Why is New York’s economy still struggling? Take a close look at construction, entertainment and retail

In the summer of 2019, with the city’s economy booming and tourists arriving in such numbers that a record 67 million will visit New York by the end of the year, leisure and hospitality jobs are reach a record 474,000.

By the summer of 2022, while the city is still struggling to recover from the pandemic recession, the number of jobs in restaurants, hotels, arts and cultural institutions stands at 404,000, a drop of almost 15%.

Three years ago, cranes crowded the skyline that summer and some 163,000 people worked to install new hotels, office buildings and residential buildings. This summer, 20,000 fewer people are employed in the construction sector, a number that has not moved in months.

The rise of online shopping had begun to pinch retailers by mid-2019, but 346,000 people still worked in stores. Despite the recovery from the pandemic, that number is only 306,000 today, with little prospect of significant gains in the coming months.

To understand why New York City’s economy is still struggling to regain its pre-pandemic pace, look at the reasons for lagging job numbers in these key areas of entertainment and hospitality, construction and retail is the place to start.

July represented a turning point as the nation regained all the jobs lost in the pandemic. New York, however, has recovered only 82%.

Experts are quick to point out the economy’s areas of strength.

The tech sector is well ahead of its pre-pandemic employment level and gains in the city have outpaced those in the rest of the country. Finance, especially Wall Street, remained strong during the recession, and the recent market rally has eased fears of layoffs there. Healthcare is also expanding.

These areas, however, have not been sufficient. And the story behind the weaknesses in leisure and hospitality, retail and construction connects the city’s biggest new problems: not enough high-spending international tourists and not enough office workers, period. And of course, New York was hit first and hardest by both the coronavirus and the resulting business shutdowns.

“The pandemic crushed the hospitality industry in New York so much, especially compared to other cities that had less restrictions and where businesses could have received more support,” said Andrew Rigie, executive director of the New York Hospitality Alliance. .

The city’s Independent Budget Office compared the sector’s recovery in New York to that of other major tourist destinations such as Orlando, Las Vegas, Washington, South Florida and San Francisco. All have regained a higher percentage of lost jobs than New York.

One reason is that about 19,000 hotel rooms remained closed, according to the Hotel Association of New York City. Many of them are concentrated along Lexington Avenue in Midtown, whose main clientele were business people visiting Midtown clients.

“When you don’t have busy offices you don’t have business trips,” said Vijay Dandapani, president of the association.

While many international tourists have returned in surprising numbers, their ranks do not include the Chinese, who are still unable to travel due to that country’s strict coronavirus protocols. China was expected to be the No. 1 source of visitors to the city before the pandemic.

Restaurants also suffer from a lack of offices. Last week, Rigie spoke with the owner of two Midtown restaurants. The full service restaurant is doing well. “But the limited-service restaurant is struggling because of a lack of office workers to stop by in the morning to pick up a bagel or go out to lunch for something,” he said.

It’s not just hotels and restaurants, of course.

Broadway attendance is still only about 80 percent of pre-pandemic levels, with long-running shows closing this summer, including “Dear Evan Hansen” and “Come From Away.”

Transportation jobs are still 10,000 below early 2020, as fewer tourists mean less need for businesses and limousines, while fewer office workers need fewer taxis and Ubers.

And retail districts, especially in Midtown, simply aren’t seeing their traffic recover. Nearly half of the stores in Herald Square, a mecca for both tourists and office workers, are empty, according to data from Cushman & Wakefield.

The pandemic has cooled the climate for construction, which has stalled 15% below its pre-pandemic level.

Virtually all ongoing construction is on buildings started before the pandemic, said Louis Coletti, president of the Construction Business Association, with little new activity in residential, commercial and government-funded construction.

The outlook for the remaining four months of the year has been dampened by surveys showing that office workers are unlikely to become old again.

“I think there’s reason to be concerned about growth for the rest of the year,” said Michael Jacobs, chief economist at the Independent Budget Office, “particularly in terms of office occupancy.” .

A report from the municipal intervention earlier this month said that polls show that there is not likely to be any significant increase in in-person attendance at the office this fall. A report by the Federal Reserve Bank of New York last week titled “Remote work is stuck” suggested that current levels of in- and out-of-office work are likely to persist for years.

“With New York being at 40% office occupancy for the last two months, it’s become harder and harder to get past 40% and get to 50% or 60%,” said Rahul Jain, subcontractor of the state

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