City confounds predictions, gains 14K private jobs in May
June 17, 2012. Growth tempered a bit by losses in public sector employment. An article by Daniel Massey, Crain’s New York.
The city economy continued its remarkable run in May, adding 14,100 private-sector jobs and bringing the total to 70,100 for the first five months of the year, according to an analysis of state Department of Labor data released last week.
The unemployment rate ticked up slightly, to 9.7% from 9.5%, but that increase was because job growth did not keep pace with a jump in the city workforce, which expanded by 11,000 in May. In total, after losses in the public sector, the city netted 12,300 jobs last month, according to a report by real estate services firm Eastern Consolidated.
“A growing labor force shouldn’t be a surprise when we keep coming out every month saying how strong job growth is,” said James Brown, principal economist at the state Department of Labor. When the economy improves, the workforce typically expands as those discouraged from looking for jobs begin hunting again.
The city added 7,800 more jobs in the first five months of the year than it did in all of 2011. Even Wall Street is growing. Defying recent layoffs, the securities industry added 1,500 jobs in May, bringing its increase for the year to 3,400.
One possibility could be that hedge funds are picking up the slack from slimming banking giants, while another explanation is that big banks are hiring more employees to handle ever-weightier regulatory issues. JPMorgan Chase Chief Executive Jamie Dimon told the Senate Banking Committee last week that the company spends $1 billion or more a year on compliance.
Despite the job growth, James Parrott, chief economist at the Fiscal Policy Institute, said that the recovery wasn’t reaching all New Yorkers. The average duration of unemployment in the city is now nearly 10 months, with 110,000 workers out of work for more than a year.
“When you factor in discouraged workers and those working part-time involuntarily, the city’s true unemployment rate is 16%—a crisis by any definition,” he said.
In the past year, most of the city’s gains have come in leisure and hospitality, as well as in professional and business services. From May 2011 to May 2012, the city added 75,700 private-sector jobs, more than three-quarters of which have come in those two sectors.
“A lot of what drives the national numbers, we’re not directly tied to,” said Mr. Brown, citing auto manufacturing and export-related industries as examples. “We’re more tied to business profits and tourism.”
While leisure and hospitality jobs can be low-paying, professional and business services jobs tend to pay relatively high wages. Accounting, advertising and employment services firms have all added significant numbers of jobs this year.
In May, professional and business services added 8,500 jobs, while leisure and hospitality posted a 3,800-job gain. Real estate, meanwhile added 2,200 positions, and arts/entertainment/recreation gained 2,100.
After two solid months, construction shed 3,600 jobs in May, the only industry with a significant loss. Barbara Byrne Denham, chief economist at Eastern Consolidated, said the loss is likely an aberration, as building permits are on the rise.