NYC office occupancy peaks in pandemic era, modest job growth leaves city lagging nation behind
Here is your October update on THE CITY’s economic recovery. We publish a new analysis of the city’s employment, jobs and tax indicators every month.
A confusing story about income taxes
Earlier this month, the state reported that income tax collections for the period April 1 through June 30 — the first six months of its fiscal year — were $2.4 billion higher. provided that.
Meanwhile, the city said this week that for the first three months of its fiscal year, the period from July 1 to September 30, income tax collections were about what it expected – but estimated income tax payments decreased by 30% compared to the previous year. Estimated tax payments arise primarily from capital gains realized from the sale of shares and other assets; the drop could mean trouble ahead amid stock market turmoil and Wall Street layoffs.
But why did the state end up with a budgetary cushion when the city’s position is less solid?
One answer is timing. Since the state’s fiscal year begins on April 1, income tax collections were largest in the first three months before the stock market crashed. The state comptroller’s office has also seen low estimated payouts in recent months.
Another reason has to do with the strict $10,000 limit on federal tax deductions for state and local taxes. The state has allowed high-income earners, especially those who work for partnerships, to pay a special tax through their business that is deductible from federal taxes and returned as a credit on the income taxes of the state. This process means that the state does not yet know how many billions of dollars are paid in business taxes, rather than income taxes.
The city has yet to implement a change allowing high-income earners to pay business taxes instead of income taxes.
Tracking estimated tax payments will be a good way to monitor the effect on city and state budgets of the market downturn and the Wall Street meltdown. At the moment, however, the signals are confusing.
Employment growth continues at a modest pace
The city added 21,300 jobs in September, about the same as the monthly average for 2022. That leaves New York City 141,000 fewer jobs than its pre-pandemic record: 4.72 million.
The steady increase in jobs also means the city has now recovered 86% of the 972,000 jobs lost at the start of the pandemic. The nation recovered faster, recovering the full number of jobs lost and adding another 500,000.
The unemployment rate in September fell one percentage point from 6.6% to 5.6% as the labor force shrank. This reversed a rise in the labor force and unemployment rate in August and is caused by issues with how the Department of Labor adjusts to seasonal issues.
Office Occupancy Highest in Pandemic Era
Average office occupancy in New York jumped to nearly 48% last week – the highest since the city’s pandemic era – despite Columbus Day/Indigenous Peoples Day city vacation October 10.
The increase in office occupancy has followed some companies ending or reducing hybrid work options after Labor Day, one noted. recent economic update of controller Brad Lander. The report also pointed to the reopening of schools as a reason parents could return to the office.
Occupancy data from Kastle Systems, a security company that tracks key card reads in large office buildings, for the week ending October 19 will provide the best insight into office occupancy as it will cover a week without vacation.