We live in potentially confusing times. On one hand, the record-breaking rates of inflation we saw this year combined with warnings of a recession from prominent individuals and organizations such as the IMF and World Bank have contributed to a somewhat worrisome economic mood. On the other hand, numerous signals indicate a strong post-pandemic job market recovery. Just very recently, most states in the United States reported robust growth in the job market during the third quarter of 2022 (3Q22), with the median job recovery rate at 98%, 6% higher than in 2Q22.
Given such mixed signals, it’s understandable that people would wonder what the reality actually is. However, it’s helpful to remember that the economy is not some sort of monolithic phenomenon. The specific manner and pace of a recovery—whether it’s for the economy overall or specific job markets—inevitably varies depending on the location and the industry. The best example of this is the uneven job recovery rates we have seen across different cities throughout the United States. Yet overall, I believe the signs are mostly positive, and there is ample reason to be (cautiously) optimistic for the job markets in big cities to recover.
An Uneven Recovery in the Big Cities
At a glance, some of the country’s biggest cities seem to be struggling with the highest unemployment rates. As of September, compared with the national rate of 5.2%, New York City’s unemployment rate is 10.2%, Los Angeles’s is 10.1%, and Chicago’s is 8%. At the simplest level, then, it is certainly true that job markets in big cities are facing challenges. However, there are a few factors to consider to get a fuller picture.
The first is that not only are there variations in employment statistics across different locations, but there are also variations depending on the industries. The knowledge industries tend to be concentrated in the major metropolitan areas, for example. During the pandemic, most (if not all) of the workers in these industries were able to work from home, and many of them are still doing so. A lot of these remote knowledge workers also moved away from the big cities to live in areas where they could enjoy more space for lower rent or home prices. With housing costs being what they currently are, there isn’t a lot of incentive for them to move back so long as they’re able to continue working remotely.
Moreover, despite the recent layoffs in the tech industry, there are still plenty of industries that are hiring and that have more available positions than they can currently fill, such as the healthcare industry and the leisure/hospitality industry, both of which tend to be concentrated in cities, as well. Economists, furthermore, maintain that the labor market is still overall healthy. At the same time, due to the outward migration of the knowledge labor force from big cities, some of the service-based industries that used to cater to the knowledge labor force, such as the food service sector, were definitely more negatively impacted.
When we talk about “recovery,” therefore, we need to ask ourselves what that looks like in light of the shifts that occurred during the pandemic. Because some of these shifts may be permanent, we may need to adjust our expectations. On one hand, there are plenty of positive signs to be hopeful about. On the other hand, even as job markets in big cities continue to recover, what that ultimately looks like may be very different from what things looked like before the pandemic. It’s possible that the food service industry in big cities may never again look the same, for example, while at the same time, other industries grow to be even bigger than they were pre-pandemic. Whether that would count as a full recovery or not would therefore depend on what we mean by “recovery.”
The Needs of Employers Versus Jobseekers
Another factor that will determine exactly how the recovery of job markets in big cities will unfold is the shifting needs of employers versus employees and jobseekers. In addition to the shift to remote work, other broad trends we have seen over the last couple of years are the Great Resignation and “quiet quitting.” These are indicators that, for whatever combination of reasons, workers are not getting what they need or want out of their jobs. Many are either quitting to go work in other organizations and industries or quiet quitting and doing the bare minimum to not get fired until they can find something better. When viewed along with inflation and the rising costs of living and housing, these factors will also determine the shape of future job markets in big cities.
In industries where workers are leaving in large numbers, companies may want to ask themselves which factors are out of their control, such as the shift to remote and hybrid work, and which factors are within their control. Given the pressures of increased costs of living, many workers are feeling the squeeze, and if companies are unwilling or unable to meet their expectations, whether it’s higher wages or more flexibility, then this, too, will impact what the recovery will look like. Even if jobs are available and companies are hiring, if they’re unable to fill those jobs with willing candidates, this will cause a negative domino effect and hinder recovery in those industries.
There are also additional indicators that have yet to play out that will also give us additional clues, such as consumer spending and behavior. For example, we experienced the first “normal” holiday season we’ve had since the pandemic started. If Q4 consumer patterns in key industries such as retail and travel fell beneath expectations, then that, too, will inevitably influence what happens.
Other than these caveats, on the whole, I still feel there are many positive signals indicating ongoing recovery of job markets in big cities. It might just look different over the long term than what people expect. Keeping this in mind will help us step back, keep a level head, and maintain a balanced perspective as we watch and wait for the bigger picture to emerge over time.
Antoinette Boyd, EdD, is Director of Career Success and Professional Development at Maryville University.