LI's post-recession job market: more jobs, lower pay

A sign advertising job openings outside a McDonalds

A sign advertising job openings outside a McDonalds restaurant. (Credit: AP, 2012)

Long Island has moved beyond the recession into a new normal of lower-paying jobs and less robust employment growth compared with previous recoveries.

Economists and business executives say the job market here has, on the surface, recovered from the deepest economic downturn since the Great Depression. The local economy has more than regained all the jobs it lost, and the current 6 percent unemployment rate is the lowest since 2008. The 7.5 percent national unemployment rate calculated in the same way as the local rate -- without seasonal adjustment -- would be 7.1 percent.

Such a turnaround would normally produce a sigh of relief, especially among local economists. But some of these experts say the Island's job market remains fraught with problems that could have far-reaching effects, even on other areas of the economy.


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Gone are the days when economists talked about strong, high-wage employment growth and its multiplier effect of generating other jobs.

Instead, during the current recovery, Long Island is more likely to grow jobs that pay $11 an hour than $30. The robust hiring that characterized past economic bouncebacks has been clipped this time by employers' determination to run leaner operations and by worries about the costs of federally mandated employee health care, local business executives and economists said.

Lower standard of living

All told, the post-recession job market suggests that the new normal for Long Island's workforce could be a lower standard of living.

"The salaries are not going to be what they used to," said Ken Goldstein, an economist at The Conference Board, a Manhattan business-research group. "That is continuing to change the economic climate on the Island."

Long Island had 1.28 million jobs in April, up from 1.27 million reached in April 2008, before the recession began shrinking employment, the latest state Labor Department data show.

One of the fastest-growing employment sectors is food services and drinking places, where the number of jobs has expanded by 15,200 since 2008.

By contrast, construction jobs, despite a recent increase in employment stemming from superstorm Sandy rebuilding, are still 9,200 shy of their 2008 peak.

The wages of those two sectors are a study in contrasts. The food service workers earn an average $11.39 an hour, compared with $29.62 an hour for construction workers, data from the U.S. Bureau of Labor Statistics show.

The lower-wage jobs could remain the growth engine of the Long Island employment market for a while.

"There's a feeling out there that things haven't returned to normal or what people expect at this point in a recovery," said Irwin Kellner, the Port Washington-based chief economist for MarketWatch, a financial news website. That's in part "because of the nature of the jobs being created."

Some significant layoffs announced recently will cost the Island skilled jobs in industries noted for higher wages.

Biotech company closing

OSI Pharmaceuticals, which was one of the most important biotech companies here before its acquisition in 2010 by Astellas Pharma Inc. of Japan, earlier this month said it is closing its remaining facility on Long Island and will lay off all of its 115 local employees. And in March, Northrop Grumman, once the Island's largest private-sector employer, announced plans to shift 850 of its 1,400 remaining Long Island jobs from Bethpage to Florida and California.

Hiring for some higher-paying jobs may not pick up until the bulk of federal health care legislation takes effect next year and employers can determine their cost to provide employee benefits.

"Health care is holding back hiring because in some cases the real cost of health insurance is still being ferreted out," said Lou Basso, president of Alcott HR, a Farmingdale human-resource services company whose 300 clients employ white-collar professional and skilled blue-collar workers.

Worries about expensive health care are having less effect on some lower-wage employers, who are pushing ahead despite concerns. Rob Basso -- no relation to Lou -- who owns Advantage Payroll Services in Freeport, said that his 280 restaurant and hotel clients, about a tenth of his customers, have increased hiring in the past six months.

General economic uncertainty is also weighing on the job market.

Howard C. Bluver, president and chief executive of Riverhead-based Suffolk Bancorp, said that despite business expansions and increased demand for loans, strong hiring hasn't followed.

"We're seeing robust expansions," he said. "What we're not seeing is very robust hiring by these businesses. They're still being cautious."

Modest housing price gains

Housing, which normally is one of first sectors to recover after a downturn, has had only modest price gains in recent months. The median home price last year, excluding the pricey East End and the North Fork, was $350,000, 20 percent below its 2006 peak of $440,000, according to the appraisal company Miller Samuel Inc.

The growing dominance of low-wage jobs could weigh on housing, Goldstein said: "The good news is that a lot of people who were out are back to work. But because they aren't making the money they used to, that is holding them back from buying a house or buying a bigger house."

At Teachers Federal Credit Union, based in Hauppauge, president and chief executive Robert Allen sees a pickup in demand for mortgages but worries that a lower standard of living could force more Long Islanders to leave for less expensive areas.

"People are only going to be able to afford so much," he said.

James Brown, principal economist in the state Labor Department's New York City office, notes that local labor markets have come back when other parts of the country are still struggling to get back to their pre-recession peaks. "I am thrilled that New York City and Long Island are beyond where they were," he said.

Goldstein, of The Conference Board, says the next few years will be crucial in determining if the Island's job market will settle into its new normal or move beyond it.

"It's going to take at least three to five years minimum," he said, "and easily could take longer, with no guarantees that it will come back, period."

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