City’s Unemployment Rate Jumps Higher Than National Rate, Despite Addition of Jobs

By Kieran K. Meadows

New York City’s unemployment rate soared to 9.6 percent in July, up from 9.4 percent in June, making it the first month in which the city’s rate was higher than the national rate, according to data released by the state Department of Labor. The U.S. unemployment rate currently stands at 9.4 percent.

“This is something we’ve been expecting for awhile,” said James Brown, the principal economist for the New York State Labor Department. The city was actually quite late into this national recession, he said, compared to some other parts of the country, which saw their economies slowing down since 2006.

“We had pretty positive numbers well into 2008, but we are slipping fast,” Brown said.

The city’s economy has weakened significantly since this same time last year, when the unemployment rate was more than four percentage points lower. Since August 2008, the month the city entered the recession—almost a year behind the nation—it has lost 72,300 jobs.

Yet, in the face of these bleak numbers, there was job growth in the city in July, after months of steady declines. The city added 39,200 jobs in July, according to seasonally-adjusted data from Eastern Consolidated, a real estate investment services company.

While 25,000 of added jobs were in local government, the private sector still added 13,600 jobs in July. Employers added 3,100 jobs in health services and 5,500 jobs in private education. The film industry added 4,000 jobs.

The ostensible inconsistency between higher unemployment rates and the addition of jobs may be attributed to the different methods used to obtain the numbers.

“The two can differ because they are two conceptually different measures,” said Theresa J. Devine, an economist with the Independent Budget Office.

Job figures are obtained from payroll data that businesses submit to the state department of labor; whereas the unemployment rate is an estimate derived from a phone survey of those who have looked for work in the previous four weeks.

Still, the strength in construction was particularly surprising to economists, a sector to which employers added 2,400 jobs in July.

“I think it’s a statistical fluke,” said Barbara Byrne Denham, the chief economist for Eastern Consolidated. With the buildings department reporting 400 construction projects stalled, to say they added jobs, she said, “it’s irrational.”

However, other economists speculated that there could be plausible explanations for the uptick in construction jobs.

Brown, of the state labor department, said that developers may have wanted to finish construction projects that were almost completed when lending came to a grinding halt last Fall. Developers may have been willing to go into the red in order to finish a building that was more than halfway done.

“If you don’t finish the building, there’s no way you can pay it off,” Brown said, adding that materials may have already been bought.

Devine, of the IBO, had another idea. “It could be the weather,” she said. “June was really wet.”

If contractors suspended work because of the rain, she reasoned, then the workers would remain on payroll, and therefore show up in jobs data. However, those same workers would have been out of work on those dates, so they may have also ended up in the unemployment numbers.

While it is impossible to know, Devine could be on to something. It rained 14 out of the first 16 days of June this year in New York City, according to the National Weather Service.

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