In the summer of 2019, with the city’s economy booming and tourists arriving in such numbers that a record 67 million will visit New York by the end of the year, leisure and hospitality jobs hit a record high of 474,000.
In the summer of 2022, as the city still struggles to recover from the pandemic recession, the number of jobs in restaurants, hotels, arts and cultural institutions stands at 404,000 – a decline of almost 15%.
Cranes filled the skyline that summer three years ago, and some 163,000 people worked to build new hotels, office buildings and apartment buildings. This summer, 20,000 fewer people are employed in the construction industry, a number that hasn’t fallen in months.
The rise of online shopping had started to hamper retailers by mid-2019, but there were still 346,000 people working in stores. Despite the recovery from the pandemic, that number is only 306,000 today, with little prospect of significant gains in the coming months.
To understand why New York City’s economy is still struggling to recover its pre-pandemic mojo, looking at the reasons behind job losses in those key areas of entertainment and hospitality, construction and retail is the place to start.
July represented a watershed, as the nation recovered all the jobs lost in the pandemic. New York, however, only regained 82%.
Experts are quick to point out areas of strength in the economy.
The tech sector is well ahead of its pre-pandemic employment levels, and gains in the city have outpaced those in the rest of the country. Financials, particularly Wall Street, remained strong throughout the recession, and the recent market recovery has eased fears of layoffs there. Health care is also expanding.
However, those areas have not been enough. And the story behind the weaknesses in leisure and hospitality, retail and construction ties into the city’s biggest new problems: not enough big-spending international tourists and not enough office workers. And, of course, New York was hit first and hardest by the coronavirus and the resulting business shutdowns.
“The pandemic crushed the hospitality industry in New York, especially compared to other cities that had fewer restrictions and where businesses may have received more support,” said Andrew Rigie, executive director of the New York Hospitality Alliance.
The city’s Independent Budget Office compared the recovery of the sector in New York with that of other major tourist destinations such as Orlando, Las Vegas, Washington, South Florida and San Francisco. All have regained a higher percentage of lost jobs than New York.
One reason is that about 19,000 hotel rooms remained closed, according to the Hotel Association of New York. Some of them are concentrated along Lexington Avenue in Midtown, whose clientele was mostly business people coming to visit clients in Midtown.
“When you don’t have busy offices, you don’t have business travel,” said Vijay Dandapani, president of the association.
While many international tourists have returned in surprising numbers, their ranks do not include the Chinese, who are still unable to travel due to that country’s strict coronavirus protocols. China before the pandemic was expected to be the source no. 1 of visitors to the city.
Restaurants are also suffering from the lack of office workers. Last week, Rigie spoke with the owner of two Midtown restaurants. The full service restaurant is doing well. “But the limited-service restaurant is struggling because of the lack of office workers to go to in the morning to get a bagel or to rush something at lunch,” he said.
It’s not just hotels and restaurants, of course.
Broadway attendance is still only about 80% of pre-pandemic levels, and long-running shows are closing this summer, including Dear Evan Hansen and Come From Away.
Transportation jobs are still 10,000 below the start of 2020, as fewer tourists mean less need for businesses and limos, while fewer office workers need fewer taxis and Uber.
And retail districts, especially in Midtown, just aren’t seeing their traffic recover. Nearly half of the stores in Herald Square, a mecca for tourists and office workers, are vacant, according to data from Cushman & Wakefield.
The pandemic has cooled the climate for construction, which has stalled at 15% below its pre-pandemic level.
Almost all the construction going on is in buildings started before the pandemic, notes Louis Coletti, president of the Construction Trade Employers Association, with little new activity in residential, commercial and government-financed construction.
The outlook for the remaining four months of the year has dimmed as surveys show office workers are unlikely to return in large numbers.
“I think there’s reason to be concerned about growth in the rest of the year,” said Michael Jacobs, chief economist for the Independent Budget Office, “especially with regard to office employment.”
A city comptroller’s report earlier this month said polls show there is unlikely to be a significant increase in in-person office attendance this fall. A report from the Federal Reserve Bank of New York last week titled “Remote Work Continues” suggested that current levels of in- and out-of-office work are likely to continue for years.
“Given that New York was at 40% office occupancy for the last two months, it’s become harder and harder to break 40% and get to 50% or 60%,” said Rahul Jain, State Deputy Comptroller.