Liberty Street Economics

« | Main | »

May 7, 2024

Many Places Still Have Not Recovered from the Pandemic Recession

More than four years have passed since the onset of the pandemic, which resulted in one of the sharpest and deepest economic downturns in U.S. history. While the nation as a whole has recovered the jobs that were lost during the pandemic recession, many places have not. Indeed, job shortfalls remain in more than a quarter of the country’s metro areas, including many in the New York-Northern New Jersey region. In fact, while employment is well above pre-pandemic levels in Northern New Jersey, jobs have only recently recovered in and around New York City, and most of upstate New York—like much of the Rust Belt—still has not fully recovered and has some of the largest job shortfalls in the country.

In this post, we examine the uneven geographic recovery from the pandemic recession, including why some places are finding it so difficult to recover. Many of the places that have not regained the jobs lost were hit particularly hard by the pandemic, leaving a deeper hole to dig out of. Further, these places tended to be slow-growing local economies leading up to the pandemic, leaving less momentum for a full recovery, and they face ongoing struggles finding the workers they need to grow. Indeed, with such persistent headwinds, many of these places are likely to continue to struggle to fully recover from the pandemic recession.

Most Places Have More Than Fully Recovered, But Many Have Not

Employment fell nearly 15 percent in the United States between February 2020 and April 2020—a shockingly large decline in such a short period of time. The country had dug itself out of this massive hole by the summer of 2022, recovering all of the jobs that were lost, and employment is now nearly 4 percent above pre-pandemic levels. As the map below shows, however, the recovery has been uneven and remains incomplete in many places. Indeed, while most metro areas have recouped the jobs that were lost during the recession (shown as blue dots), more than 25 percent still have not (shown as red dots). Most of these areas are concentrated in the Rust Belt along the Great Lakes, though clusters are present in parts of the South—Louisiana in particular—as well as in California, Oregon, and Hawaii. In fact, employment is still more than 5 percent below pre-pandemic levels in New Orleans, and more than 3 percent below in Honolulu and San Francisco. Likewise, sizable job shortfalls remain in Cleveland, Detroit, and Pittsburgh. At the other end of the spectrum, employment in fast-growing parts of the country such as Austin, Boise, Phoenix, Raleigh, Charleston, and Sarasota is now more than 10 percent above pre-pandemic levels. (Download the full set of metro-area data and rankings).

An Uneven Geographic Recovery from the Pandemic Recession

Map of the United States, with blue dots indicating regions where employment has recovered from the pandemic recession as of March 2024 and red dots indicating those where it has not.

Sources: U.S. Bureau of Labor Statistics; Moody’s Economy.com.

Much of The New York-Northern New Jersey Region Is Still Way Behind

The New York-Northern New Jersey region was hit especially hard by the pandemic, and has been slow to recover. The chart below shows the change in employment from February 2020 to March 2024 for local areas in the region compared to the nation as a whole.

Large Job Shortfalls Remain in Much of the N.Y.-Northern N.J. Region

Bar chart with horizontal bars showing the percent change in employment for local areas in the NY/Northern NJ region, with color coding based on sub-area (upstate, downstate, NJ, etc.). Bars for NJ, Fairfield, NYC and Long Island all extend to the right of the zero line, showing positive growth, while most other bars extend to the left.

Sources: U.S. Bureau of Labor Statistics; Moody’s Economy.com.

Employment is well above pre-pandemic levels in Northern New Jersey, though generally to a lesser extent than nationally, and is firmly above pre-pandemic levels in Fairfield, Conn. Though it took one-and-a-half years longer than for the nation as a whole, New York City has now recovered the jobs that were lost during the pandemic recession, but only just so, leaving it well behind the nation. Notably, the jobs gained in New York City during the recovery have not been the same as the jobs that were lost. Indeed, much of the City’s job growth has been in the healthcare sector, which is up almost 14 percent compared to pre-pandemic levels. And while there has been growth in high-paying sectors such as finance and business services during the recovery, lower-paying sectors such as retail, leisure & hospitality, and personal services that depend on foot traffic from office workers and visitors continue to lag.

While Long Island has just recently fully recovered to pre-pandemic employment levels, job shortfalls remain in much of the rest of New York State, including Kingston and Poughkeepsie as well as nearly every metro area in upstate New York, where some of the largest job shortfalls in the country remain. Indeed, Elmira’s employment level is still 5 percent below its pre-pandemic benchmark, ranking as the eighth-largest job deficit of all metro areas in the country. Utica, Glens Falls, Ithaca, and Poughkeepsie all have job deficits ranging between 2.6 and 3.1 percent, ranking among the twenty-five largest shortfalls in the nation. Focusing on upstate New York’s largest metros, Syracuse has now only just recovered the jobs that were lost, and Albany, Buffalo, and Rochester all have job deficits around 0.6 to 0.7 percent.

Why Are Some Places Finding It So Hard to Recover?

