In the rest of the United States, low-wage workers made big economic gains during the pandemic and the recovery, with the largest pay gains in the workforce.
In New York City, high-wage workers did the best while low-wage workers’ pay increased at a much lower rate. The result is that inequality has grown in New York while it has declined nationally.
“There has been a recovery, but it has been more unequal than the rest of the U.S.,” said Mohamend Obaidy, senior analyst and economist at the Center for New York City Affairs, which Thursday issued an in-depth report on wages between 2019 and 2023 in New York and the nation.
The report comes at a time when the data appears to be at odds with Mayor Eric Adams’s talk of a robust city economy.
The mayor regularly trumpets good economic news, emphasizing the city has a record number of jobs, with new businesses being formed at an impressive pace and a dramatic decline in Black unemployment.
But the Center’s study, as well as findings released last week by the Federal Reserve Bank of New York showing a sharp decline in middle-wage jobs — such as administrative, sales and education positions — point to a much more complex story.
So do other data points including:
The city unemployment rate of 5.2% is much higher than the national rate of 4.1%.
While the city has recovered all the jobs lost in the COVID recession, it has increased employment since then by 2% — lagging the nation’s 4% jump.
The majority of recent job gains have come in health care — especially home health care — which are among the lowest-paying positions available.
The Center report adds a disturbing trend on wages to that picture.
Nationally, workers in the bottom 20% by wages saw pay grow by 13.2% between 2019 and 2023, outpacing inflation. The top 20% of wage earners saw pay move up only 4.4%.
The opposite happened in New York City: The lowest-paid workers’ pay rose 6%, while the highest-paid workers saw pay jump 18.2%.
In a way, this reflects the strength of the city’s economy. Wall Street, the city’s most important sector, saw strong profits and paid out big bonuses during the pandemic. Tech, another high-paying industry, powered through the recession, surpassing Wall Street in jobs. Pay also increased at law and accounting firms and other professional service jobs that primarily serve those industries.
High-wage jobs account for a third of all employment in New York City but 69% of increased wages between 2019 and 2023, or twice its share of jobs, Obaidy noted.
That reflects the weaker recovery in New York City, which meant low-wage workers were unable to get the same kind of pay increases as their counterparts elsewhere, especially in sectors like retail and hospitality that remain below their pre-pandemic job levels.
At the same time, New York is seeing its economy being “hollowed out” by losing middle-wage jobs, according to Jaison Abel, an economist at the Federal Reserve Bank of New York.
In a major study of the post-COVID economy released Friday, the Fed found that in the decade before the pandemic annual salaries between $35,000 and $75,000 grew less than 2% in the New york region compared with 26% for low-wage jobs and 27% for high-wage jobs. Since then, middle-wage salaries have declined by 7% while the other two categories both increased by 38%.
The story is similar for the city with job losses in production, sales, administration, security, construction, education, and arts and entertainment. The only middle-wage jobs with gains were in installation and repair.
The Adams administration said it has taken many steps to both improve the economy and help those in need in the city, including decreasing the cost of child care for low-income families, increasing the minimum wage for app-based deliver workers, and connecting thousands to employment, free training, and workforce development through its ‘Jobs NYC’ effort.
“Since day one, the Adams administration has been laser-focused on rebuilding our economy as the city emerged from the COVID-19 pandemic and taking decisive action to make the city more livable and affordable for working-class New Yorkers,” said spokesperson William Fowler. “But we also know that many New Yorkers are still struggling, which is why we’ve put forward proposals like the ‘City of Yes for Housing Opportunity,’ which will help bring down housing costs by making it possible to build more homes across the city.”
Fowler also noted that low-wage jobs pay more than the nationwide average.
The Center’s report also blames the stagnant minimum wage in the city for the widening of inequality.
Between 2019 and 2023, 29 states and the District of Columbia raised their minimum wages an average of 29%, outpacing inflation.
New York City’s minimum wage stayed at $15 for most of that time. Gov. Kathy Hochul rejected a large increase in line with those in other states, forcing a compromise in which New York City’s minimum wage rose by $1 last January and will rise by 50 cents in each of the next two years, after which it will be indexed for inflation.
“The minimum wage acts as a floor for low-wage workers to bargain for higher wages,” said Obaidy. “The higher the floor the more they are able to negotiate higher wages.”