Nearly a Million Unemployed in NYC and the Risks Loom Farther Still
New York City had seen its net unemployment since May of 2019 reach nearly one million residents, and seen its unemployment rate increase from 18.3% in May to 20.4% in June 2020. The whole state is approaching net job losses of 1.5 million.
New York City’s current unemployment rate is so staggering in its dimensions that if it were any other time, then the eye-popping figures might command immediate headlines of warnings of economic collapse, and perhaps its own immediate and extraordinary policy intervention from national institutions like the country’s central bank, the Federal Reserve, and the Congress. But, we are not in normal times, and neither is the city.
Many Americans may feel that New York City, the nation’s largest city and engine to the largest metropolitan economy, already receives undue attention because of its size and its role as host to national media, but Americans of all states need to know that a potential housing collapse due to the gravity of its unemployment rate is a real liability, and it would take on dimensions of metropolitan, national, and global import.
The most relevant set of problems concerns the fact that economic policymaking processes in the United States, in both its monetary and fiscal dimensions, are attending to concurrent disasters in the nation’s macro economy and society. And policymakers are mostly playing defense.
So much of what we understand about urban economics has occurred by observing and analyzing mild economic downturns, during which time strains to the city’s fiscal situation can be remedied by bankruptcy. But, pandemics strain so much, all at once, including city and state revenues and long-term economic output. They also require new essential spending despite dwindling fiscal reserves. And that says nothing of what it is requiring of the people who call New York City home, and suddenly find not only their financial well being threatened, but that of the near entirety of lower income neighborhood communities.
There is likely still time, before an economic sinkhole appears, pulling the center of the United States’ financial system into a localized housing market downturn reminiscent of ’07 and ’08,threatening even greater social and economic costs than those of the pandemic slow down.
But it is honestly unclear how much of it there is before the gravity of these levels of unemployment envelopes the city’s operational phased reopening, its recovery of local economic activity, and the social infrastructure of its market economy and financial system, New York City’s middle and working-class communities.
Local, state, and federal intervention need, then, to accelerate ahead of the rate of collapse economic activity and tax revenues to heal the damage at the grassroots.
Even as New York State passes a key extension of benefits, the liminal statuses of freelance employees and undocumented immigrant communities went unattended by these provisions, showing why this situation is one in which maybe only the federal government can deliver direct support at scale.
Indeed, in normal times, those without yawning state and local budget gaps, the city commands impressive instruments of social, housing, and economic development policy. But in this pandemic, city and state revenues fell alongside dramatic state demands to quarantine, slowing its economic activity to historic lows. Further, city and state capacities to initiate policy have been overwhelmed with demand for benefits, representing the constraints to the mitigation of the economic effects of the rapid quarantine adjustments in the decentralized pandemic response.
Take, for instance, the impact of the city’s emergency adjustments to its fiscal spending, whereby shifts to prepare for the fiscal realities of pandemic slowed the city’s hiring, left others at risk of furlough, and withdrew support for important education and housing spending. But even with the City’s newly incorporated fiscal year 2021 budget and proposal to shift police spending to social spending, historic vulnerabilities in its housing market face still limited fiscal and bureaucratic capacities.
Moreover, homelessness becomes a growing risk for unemployed individuals without access to benefits and running behind on monthly rental payments, their options to improvise housing solutions are rendered even more limited in a pandemic that requires us to socially distance ourselves.
As of now, renters have largely been able to make accomodations for rental payments, helped by the state’s support for landlords and local moratoriums temporarily holding the legal mechanisms of eviction at a pause. In New York City these are important indicators of a recovery’s success because unlike most of the country, the majority of its residents are renters and not homeowners. But, for how long can this balance continue before evictions beginand mutual aid networks give way?
The unemployment liabilities in New York City are those of a single locality, but its troubles are also a clear call to action for the nation at local and state levels.
Cascading economic collapses in the recovery period would spell disaster reminiscent not only of this city’s fiscal crisis in the 1970s, but also the depression-era, then requiring even greater interventions by governments by the city, state, and country, but only after causing undue human tragedies with influence that could permeate our national and global economies.
Innovative proposals that meet the threats of historical levels of unemployment and financial strain at scale, or at least with regards to the scale of previous interventions, and are implemented with regard for other distortions in the pandemic era macro economy. Acting with immediacy would bolster the current trajectory of families, the unemployed in surviving this pandemic, and the overall recovery from the economic downturn.
In taking New York’s issues as a useful vantage point for similar conditions manifesting in the rest of the country, then Congress might recognize the urgent needs to provide extraordinary levels of direct aid to citizens and non citizen residents.
Congress might also contemplate legislative fixes to the federal reserve system to extend new and emergency authorities to intervene into the affairs of states. Along with these demands, the public and local leaders could ask for more transparency in how the federal reserve system is contemplating mitigating risks to the middle and working classes and local communities all across the country, of which New York City is only one.
Said differently, direct intervention into the grassroots and local elements of our macroeconomy lowers the risks of more acute financial pain and systemic economic damage, all of which could quickly manifest beyond New York City’s metropolitan area and weigh outward onto the nation’s and the global economy’s broader recoveries.
Darius Callier, a former policy analyst for the New York City Mayor’s Office of Operations, (2016–2018), researches and writes about issues of political economy and urban social policy from Georgetown University’s Department of Government as a graduate student.
