By Forum Staff
Despite having the fourth-largest construction sector in the nation, New York is one of five states that have not recovered from pandemic job losses in the construction sector, and a full recovery may take some time as construction businesses in New York City continue to face a variety of challenges, including softer demand for office space, according to a report released on Thursday by State Comptroller Tom DiNapoli.
The Empire State’s construction employment remains 4 percent (16,300 jobs) below its pre-pandemic level, the second lowest recovery among all states. The state’s construction sector would have fully recovered if not for New York City, where construction employment in 2024 was 11.3 percent (18,200 jobs) lower than in 2019. The city’s 143,100 construction sector jobs last year accounted for 36.7 percent of the state’s total construction jobs, down from a record high of 39.7 percent in 2019. Excluding NYC, construction employment in the state exceeded its 2019 level by 0.8 percent (1,900 jobs) in 2024.
According to the New York Building Congress, nonresidential construction spending remains below pre-pandemic levels as market demands have changed due to hybrid work policies. Of the three categories of construction spending, nonresidential spending had the biggest decline (43 percent) in 2020. Despite three consecutive years of increases, by 2023, nonresidential construction was the only one still below 2019 spending, remaining 3.4 percent ($786 million) lower at $22.2 billion. Nonresidential spending was estimated to have fallen by 2.6 percent ($572 million) in 2024 as demand remains low.
Residential construction spending fully recovered from the pandemic by 2023, exceeding its 2019 level by 17.6 percent ($3.4 billion) to reach $22.8 billion, reflecting the high demand for housing and rising inflation. The NYBC, however, estimated residential spending dropped by 16 percent in 2024, partly due to the expiration of the 421-a tax abatement program. Residential spending is expected to improve following the adoption of a replacement program, 485-x, in April 2024. The 467-m program for the conversion of non-residential buildings into residential buildings may also improve the outlook.
DiNapoli’s report found:
- Construction spending in the city reached a record high of $68.2 billion in 2023, partly due to rising costs, exceeding the pre-pandemic peak in 2019 by 10 percent. The number of construction businesses decreased by 3 percent, or 479 firms, in 2024, the first annual decline since 2011.
- In 2024, construction was the fifth (out of 10) highest-paying employment sector in New York City, with an average salary of $95,800.
- The city’s construction sector accounted for $28.1 billion in economic activity in 2023, 3 percent higher than 2019. When adjusted for inflation, the construction share of the gross city product declined from 2.5 percent in 2019 to 1.8 percent in 2023 as other sectors, such as the information and professional and business services industries, took on significantly larger roles over the period.
- Around one-fifth of the jobs in the construction sector in New York state (20.7 percent) and the New York City metropolitan area (19 percent) were held by union members in 2024. Both shares were down significantly from 10 years ago (31.3 percent and 27.4 percent in 2014, respectively). For the five boroughs, the majority of construction workers are union members.
- The number of construction permits declined in 2023 and 2024, indicating that a return to pre-pandemic growth trends (4.5 percent annual average) has not yet occurred.
