Just Released: Labor Markets in the Region Are Exceptionally Tight
At today’s economic press briefing, we examined labor market conditions across our District, which includes New York State, Northern New Jersey, and Fairfield County, Connecticut, as well as Puerto Rico and the U.S. Virgin Islands. As has been true throughout the expansion, New York City remains an engine of job growth, while employment gains have been more moderate in Northern New Jersey and fairly sluggish across most of upstate New York. Nonetheless, it has become more difficult for firms to find workers throughout the New York-Northern New Jersey region. It may not be terribly surprising that labor markets have tightened in and around New York City, where job growth has been strong, but labor markets have also tightened in upstate New York, even in places where there has been little or no job growth. This is because labor markets are tightening as a result of changes in both labor demand and labor supply. In upstate New York, a decline in the labor force has reduced the pool of available workers. Meanwhile, Puerto Rico and the U.S. Virgin Islands are still recovering from the destructive hurricanes last year. As these island economies continue to rebuild, employment has edged up in Puerto Rico and stabilized in the U.S. Virgin Islands.
Led by New York City, downstate New York has experienced strong job growth in recent years, matching or exceeding the national pace. Employment in New York City is up about 25 percent from its trough following the Great Recession, which is considerably more than the nationwide increase. Job growth in Northern New Jersey has been steady, though not nearly as strong. Meanwhile, upstate New York has not fared as well. Albany had seen solid job growth through much of the expansion, but growth has slowed over the past year. In Western New York, after years of modest employment gains, Buffalo and Rochester have seen job growth slow considerably since 2016. On a more positive note, employment has finally started to increase in Binghamton as the region’s manufacturing sector has stabilized following several years of shrinkage in its job base after the Great Recession.
Despite these considerable differences in job growth, there is strong evidence that labor markets have tightened all across the New York-Northern New Jersey region. Unemployment has fallen to exceptionally low levels, reaching historical lows in some places. In New York City, unemployment has dropped to a record low of 4 percent, and is at its lowest level in decades in much of the surrounding area. Even across upstate New York, unemployment has fallen to its lowest level in several decades, including in places that have seen little if any job growth in recent years. In this part of the region, the labor force is declining, reducing the supply of labor and making workers more difficult to find. Further, as labor markets have tightened, our business surveys are showing a pickup in wage growth throughout the region.
As part of our analysis, we also show that the types of jobs gained in recent years differ within the region. While the United States overall has seen fairly broad-based job growth across the wage distribution, job growth in downstate New York has been more polarized, with the largest gains in lower-wage and higher-wage jobs, though there has also been some job growth in the middle of the wage spectrum. By contrast, upstate New York has continued to lose middle-wage jobs, while in New Jersey, the middle has seen solid gains. With some types of jobs growing and others declining, even with tight labor markets, it may still be challenging for some workers to find a good job if they don’t have the skills required for the kinds of jobs that are available in their local area.
For more information on labor market conditions in the region, see the economic press briefing web page.
The views expressed in this post are those of the authors 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 authors.
Jaison R. Abel is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.
Jason Bram is a research officer in the Bank’s Research and Statistics Group.
Richard Deitz is an assistant vice president in the Bank’s Research and Statistics Group.
Jonathan Hastings is a research associate in the Bank’s Research and Statistics Group.
How to cite this blog post:
Jaison R. Abel, Jason Bram, Richard Deitz, and Jonathan Hastings, “Just Released: Labor Markets in the Region Are Exceptionally Tight,” Federal Reserve Bank of New York Liberty Street Economics (blog), December 4, 2018, https://libertystreeteconomics.newyorkfed.org/2018/12/just-released-labor-markets-in-the-region-are-exceptionally-tight.html.