David Robinson: As unemployment drops, low-wage workers take the hardest hit

Sep. 22--There was a glimmer of good news for the Buffalo Niagara economy on Tuesday, with the local unemployment rate taking its biggest drop since May.

But it's not time to celebrate: At 10.8%, an unemployment rate that high means that nearly 1 of every 9 local workers still is without a job -- a level that's on par with the dark days of the steel plant shutdowns in the 1980s.

While it is a solid improvement from the jobless rates that hovered around 14% since May, the region still is tied with Orange-Rockland-Westchester counties for the highest unemployment in upstate New York. Jobless rates last month dipped below 10% in Albany, Utica, Syracuse and Rochester.

Couple that with modest job growth over the past two months, and local economists think it will be well into next year before we're likely to have recovered from the calamitous plunge when the Covid-19 lockdown took hold six months ago.

"Far from a hoped-for V-shaped recovery, the pace of hiring and rehiring by New York employers has come to more closely resemble a lopsided L," said E.J. McMahon, the senior fellow at the Empire Center, an Albany think tank. "At this rate, it will be at least another year before private employment in the state returns to 2019 levels."

"We were down and were coming up," said Fred Floss, a SUNY Buffalo State economist, who noted that the region has regained only about 5% of the jobs it had lost during each of the past two months. "But you can see that over the last two months, we've only added a couple of percentage points."

The job losses have hit lower-income workers much harder than those with better paying occupations, according to data compiled by the research group Opportunity Insights.

In Erie County, employment among workers earning $27,000 a year or less -- that's a maximum of $13 an hour over a 40-hour week -- plunged by 22% through the end of July, the group found.

That's a far stiffer blow than the one absorbed by midincome workers, earning $27,000 to $60,000 a year. Employment in those midlevel occupations are down 8% through July -- a little more than a third of the decline experienced by the lowest-paid workers.

And the gap is even wider among the best-paid occupations. Employment among the highest-paid workers -- those earning more than $60,000 annually -- was down just 2% at the end of July. Those jobs tended to fare better during the downturn because they often could be done from home during the lockdown.

Lower-income workers tend to be concentrated in jobs that require face-to-face contact with consumers and can't be done from home. They're store workers, restaurant servers and cooks, or hotel staff.

Those all are occupations that are reeling with business travel at a trickle, vacation travel subdued and online shopping keeping people out of stores. All of that is exacerbated by the shutdown of the Canadian border, locking out travelers and shoppers who make up an important part of the region's travel and shopping clientele.

"The sooner the border between Buffalo and Canada reopens, the better we'll be," Floss said.

In all, about 30% of the jobs lost at the start of the lockdown at local bars and restaurants and hotels still haven't come back. For retail workers, less than half of their jobs have returned.

Between those two groups, 16,000 jobs haven't come back six months into the Covid-19 recession. That's a little more than a third of the 45,000 local jobs that haven't been recovered across the region since the lockdown began in March.

While low-paid workers are struggling, the wealthiest workers -- those with robust 401(k) plans and investment accounts chock full of stocks -- are weathering the economic storm much better.

Although the stock market fell earlier this week to a six-week low as rising coronavirus cases sparked fears of a second wave, share prices have held up remarkably well during the pandemic, hitting record highs earlier this month and still at roughly breakeven for the year.

It's the same story with the sizzling housing market. Families with the financial wherewithal to own a house are reaping the benefits of the strongest local housing market in decades, with median sale prices up 6.5% over the past year, according to the Buffalo Niagara Association of Realtors.

Deals to buy homes are up nearly 17% over the past three months, compared with last year, as buyers scrambled back into the market after the lockdown lifted, even though the number of homes for sale are at a record low.

All of that helps build a cushion of wealth for workers with assets -- primarily the better paid ones -- while workers who live paycheck to paycheck scurry to get by. An estimated 45% of Americans don't own stock, while a third of all households don't own a home, according to a Gallup survey conducted in June.

What those lower-paid workers know is that food prices are up by almost 5% over the past year. Rents across the Buffalo Niagara region are up 4.5% over the past year through August -- six times more than the nationwide increase, according to housing market tracker Zillow.

It's a nationwide trend. A report released Monday by the Federal Reserve found that the net worth of households jumped by 7% in the second quarter -- during the middle of the Covid-19 pandemic -- to an all-time high.

The reasons: the massive federal stimulus program that paid jobless workers an extra $600 a week and provided forgivable loans to companies that kept workers on the payroll, combined with rising stock and home prices.

Those safety nets are gone now, forcing unemployed workers to get by on $500 a week or less, notes Julie Anna Golebiewski, a Canisius College economist.

The drop in the unemployment rate amid modest job gains also suggests that some workers who previously held two or three part-time jobs to get by now are working only one job, possibly with reduced hours and less pay overall.

Since the unemployment rate treats part-time jobs the same as full-time ones -- the survey simply asks whether you have a job -- that could account for part of the drop in joblessness, economists said.

So even though the drop was a welcome step in the right direction, the highest unemployment rate in 40 years is nothing to cheer. It's just a reminder of how far we still have to go.

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