New York business improving, but more to be done
This week’s upgrading of New York’s credit rating is good news. It reflects a significant turnaround in the management of the state’s fiscal affairs.
Having four straight on-time budgets is nice, but more importantly, the state has achieved sustainable spending growth (averaging under 2 percent ) while maintaining public services, increasing infrastructure investments and adopting much need tax reform.
Gov. Andrew Cuomo has led this turnaround and should be congratulated for this accomplishment, as should his partners in the state Senate and Assembly. This is important progress, but not the end of the story. The same bond rating announcement talked about future risks, as well, including structural budget deficits. The state also needs to address the pending expiration of more than $2 billion a year in temporary income tax revenue. In short, there is more work to do in maintaining our newfound fiscal discipline.
Similarly, recent numbers on the state’s economic performance look good. Statewide, New York has outperformed the nation in its recovery of pre-recession jobs. Since 2008, New York’s private sector job growth has been nearly threefold that of the U.S. and passed our pre-recession peak in October 2011, while the nation has only recently done so.
However, we have real economic growth challenges, as well. New York City has more than recovered, with private sector employment at the end of 2013 at 4.5 percent, or 150,000 jobs, above 2008 pre-recession levels. But job growth in the rest of the state, from 2008-13, has been essentially flat. As of the end of 2013, upstate had just about recovered its 2008 job numbers, although upstate employment has dipped by about 20,000 since then.
A more detailed look at job numbers shows challenges in key economic sectors both upstate and downstate. New York City’s key financial sector ended 2013 with 27,000 fewer jobs than its pre-recession high. Since 2008, two-thirds of the city’s job growth was in relatively low-paying sectors — accommodations/food service and retail.
In the 52 upstate counties, manufacturing still offers significant economic opportunity — average manufacturing jobs upstate pay $16,000 more per year than other private sector jobs. Yes, manufacturing employment is down across the U.S. due to technological advancements and foreign competition. But over the past 20 years, New York has lost manufacturing jobs at a rate 65 percent faster than the nation overall. Over just the past 10 years, upstate has lost more than 100,000 manufacturing jobs — a loss of some $4.8 billion in family income.
Locally, the Albany-Schenectady-Troy metro area has done better. Since 2008, private sector jobs are up, by about 4,800. Sharp growth in health/education services and the hospitality sector have offset losses elsewhere. The Capital Region has bucked broader trends and saw manufacturing employment grow by 1,500, a number undoubtedly driven by GlobalFoundries.
Looking at this data, we agree New York needs to do more to promote the creation of good-paying, private-sector jobs. Renewed growth is the long-term solution to stemming the loss of middle class economic opportunity and the growing income gap — not higher income taxes or minimum wage hikes that transfer, rather than create, wealth.
Like our renewed fiscal performance, New York has made positive steps toward improving the state’s economic climate, as well. In March, New York adopted the state’s most significant, broad-based tax reform package in nearly 20 years. It provides significant state tax relief for manufacturing and financial service businesses that have significant jobs and capital in New York state, thereby improving the state’s cost climate for these high-wage, high-value sectors.
This is important progress, but more needs to be done. We need to assure that our schools are producing career-ready young adults, we need to roll back state-imposed costs on energy-intensive businesses and we need to control the rising cost of workers’ compensation insurance. Perhaps more than anything else, we need to give local governments the mandate relief they need to start reducing the cost of local property taxes — the largest and most disproportionate tax paid by most businesses in New York.
Yes, these are challenging issues, but creating a more competitive economic climate in New York is the only real long-term plan for growing private sector jobs, family income and state and local revenues.
Heather C. Briccetti is president of the Business Council of New York State.