eventually flyover America will begin to revolt in earnest and wonder why their tax money is going toward keeping the NYC economy relatively stable. And when they revolt, that unemployment rate will begin to race higher.
Maybe we should change our opinions on bailouts.