Main Street

New York City Unemployment at 16-Year High

This we know: The crisis in the financial industry brought on a financial crisis around the country, and contributed to the effects of the recession, and its accompanying unemployment. But in some places, the effects were a little more direct as far as unemployment. Where most of the country is Existing Recession + Financial Industry Crisis = Unemployment Due to Lack of Available Credit, Depressed Spending, Etc., New York City is Financial Industry Crisis = A Lot of Laid-Off Financial Industry Workers. Oh, and also all that other stuff.

My sympathy for the multimillionaires in that industry, the ones who gambled our economy on credit default swaps and a housing bubble fed by subprime mortgages is…what’s the word I’m looking for? It’s definitely limited. I’m also thinking of Jo Dee Messina’s “My Give a Damn’s Busted.” But those people had clerical and custodial and security and data entry staff, and a dozen or two other kinds who were never millionaires and did nothing to cause this.

Continuing layoffs on Wall Street drove New York City’s unemployment rate to 10.3 percent in August, a 16-year high that underscores the need to retrain former financial services workers for other jobs, state officials said Thursday.

In the year since the Lehman Brothers investment bank collapsed and others had to be rescued from failing, the number of unemployed city residents has risen to more than 415,000, the highest total on record. The still-shrinking financial sector, which had been the main engine of employment growth in the city before the downturn, has essentially been declared to be in a state of emergency.

In fact, I know someone who had a steady temping job at an investment bank/security firm/what-have-you at the time it collapsed. He found himself out of work, and the fact that he landed on his feet (thanks to a blog) doesn’t help all the people who didn’t.

Neither do optimistic statements from elsewhere:

Referring to the recent pronouncement from Ben S. Bernanke, the chairman of the Federal Reserve, that the national recession is probably over, Mr. Paterson said, “What he’s saying about the national recession doesn’t apply to us.” He said New York faced at least another year of “tough sledding.”

And neither does a recession ending without a real recovery, as San Francisco Fed President Janet Yellen says is likely:

Much of the recent economic data suggest that the economy has bottomed out and that the worst risks are behind us. The economy seems to be brushing itself off and beginning its climb out of the deep hole it’s been in.

That’s the good news. But I regret to say that I expect the recovery to be tepid. What’s more, the gradual expansion gathering steam will remain vulnerable to shocks. The financial system has improved but is not yet back to normal. It still holds hazards that could derail a fragile recovery. Even if the economy grows as I expect, things won’t feel very good for some time to come. In particular, the unemployment rate will remain elevated for a few more years, meaning hardship for millions of workers.

Don’t get me wrong. It’s good—it’s really good—that things have stopped getting worse. It’s good the hole isn’t getting any deeper. But, to continue the metaphor, I’m just not cheering up until we’re not actually standing in a hole anymore. For New York City especially, it looks like that’s going to be a while.

Tags: unemployment