NY’s Labor Day “arrows”

by E.J. McMahon |  | NY Torch

Screen Shot 2016-09-02 at 12.59.55 PMGovernor Cuomo frequently asserts that “the arrows are pointing in the right direction” for the upstate New York economy, thanks to state policy changes under his leadership.

But approaching the sixth Labor Day of Cuomo’s tenure, the latest job statistics continued to tell a different, more complicated story. For example, as reported in recent posts on this site:

  • As of July, based on a year-to-year comparison of state Labor Department data, virtually all of the private job growth in New York had been downstate, mainly in New York City. Syracuse (-0.3 percent) and Albany-Schenectady-Troy (-0.5 percent) both lost jobs on a year-to-year basis, while gains were small in Buffalo-Niagara Falls (+0.9 percent) and Rochester (+0.2 percent).  The Southern Tier kept slowly sinking, with both Binghamton and Elmira registering another month of small private job declines.
  • “In upstate New York, economic growth has generally been modest, with job growth running well below the national pace,” William Dudley, president of the Federal Reserve Bank of New York, noted at a regional economic briefing last month. New York Fed researchers said upstate was still experiencing weak growth in “middle-wage” jobs, reflected by a “limited bounce back in Education and Construction jobs coupled with ongoing declines in Administrative Support and Production jobs.” The two-year trend nationally, and even more so downstate, has included a strong increase in those categories.
  • State Comptroller Thomas DiNapoli issued a report confirming the generally sluggish upstate trend. Among other things, the report pointed out that upstate has yet to regain all of the jobs lost in the Great Recession. The report also included this informative chart showing net average jobs gains upstate and downstate on annual basis since 2010.
  • The unemployment rate in upstate New York has been sinking—a trend frequently touted by the governor— mainly because the workforce is shrinking. For example, if the Southern Tier labor force was still at its May 2010 level of 326,800 people available and looking for work, the region’s May 2016 employment level would translate into an unemployment rate of 13 percent.

As the Fed’s Dudley pointed out, upstate’s sluggish economic performance “isn’t new, as upstate New York has historically tended to grow much more slowly than the nation.” Regional trends are affected by a lot of macro-economic factors beyond the control of any governor. And on the positive side, Cuomo deserves a lot of credit for some important pro-growth initiatives, especially his property tax capcorporate tax rate cuts and (unfinished) reform of the state estate tax.

But taxes aren’t the only factor affecting New York’s attractiveness as a place to create jobs and do business. Cuomo has also undermined upstate recovery prospects with his ban on shale gas “fracking,” his denial of a permit for a desperately needed natural gas pipeline across the Southern Tier, his (partially successful) advocacy of a $15 minimum wage and his failure to reform an increasingly costly workers’ compensation insurance system, among other policies.

His prescription for an upstate recovery relies heavily on state-subsidized, centrally controlled mega-initiatives modeled on the “Buffalo Billion”—which has sparked a federal investigation.

The bottom line: at best, taking together modest upward trends in some metro areas with sharp declines in others, the upstate arrow is pointing sideways.

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- E.J. McMahon is the Research Director at the Empire Center for Public Policy.