July 19, 2017
More Jobs, Rising Wages, Broader Advances: Seven Indicators of New York’s Economic Health
By James A. Parrott, Ph.D.
New York City is in the eighth year of recovery from the 2008-09 Great Recession. This period has been one of historically strong job growth, declining unemployment, and rising minimum wages that are starting to translate into real wage and income gains.
Here are seven views of New York City’s economic health in mid-2017.
In the last three to four years, more of the city’s net job growth has taken place in middle- and high-wage industries like professional and tech-related fields than earlier in the recovery. But growth in low-wage jobs has accounted for much of the net job gains during the recovery, and also since 2000.
In the low 4-percent range in recent months, New York City’s unemployment rate is at an historically low level. The city’s employment rate (also referred to as the employment-to-population ratio) is also at an historically high level. Nationally, the employment rate has inched up during the recovery but is still well below where it was when the 2008-09 recession began, and also below its 2000 peak level.
In a job market with sustained job growth and declining unemployment, economists would expect to see wages rise. And that is what is happening in New York City. The chart below contrasts inflation-adjusted wage change by deciles across the wage distribution for the 2010-to-2013 period to the more recent 2013-to-2016 period.
This is another area where recent economic growth has been better for workers in the Big Apple than for their counterparts at the national level. From 2013 to 2016, real median hourly wages have grown by 8.4 percent here, while for the nation overall the median wage gain has been a more modest 2.8 percent. Increases in the State’s minimum wage since 2013 have helped lift earnings for low-wage workers in New York City.
And for the first time in a very long time, black and Latino workers have shared in local broader wage gains. While black and Latino workers generally are paid less than their white non-Hispanic counterparts, over the past three years hourly wages for the median black and Latino workers increased more than for the median white worker. Lower-paid black and Latino workers (e.g., at the first decile in the wage distribution) also fared better than lower-paid white workers.
Sustained wage gains eventually translate into family income gains, and that was clearly demonstrated in 2015, the latest year for which such data is available. But while median family incomes rose 4.4 percent in 2015 from the year before, that still left the median New York City family with an inflation-adjusted income slightly below the 2008 level, before the worst of the recession hit.
The post-recession recovery in New York City appears to be yielding better family income outcomes, overall and for black and white non-Hispanic families, than have been seen since 1990. For the 2010-to-2015 period, citywide median family incomes rose by 5.7 percent. The median black family saw an 11.5 percent income gain, much better than for white families who saw an increase in line with the citywide gain. For Latinos, on the other hand, median family incomes declined by 1.2 percent, and Asian and all other non-Hispanic families saw a modest 1.8 percent increase. Family incomes have not fared nearly as well so far in this decade as they did in the 1980s, although the gains in the 1980s were made more dramatic by the steep employment and population loss the hit New York City in the 1970s.
While the current recovery is among the longer post-World War II national recoveries, as Federal Reserve chair Janet Yellen has said, recoveries do not die of old age. In the context of what has been, at the national level, the weakest post-recession recovery on record, New York City’s economy has recorded fairly strong job, wage, and income gains. To the extent that the national recovery continues and unemployment stays low, the city should continue to see reasonable growth in wages and incomes.
Economist James A. Parrott is a widely recognized expert on employment and fiscal policy in New York City and State. This month he joins the staff of the Center for New York City Affairs at The New School as director of economic and fiscal policy.
Cover photo courtesy of Geoff Livingston