The metro areas that are lagging in the jobs recovery share some common features. First, many of them were hit particularly hard during the initial shock, leaving a bigger hole to dig out of. On average, the places that have not yet recovered experienced an employment decline of 16.1 percent during the pandemic recession compared to a 13.4 percent decline in the places that have recovered. While industry composition certainly played a role in the depth of the decline—in particular, local economies reliant on tourism suffered large losses—declines were quite steep in places where the pandemic first took hold. Specifically, clusters of job deficits persist in New York, California, and Michigan, all of which emerged as coronavirus hot spots and had outsized job declines early in the pandemic. Indeed, initial job losses in the New York-Northern New Jersey region averaged almost 19 percent, and parts of California and Michigan saw initial job losses well above 20 percent.

In addition, many of the places that have not recovered were slow-growth economies heading into the pandemic, leaving less momentum to grow and recover coming out of it. Indeed, the metro areas with job deficits saw average annual job growth of just 0.5 percent in the five years leading up to the pandemic, compared to 1.5 percent, on average, for those that have recovered. Over the past year, slower job growth in the areas that have not yet recovered has resumed.

Further, many places that have not recovered just don’t have the workers to allow their local economies to grow. With persistent worker shortages across the country since the pandemic, labor has often been hard to find, and that’s been especially true in places that still have job deficits, as shown in the chart below. Here we plot pre-pandemic job gains/deficits for local areas against the change in that area’s labor force since the pandemic hit. While remote work has decoupled where people live and work to some extent, the vast majority of workers still live in commuting distance to their employers. Indeed, the clear upward-sloping pattern shows the close connection between job growth and the availability of workers both across the country and within the region.

Worker Availability Contributing to Persistent Job Shortfalls

Scatter plot with four quadrants, showing the percent change in labor force against the percent change in employment for all metro areas in the U.S. Areas in the NY/NJ region are shown as colored dots corresponding to their sub-area (upstate, downstate, etc.), while gray dots represent the nation's other metros.

Sources: U.S. Bureau of Labor Statistics; Moody’s Economy.com.

Local areas shown in the upper right quadrant, including those in Northern New Jersey, have seen growth in their local labor forces, and employers are more able to find the workers they need. As a result, such places are seeing employment climb well above pre-pandemic levels. At the other end of the spectrum, areas in the lower left quadrant have seen their labor forces shrink and have job deficits. Parts of upstate New York such as Binghamton, Elmira, and Utica saw labor force declines, which were in fact already occurring before the pandemic hit, in part due to population aging and people leaving the area. Clearly, more people willing and able to work will be required to achieve a full recovery in this part of the region, but with ongoing long-term labor force decline, these places and others like them are likely to continue to struggle to gain back the jobs that were lost during the pandemic recession. New York City has been able to gain back the jobs that were lost despite a declining local labor force, largely because it can draw workers from a broader surrounding geographic area.

The New Normal Is the Old Normal

Four years after the pandemic hit, historical growth patterns have generally resumed throughout the country after a period of rapid recovery. The places that were growing more strongly before the pandemic have generally recovered and are growing more strongly today, while many places that lagged are still struggling to recover. Indeed, more than a quarter of the country has not gained back the jobs that were lost during the pandemic recession, including most of upstate New York. Some places in upstate New York were hit by a “triple whammy” of slow growth leading up to the pandemic that has now resumed, a deeper hole when the pandemic hit, and a declining labor force. As such, upstate New York, and many places like it, may well continue to struggle to reach employment levels seen before the pandemic.

Chart data excel icon

Photo: portrait of Jaison Abel

Jaison R. Abel is the head of Urban and Regional Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

Richard Deitz is an economic research advisor in Urban and Regional Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

Photo: Portrait of Jonathan Hastings

Jonathan Hastings is a research associate in Urban and Regional Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

Photo: portrait of Joelle Scally

Joelle Scally is a regional economic principal in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:
Jaison R. Abel, Richard Deitz, Jonathan Hastings, and Joelle Scally, “Many Places Still Have Not Recovered from the Pandemic Recession,” Federal Reserve Bank of New York Liberty Street Economics, May 7, 2024, https://libertystreeteconomics.newyorkfed.org/2024/05/many-places-still-have-not-recovered-from-the-pandemic-recession/.


Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

We saw this in NOLA and Miss Gulf South after Katrina hit – disasters speed up by many years trends that are in progress. Insitutions and companies hanging on by a thread die, but new things can blossom from the disruption. In NOLA growth was inflow of laboroers for rebuilding and high school / college students working on relief efforts (some who returned after college to work).

The comments to this entry are closed.

About the Blog

Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

Economic Research Tracker

Image of NYFED Economic Research Tracker Icon Liberty Street Economics is available on the iPhone® and iPad® and can be customized by economic research topic or economist.

Economic Inequality

image of inequality icons for the Economic Inequality: A Research Series

This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.

Most Read this Year

Comment Guidelines

 

We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:

Please be brief: Comments are limited to 1,500 characters.

Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.

Please be relevant: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post.

Please be respectful: We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will
not be posted.‎

Comments with links: Please do not include any links in your comment, even if you feel the links will contribute to the discussion. Comments with links will not be posted.

Send Us Feedback

Disclosure Policy

The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.

Archives