The cities of New York, Los Angeles and Chicago account for 13.4 percent of all unemployed people in the US, but make up only about 4.6 percent of the total population, according to data from the Bureau of Labor Statistics.
the BLS data show that the country’s three largest cities have unemployment rates dramatically higher than the June national average of 5.9 percent, with Los Angeles and New York at 10.6 percent and Chicago at 8.2 percent.
Together, the three cities had a total of 1,272,464 unemployed in June, accounting for more than one in eight of the 9.5 million seeking work nationwide.
The reason for the persistently high unemployment rates in major cities is disputed, with some blaming different policies on minimum wage and unemployment benefits, while others insist that the different job mix in those cities is to blame.
Major cities have many jobs in the restaurant and hospitality industry, a field many workers are reluctant to return to.
June unemployment figures in LA, Chicago and New York are compared to the US average
In May, a ‘Help Wanted’ sign hangs outside a restaurant in Los Angeles. Restaurants are desperately looking for employees, but are struggling to hire staff in many places
In recent history, the unemployment rate in the three major subways has been hewn fairly close to the national average.
For example, in January 2020, just before the pandemic hit, the national unemployment rate was 3.5 percent. In New York it was 3.6 percent, in Chicago 3.9 percent and in Los Angeles 4.2 percent.
And it wasn’t until 2019 that unemployment in New York and Chicago was even lower than the national average.
Job losses rose across the country during the pandemic, but especially in major cities, where lockdown restrictions have been most severe and the hard-hit service and hospitality sector is responsible for a higher share of jobs.
Liberal economists say continued misery for the service sector, with restaurants struggling to bounce back, is at the root of high unemployment in major cities.
Still, restaurants in the three cities are desperate for workers and hiring as quickly as possible, and some in New York are even cutting hours due to staff shortages.
Unemployment rates for the three cities are compared to the national average (purple) before and after the pandemic
Job seekers complained that wages for hospitality jobs were too low and said they would rather work in a different environment, a survey found
A recent Joblist survey found that a third of former hospitality workers would not consider returning to the industry even if they are looking for a job.
However, the nation’s fourth-largest city, Houston, with its own plethora of restaurants and bars, seems to be doing much better.
In May, the latest monthly data available, Houston had an unemployment rate of 6.6 percent (not seasonally adjusted), compared to the national average of 5.8 percent.
Conservative economists argue that disastrous policy decisions are responsible for the higher unemployment rates in New York, Chicago and Los Angeles, all of which are ruled by Democratic mayors and governors.
The three cities were among the last to ease economic restrictions during the pandemic, with harsh regulations limiting capacity and even closing some businesses completely.
In addition, all three cities have a minimum wage of $15 per hour, which some say makes it more difficult for small businesses to hire additional workers.
A sign for a company looking to hire workers in New York City in June. Companies struggle to attract workers, even in cities with high unemployment
Also, Democrat-led states have had divergent policies on federal supplemental unemployment benefits.
The additional $300 per week federal allowance, which comes on top of state benefits, has been canceled in nearly all Republican-administered states, where lawmakers argued that the rich benefits discouraged the unemployed from seeking work.
In the US states that ended federal unemployment benefits early, local labor supply increased more in June than in the states that planned to maintain the federal benefit until it expires in September.
State-level job data released earlier this month shows that in the 26 states that cut benefits early in June, an additional 174,000 entered the workforce either by taking jobs or seeking work, compared with 47,000. in the other states.
Some economists argue that the federal benefit remains an economic lifeline, that many unemployed Americans want to return to work but can’t because they don’t have access to childcare or remain afraid of contracting COVID-19.
But many of the states decided to discontinue the benefits after some entrepreneurs complained that they were unable to fill jobs.