NYC's economic outlook for 2024? ‘Lopsided’ prosperity, researcher says

Published Dec 31, 2023 at 5:00 a.m. ET

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Published Dec 31, 2023 at 5:00 a.m. ET

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The economic outlook for New York City in 2024 is in line with forecasts for the nation in many respects: slow growth and no recession, the prototypical “soft landing.”

But the not-so-good news for the five boroughs is that slow growth means no “quick takeoff” for an economy still leaving many behind. And some metrics of the city’s economic health — including average income, poverty, income inequality, and unemployment adjusted for race — have become more concerning after the pandemic, according to a prominent research group.

James Parrott is the director of economic and fiscal policies at the New School’s Center for New York City Affairs, known for its deep dives into the city’s economic health, with a focus on the people who make up so many of the numbers. He and his colleagues say that while the city has clawed its way back from the big job losses of the pandemic era, its recovery has been uneven and there's little to suggest the score will change in 2024.

“Not a very promising outlook, but also not a totally bleak outlook,” said Parrott, who has spent more than 30 years analyzing and making recommendations about the city’s economy. “What we're missing out on: We don't have any mechanisms that ensure that the prosperity is fairly shared.”

“As a result, the prosperity we're experiencing is very lopsided," he added.

Gothamist recently sat down with Parrott for his take on the city’s economy and what’s in store for 2024. His views have some weight in the public policy arena, as he’s held positions with the state comptroller’s office, in local government, and as chief economist at the Fiscal Policy Institute, a local think tank.

His outlook in some key areas:

NYC recently set an all-time high for employment with 4.7 million public and private jobs, including 946,000 positions lost during the pandemic that have returned, according to City Hall data.

But Parrott says most of the job growth has come in low-wage sectors of the economy, such as home health care and social services. In the first 11 months of 2023, he says, the city added 38,000 jobs in home health care and another 18,000 in social assistance jobs. Meanwhile, the media and information technology industry lost 28,000 jobs, while finance and insurance lost another 6,000.

Next year, job growth isn’t expected to be as robust as in 2023, and the drift toward low-wage jobs will persist, according to Parrott. “We've had a deterioration in the mix of jobs based on what they pay,” he says.

The city’s unemployment rate, which is currently exceeding pre-pandemic levels and the national average, isn’t likely to drop much either, says Parrott. The local unemployment rate stood at 5.4% in October, compared to 3.9% nationwide.

Parrott highlights a concerning detail behind the employment numbers: a rise in commuters from outside the five boroughs and more remote work. Commuters hold 100,000 more jobs in the city than they did three years ago, while NYC residents hold 100,000 fewer jobs than before.

Some of the commuters may be former New Yorkers who moved out of the city, which could be a boon to local employers who were able to hold onto workers, per Parrott.

“But it's not good for the New York City economy in the sense that those incomes are not being spent in New York City to the same degree they were before,” he says.

More signs of trouble show up in wage data.

“People in the bottom half are losing ground,” Parrott says. “And at the same time, people in the top half, particularly in the top 10% and the top 1%, are prospering almost as if never before.”

With many workers losing economic ground and few taking home even more, income inequality in the city is now the greatest among major cities across the country, Parrott’s analysis shows.

COVID-19 has been a factor: Poverty rose during the height of the pandemic, as median income declined, and wages grew the most for the city’s highest-paid workers, according to the center's research.

From 2019 to 2022, Parrott says, the poverty rate in New York City rose by 2.3%, the most of any major city. Nearly 1 in 5 New Yorkers, or 18.3%, made less than the federal poverty line in 2022: $13,590 for an individual and $27,750 for a family of four.

At the same time, NYC had a historic increase in the number of millionaires in 2021. From 2019 to 2022, according to Parrott, workers in the city's high-income industries saw wage increases more than four times greater than those of workers in low-income industries, found a report by Lauren Melodia, an analyst at the center.

Parrott says he doesn't see the wages picture changing much at all in 2024.

The city's economic outlook worsens when racial disparities are taken into account.

By Parrott’s analysis, NYC is experiencing the largest gap in unemployment between Black and white New Yorkers this century, including during the Great Recession. Among Black New Yorkers, 7.6% were unemployed in the third quarter of 2023, compared to 3.7% of white residents.

There's more worry in wages: In 2022, the median household income in the city dropped by nearly 7% from 2019, or more than four times the national decline and the largest of any major city.

But for Black and Latino workers, the decline was even worse, according to an analysis of Census data that Parrott published in September.

Overall, the city’s median income was nearly $75,000. For white residents it was more than $106,000; for Black residents it was $58,000; and for Hispanic and Latino residents it was $53,000.

NYC also had the largest increase in poverty of any major U.S. city in 2022, per the analysis. Poverty rates for Black and Latino New Yorkers — 22.9% and 24.3%, respectively — were also twice as high as those for white New Yorkers, 11.6%.

Parrott says he doesn’t expect any major improvement in 2024.

In particular, the city and state need to do more to help New Yorkers with housing, according to Parrott. But how to pay for it?

Parrott recommends the state release some of its record-high $22 billion budget reserves to the city and provide more assistance for the migrant crisis, as Mayor Eric Adams has requested. In November, Adams announced widespread budget cuts, citing the cost of the migrant crisis, the end of federal pandemic aid and slow tax revenue growth.

The city also needs to raise revenue another way, says Parrott: a tax hike, which the mayor has signaled he’s open to. Parrott recommends a “modest” increase in taxes on New Yorkers in the top tax bracket, noting the city has gone 30 years without an increase in personal income taxes.

Universities including NYU and Columbia should also start paying the city annual fees for their growing real estate portfolios, according to the economist. A state bill introduced in December would revoke the two universities’ longstanding tax-exempt status; Parrot suggests they instead make what are known as "payments in lieu of taxes," which some other jurisdictions have done with large, tax-exempt property holders.

The payments would “help support the city services that they thrive on and that are key to the economic success of those institutions,” Parrott says.

To ensure more equitable gains across the income spectrum, Parrott also says lawmakers should seek targeted wage increases for low-paying jobs mostly held by women, given large racial and gender disparities persist.

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Arya is a reporter covering race and justice. Got a tip? Email: asundaram@nypublicradio.org or reach Arya on Signal at 512-650-8767.

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