New York City’s Long-Term Unemployment Rate Continues to Outpace U.S. Rate

Posted by Theresa Devine, July 30, 2010

In terms of job losses, New York City has fared much better than the nation in the last two years, and while the city’s unemployment rate has climbed, it has stayed close to the national unemployment rate. But there is one labor market indicator where New York City is doing worse than the country as a whole. The city’s long-term unemployment rate has shot up and consistently stayed above the nation’s, even as the national level of long-term unemployment has reached record highs.

Since the recent recession began, New York City’s unemployment rate (the share of the labor force not employed and looking for work) has tracked the national unemployment rate quite closely. From late 2007 to early 2009, the city’s unemployment rate was lower than the national unemployment rate, but the differences were no more than one-half a percentage point. From mid-2009 to early 2010, the pattern was reversed, but differences were still small. Both New York City and the nation had unemployment rates of 9.5 percent in June. This recent history is quite different from trends in prior recessions. New York City’s unemployment rate exceeded the national unemployment rate by an average of 3.5 percentage points in 1992 through 1993, and by an average of 2.8 percentage points in 2002 through 2003 (graph).

In contrast, the city’s incidence of long-term unemployment has exceeded the nation’s since 1989. New York City’s long-term unemployment rate (defined as the share of the labor force continuously unemployed for a half year or more) averaged 3.7 percent in 2009, the highest annual rate in the three decades for which we have data. The next highest annual average was 3.2 percent for 1992 and again for 1994. The city’s average long-term unemployment rate far exceeded the national average rate of 2.9 percent last year, which itself was far above its past high of 2.3 percent in 1983 (graph). In the first half of 2010, the national and local long-term unemployment rates both continued to climb sharply, with the U.S. average of 4.3 percent approaching the city average of 4.5 percent.

Last week the President signed into law legislation that extends federal emergency unemployment benefits. Many New Yorkers will benefit from this legislation, although the maximum duration of unemployment benefits for New York State residents will be 93 weeks, rather than a maximum of 99 weeks available in some other states. This is because New York State’s three-month average unemployment rate of 8.3 percent is just shy of the 8.5 percent federal threshold for the higher maximum.