The ‘triple whammy’ that’s hindering a full recovery

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More than two years after the nation as a whole replaced all of the jobs lost in the steep and deep downturn caused by COVID-19, the Rochester region still has not returned to its pre-pandemic employment level.

It’s hardly alone among U.S. metro areas, though. A new analysis by the Federal Reserve Bank of New York’s Research and Statistics Group shows that more than a quarter of metros nationwide—including much of the state outside of New York City—are still playing catch-up.

“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,” the researchers note.

The analysis was authored by four members of Research and Statistics Group: Jaison Abel, head of urban and regional studies; Richard Deitz, economic research advisor in urban and regional studies; Jonathan Hastings, a research associate in urban and regional studies; and Joelle Scally, regional economic principal.

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

No single factor explains the uneven geographic recovery from the pandemic, they say. In Rochester and the rest of the upstate region, a “triple whammy” of slow growth prior to COVID’s arrival, a deeper hole when the pandemic hit, and a shrinking labor force has made recovery a particularly tall order.

With the difficult transition away from its traditional manufacturing-based economy, the Rochester area over the last several decades has struggled to keep pace with the nation’s growth rate. When COVID hit, the immediate job losses here were even more severe than many other metros experienced.

The New York Fed researchers say employment nationwide plunged nearly 15 percent from February to April 2020—“a shockingly large decline in such a short period of time.” Yet nonfarm employment in the Rochester region fell even farther—more than 17 percent—during the first months of the pandemic.

The Rochester metro has now regained most of the jobs lost in the pandemic—the employment level in March was just 0.7 percent shy of the number recorded in February 2020—but there’s a persistent gap in the labor force compared with before COVID.

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

This deficit impacts employment, the researchers note, because more people willing and able to work are needed to achieve a full recovery. “Many places that have not recovered just don’t have the workers to allow their local economies to grow.”

The pandemic accelerated outmigration from some of the largest U.S. cities, a trend that a number of experts thought created an opportunity for midsize and smaller metros. But the more permanent change appears to be an increase in hybrid, not fully remote work, which has not brought the anticipated gains in metros like Rochester.

“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,” the researchers note.

In a conference call to discuss the findings, Deitz said early in the pandemic there was “some movement out of (New York City) to the surrounding areas like Long Island and New Jersey, but also into Upstate New York, places like Buffalo and Rochester. I think we’ve shifted into a mode where it’s not that most people are working remotely 100 percent of the time; remote work is more people working at home two (or) three days a week, and that’s only for part of the workforce; a lot of the workforce can’t do that.”

He added that hybrid work may have “shifted the landscape” as to where people are located within a metropolitan area and allowed people to take more advantage of working from home, but “they still have to drive into work some of the week, so we’re not going to see people moving from New York City into Upstate New York, because that commute is not really feasible.”

In short, more than four years after the pandemic hit, the “new normal” looks much like the old normal, the researchers conclude. With the period of rapid recovery over, “historical growth patterns have generally resumed throughout the country. … 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.”

Paul Ericson is Rochester Beacon executive editor. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected]

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