The back-to-school push kept the Buffalo Niagara job market going during September.
And that was a good thing, because all the teachers and aides and support workers heading back to their jobs at local schools and colleges masked an alarming slowdown in the region's recovery from the spring Covid-19 shutdown.
In fact, if you take the school reopening out of the equation, the Buffalo Niagara job market essentially stopped in its tracks last month. The region's private sector, which excludes government, added a meager 700 jobs from August to September, the state Labor Department said Thursday.
That's not good, when you consider that we've only recovered a little less than two-thirds of the nearly 105,000 jobs that disappeared when the lockdown took hold in March. That means we're still down almost 38,000 jobs – and the September job numbers show that the recovery's momentum has pretty much played out.
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All this, at a time when Covid-19 case levels have started to rise, both locally and nationally. While case levels remain relatively low here, fears that the onset of winter will accelerate the spread of the virus – and potentially cut further into the already curtailed economy – cast an ominous cloud over the region.
In fact, local economists think the economy could take a turn for the worse in the coming months.
"We've obviously stalled now, and with Covid numbers going up, I suspect we'll start to see a decline again, to some extent," said Fred Floss, a SUNY Buffalo State economist.
Julie Anna Golebiewski, a Canisius College economist, tried to look on the bright side of September's concerning job numbers.
"The positive news is that we didn't actually lose any jobs," she said. "But we've stalled out. Fully stalled out."
And if there's a new spike in Covid-19 cases? "It will stall the economic recovery, if not make it worse," Golebiewski said.
Those aren't words you want to hear when you're only two-thirds of the way through a supposed recovery.
Here's why Golebiewski and Floss are so concerned:
Let's start with the good news: The region gained 6,800 jobs from August to September, continuing the region's slow recovery from the spring shutdown.
But the gains came almost entirely from the reopening of schools. The region regained 7,100 jobs simply from teachers, school staff members and support workers going back to their jobs. That more than accounted for all of the jobs the region gained from August to September, and even then the rebound of education services jobs was only about half as robust as you would normally see, as schools largely turned to hybrid learning models that limited in-school attendance.
It was the rest of the job market that sputtered during September. Factory jobs disappeared. The slow recovery in retail jobs reversed course, with 700 positions vanishing. The rebound in leisure and hospitality ended, with 500 jobs going away at local hotels, bars and restaurants as summer wound down. Even financial services – one of the region's more stable sectors during the pandemic – ticked slightly lower.
While the September jobs report got a boost from schools reopening, it's also clear that plenty of other businesses continue to cut jobs.
Seneca Gaming Corp., for instance, is laying off 300 workers at its three hotels and casinos in Western New York because business is sagging. Dave & Buster's entertainment and gaming center in the Walden Galleria, shut down since March, said it will permanently lay off 85 workers come December.
Over the past two months, about 2,600 workers are filing for unemployment benefits for the first time each week. While those weekly jobless claims had been dropping since mid-September, they headed higher again last week, with 2,631 workers filing for unemployment for the first time in Erie and Niagara counties. That's more than three times higher than the 846 workers who filed for jobless benefits a year ago, when unemployment was hovering around a 30-year low.
Now, joblessness is above 10% – its highest sustained level in nearly 40 years – and the stubbornly high level of jobless claims is a powerful indicator that this recovery still is going up against some powerful headwinds. September's unemployment rate will be released on Tuesday.
There are some bright spots. Manufacturing has held up remarkably well during the pandemic, although there are some signs that what had been a growth spurt among industrial firms is losing some steam.
Factory employment, which had been rising during the summer, fell by 2,400 jobs from August to September. Golebiewski thinks that might be a sign that the summertime improvement was overstated, rather than the result of major job cuts last month. Either way, factory employment now is about where it was before the pandemic – and that's exceptional for a manufacturing sector that usually gets hammered during a recession.
Manufacturers are signaling that their growth continued into October, but the rate of the expansion has slowed, according to a survey of New York manufacturers released Thursday by the Federal Reserve Bank of New York.
Those factory operators also aren't as upbeat about the future as they were just a month ago.
"Firms remained optimistic that conditions would improve over the next six months, though optimism was somewhat lower than last month," the Fed economists said in their report on the Empire Manufacturing Survey.
Consumer spending also appears to be holding up, despite the highest unemployment rates in a generation. In Erie County, it was up 10% through late September, compared with January 2020 levels, according to economy tracker Opportunity Insights. In Niagara County, it was down 4%.
We also are seeing the strains starting to hit local governments that are grappling with the reality that they will have less tax money coming in. Erie County Executive Mark Poloncarz is proposing to cut 19 jobs in the budget he proposed this week.
Other municipalities are going a different route, proposing hefty tax increases. Amherst's proposed budget would increase the amount raised through taxes by almost 9%. In Orchard Park, the tax levy would rise by nearly 10%. Higher taxes will leave residents in those communities with less money to spend – consumer spending accounts for about 70% of all economic activity – which in turn will put a damper on the region's economy.
"We've been lucky that we've had public sector employees propping up the economy," Floss said.
But as budgets tighten, more of those government jobs could be in jeopardy, especially after the election.
"Then all of this will start to get real," Floss said.
