Maybe next year: Economist says LI recovery delayed by delta variant, inflation

Inflation and the rise of the delta variant this summer may delay Long Island’s jobs recovery to the end of 2022 at the earliest, a leading local economist said Thursday.

Those factors "rolled back the timeline for when we’re going to be at full employment levels," said John A. Rizzo, chief economist for the Long Island Association business group. "The most optimistic would be the end of next year and again, that’s optimistic."

In August, the region’s economy was up 36,000 jobs compared with a year ago, but that number was much smaller than the 60,800-job year-over-year gain recorded in July, data released Thursday by the state Labor Department shows. The Island has struggled to recover all the jobs lost to the pandemic and remains down 8.8%, or 119,100 jobs, from August 2019.

The slowdown in hiring was mirrored at the national level. Last month, the country added 235,000 jobs, just half the 586,000 jobs on average it had added each month so far this year, according to the Bureau of Labor Statistics.

After seeing robust hiring during the months immediately following last year's pandemic shutdown, the pace of job growth has lagged.

"Between May 2020 and September 2020, the region regained a large portion of jobs lost during the pandemic, but from October 2020 onwards, the region reverted to typical seasonal job gains and losses," said Shital Patel, labor market analyst for the Labor Department’s Hicksville office. On a month-over-month basis, the Island shed 5,900 jobs in August, close to the 5,500-job loss typical for the month.

That pattern has left the Island in a perpetual game of catchup.

Hospitality hiring lagging

Rizzo said the leisure and hospitality sector, particularly, has lagged in hiring, failing to see the boost observers hoped to see from summer hiring.

While the sector was up 8,600 jobs in August on a year-over-year basis, it lost 800 jobs from July into August and remains nearly 30,000 jobs below pre-pandemic levels, state data shows.

For months, restaurant and bar owners have contended with staffing woes and the rising price of commodity goods such as meat. Those factors, combined with impacts of the delta variant making consumers more cautious, have stalled hiring, Rizzo said.

"There were very high hopes in May," he said. The recent job figures provide "more evidence that maybe the summer tourism season wasn’t what we hoped."

Hiring continues to be a problem for many employers outside the leisure and hospitality sector as well, said Renée Nielsen, president of Islandia staffing agency Nielsen Associates.

Employers had hoped the Sept. 5 expiration of enhanced federal unemployment benefits – including the extra $300 per week in aid Islanders were getting – would bring with it a wave of job applicants, but that has yet to materialize, she said.

Vaccine policy disconnect

Instead, Neilsen said she's seeing a growing disconnect between job seekers and employers over vaccination and COVID-19 safety policies.

"The big issue question now is, ‘Are you vaccinated?’ " she said.

With employers requiring the vaccine, "some people are saying, ‘I’m not getting vaccinated, so I don’t want to go on the interview,’ " Nielsen said. "And some companies are saying they won’t make their employees get vaccinated and job candidates in response are saying, ‘I don’t want to work in an unsafe environment.’ "

The problem is likely to get worse as vaccine mandates both at the state and national level go into effect, she said.

"That’s what we’re having a problem with now. That’s the big stumbling block," she said.