The latest progress report from START-UP NY shows it’s losing participants almost as quickly as it’s adding them.
In an October 28 press release, Governor Cuomo reported: “START-UP NY now has commitments from 202 companies to create at least 4,490 new jobs and invest more than $251 million over the next three-to-five years throughout New York State.”
But that 4,490-job figure is a net increase of only 212 from the 4,278 commitments that were reported in December 2015. Since then, the governor’s office has twice announced additional commitments: 135 jobs in March and 817 jobs in October. So while the program added new commitments to create 952 jobs, its total count of five-year commitments rose by only 212, because 740 existing commitments were lost. This means that for every four jobs START-UP added since December, it lost three.
As explained here in July, START-UP appeared to have peaked during 2015, adding about 2,100 five-year job commitments in each of its full years of operation (calendar 2014 and 2015).
Unless the program adds 1,843 new commitments in the next two months—and doesn’t lose any commitments in the meantime—2016 will be the weakest year for START-UP since its creation.
The drop-offs wouldn’t be so surprising if the program actually was limited to genuine start-ups. Nationwide, nearly one-third of start-up firms failed between 2013 and 2015, according to the U.S. Small Business Administration. New York State has stretched START-UP’s eligibility to include existing companies, but the numbers still aren’t impressive.
Of the 39 companies listed in the October announcement, 16 are existing New York companies, and 7 are existing companies that are “new to New York.” Only 16 companies would fit any definition of true start-ups. The new companies are distributed across the state, with the biggest concentration—8 companies and 213 new jobs—located at University of Buffalo.
As Empire Center’s E.J. McMahon wrote a year ago, “few economic development initiatives in New York State’s history have been the subject of more marketing hype than START-UP NY.” But a program of tax-free micro-zones on and near college campuses is nowhere near potent enough to overcome New York’s other competitive disadvantages, which the governor has compounded with policies including opposition to natural gas pipelines, a costly renewable energy mandate, and the nation’s highest minimum wage.