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If New York Is Adding So Many Jobs, How Come Unemployment Remains High?

Thursday, September 20, 2012

The government reported Thursday that New York City’s unemployment rate declined slightly, to 9.9 percent in August. But the good news belies a troubling trend: while New York City is gaining jobs quickly, unemployment remains high — higher than it was in the worst days of the recession in 2009.

It’s a paradox that’s hard to explain. “If we’re adding more jobs, then how is the unemployment rate increasing, why aren’t those people getting hired? That would be my question,” said Heather O’Donnell, a radio ad saleswoman, who was taking a break from work in Bryant Park on a recent afternoon.

Unemployment can sometimes rise in an economic recovery, but it’s unusual for the jobless rate to rise in tandem with net job creation.

“Having studied the New York City economy for 18 years, I’ve never seen this,” said Barbara Byrne Denham, an economist with the real estate firm Eastern Consolidated.

Last month, Denham published a five-page paper entitled “Why Is New York City’s Unemployment Rate Increasing When Job Growth Is So Strong?” Having explored possible explanations, such as a rise in commuter jobs (non-residents are not counted in the city’s unemployment rate), Denham concluded the problem is the formula used by the Bureau of Labor Statistics.

“The 2010 census data severely undercounted the population here in New York City, and that skewed the model pretty severely,” Denham said, noting that earlier models predicted the city’s population would grow by 360,000, while the census found only 166,000 additional residents.

Another paper, by the left-leaning Fiscal Policy Institute, estimates the real unemployment rate to be about one percent lower than the official number.

But the statistician who is responsible for New York City’s unemployment number defends the numbers.

“I think the stats we collect actually paint a very coherent picture of job growth, persistent unemployment, and low wage growth,” said Martin Kohli, chief regional economist with the Bureau of Labor Statistics in New York City.

Kohli said the two numbers, which seem to describe the same thing (working patterns in New York), actually are different: the unemployment rate is derived from a survey of households, while the job creation number comes from a separate survey of employers. Economists tend to put more faith in the employer survey because the sample is larger.

He said there’s no tidy explanation for the apparent contradiction, but it is likely due to a variety of factors: an increase in commuting from outside the city, but also freelancers taking staff jobs, and employed people taking second jobs.

Meanwhile, people restarting their job hunt may be pushing unemployment up.

“It’s all so easy for people to be armchair critics and say, ‘My experience doesn’t match this survey, therefore the survey has to be wrong,’” Kohli said. "That's not the kind of thing that the Bureau can really pay attention to."

The question may have the air of an academic debate, but the fact is the unemployment rate matters to everyone because it tells us how the economy is doing. And right now, the mixed signals are sowing confusion.

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Comments [6]

Andrew

According to the Bureau of Labor Statistics, New York increased its employment by 0.8% overall from August 2011 to August 2012. This will help out those who are searching for jobs in the state. You can also search for jobs in New York using http://www.granted.com, a good source for jobs for all 50 states.

Sep. 25 2012 07:25 PM
MITENS

It's a well known fact that 47% of those who say they are unemployed are victims in their own mind.
Of course, on the other hand, since most job creators are not creating jobs due to onerous regulations and uncertainty, job growth should actually be even better.

Sep. 20 2012 03:24 PM
No Education

Seriously! What an ignorant article. Thirty years ago this scenario was taught within our Universities. We knew then that if the American populace didn't take education seriously that American would become UNEMPLOYABLE. That day is here.
AS the educators taught 30 years ago, if the assembly line person didn't learn to use a computer they wouldn't have a job in the next couple of decades. Again, that day is here.
We have plenty of jobs within the US but we don't have the skilled workers to fill them. People don't apply themselves in school, don't bother to go to a good University, don't bother to remain sober during the week, etc. American workers are quickly becoming unemployable. They did it to themselves and don't seem to care at all. Watch as their big bellies get BIGGER. Lay off the potatoes and gravy, for goodness sakes.

Sep. 20 2012 12:59 PM
Marty Goldberg

Why are all media people jews?

Sep. 20 2012 10:46 AM
Patton

Maybe Governor Cuomo is padding the numbers with the help of the special interest groups that want to run him for President....the special interest groups run NYC'

Sep. 20 2012 10:33 AM
Lisette from Ridgewood, Queens

Well, this article seemed very inconclusive, was kind of hoping for more research/answers. Might be useful to call the local employment agencies or HRA to inquire about their hiring rates. Ask if they are finding reasons why residents are not getting hired. That data would greatly assist those of us who are unemployed.

Sep. 20 2012 08:38 AM

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