(Cole Lauterbach, The Center Square) A credit ratings agency says mobile workers in California and New York who remained employed through the COVID-19 pandemic could keep the states from full recoveries.
A report released Wednesday by Fitch Ratings described the “severe job shocks” in two of America’s major economic centers.
“These orders were in place for much longer and non-essential businesses were closed for much longer,” the report read. “The shock to mobility (visits to retail and recreation venues) in both states was larger than for the U.S. as a whole and New York saw a particularly stringent lockdown (according to the Oxford University Stringency Index).”
The two states’ falling COVID-19 infection rates, coupled with rising vaccination rates, allowed for loosening restrictions, Fitch said, which will likely lead to a boost in the national recovery since the two markets are so large.
“As at March 2021, California and New York accounted for about 30% of total jobs lost since the onset of the pandemic in the [leisure and tourism] industries,” it said.
Fitch warned that a hurdle to California and New York’s economic bounce-back could be what helped the two states amid the pandemic: remote workers.
“Many office workers in large cities in New York and California successfully worked remotely during the pandemic,” said Olu Sonola, a senior director at Fitch. “The likelihood that many will continue remote work, in some form, may also prove to be a drag on the pace of labor market recovery in New York and California.”
Some predict the absence of these new telecommuters in city centers will have profound effects on local businesses.
Stanford economist Nicholas Bloom predicted in a June interview with the university’s news department that “the loss of their physical presence slashed total daily spending at city center restaurants, bars and shops by more than half.”
A December report from California’s Legislative Analysts Office said about 7.6 million people, 40% of the state’s workforce, were able to work from home.
Because they’re typically paid more, remote workers staying employed got credit for much of California’s $76 billion budget surplus.
In New York, a metropolitan area that typically sees 1.6 million commuters a day, a March survey from Partnership for New York City found 90% of office workers in Manhattan had yet to return to their offices.
A June report from the Federal Reserve Bank of Atlanta found employers predict work-from-home employment to triple nationally.