The Public Policy Institute

Just the Facts 1999-2000

The Ten Largest States: How Does NY Stack Up?

Most of the tables in this booklet compare New York to all of the other 49 states. This first section takes a more targeted view: How does our job growth, and how do other important indicators, compare to our main competitor states in particular?

In 1998, New York ranked 30th among the 50 states for private-sector job growth. Our performance compared to the other largest states shows a similar, middle-of-the-pack ranking. And we produced new jobs at a significantly better rate than some other northern, industrialized states (Michigan, Pennsylvania, and Ohio). At the same time, we remained far behind four of the other largest states. A more complete look at our 1998 job growth, relative to the rest of the nation, appears as Table 1 of this report. For comparison with previous years, see Tables 2 and 3.

Private-Sector Job Growth, 10 Largest States
1 Florida 4.4% 7 Illinois 2.0%
2 Georgia 3.6% 8 Michigan 1.5%
3 California 3.5% 9 Pennsylvania 1.2%
4 Texas 3.4% 10 Ohio 0.9%
5 New Jersey 2.0% Avg., other 9 states 2.7%
6 NEW YORK 2.0% N.Y.S. % of avg. 74.1%
Public Policy Institute calculations from U.S. Bureau of Labor Statistics data

For more than a century, manufacturing has been a key player in New York's economy. It remains so today, especially Upstate, even after huge job losses in the late 1980s and early 1990s. Factory and related jobs are held by more than 900,000 New Yorkers, and such jobs are the lifeblood of many communities. Only the state's financial sector rivals manufacturing as a magnet that attracts wealth from around the country, and around the world. In 1998, the state shed about 11,000 manufacturing jobs. That was better than the record of most of the past decade. But it represented a step backward from 1997, when New York added industrial employment for the first time in more than a decade. The Empire State's loss of 1.2 percent of its manufacturing jobs in 1998 matched the decrease in manufacturing employment nationally (see Table 4). Most of the other larger states did better than New York, and better than the national average, as shown below.

Change in Manufacturing Employment, 10 Largest States 1998
1 Georgia 1.2% 7 Illinois -0.9%
2 Florida 0.9% 8 Pennsylvania -1.0%
3 California 0.3% 9 NEW YORK -1.2%
4 Texas 0.2% 10 New Jersey -0.2%
5 Michigan -0.3% Avg., other 9 states 0.0%
6 Ohio -0.8% N.Y.S. % below avg. -1.2%
Public Policy Institute calculations from U.S. Bureau of Labor Statistics data

As the business world grows even more competitive, New York's business climate becomes an even greater factor in our economic strength. Economic developers and business owners, in this state and elsewhere, say taxes are one of the most important elements of any state's business climate. The table below shows how our overall tax burden compares to those of our key competitors. Our "tax gap," or the difference between New York's taxes and those elsewhere, has shrunk noticeably in recent years (see Table 15). But the extra cost for businesses and individuals in New York is still large; taxes here are more than half again as heavy as those in other states. Benchmarking our taxes against those of other states is more than a study in competitiveness. Why is government so expensive in the Empire State? Few would argue that public services in states such as Illinois, Michigan, Pennsylvania or Georgia are grossly inferior to New York's. Yet the public sector is much less costly in those areas.

State and Local Taxes Per Capita, 10 Largest States 1996
1 NEW YORK $3,987 7 Ohio $2,503
2 New Jersey 3,436 8 Georgia 2,354
3 Illinois 2,757 9 Florida 2,330
4 California 2,705 10 Texas 2,128
5 Michigan 2,588 Avg., other 9 states $2,559
6 Pennsylvania 2,512 N.Y.S. % above avg. 55.8%
Public Policy Institute calculations from US Census Bureau data

Our local taxes are more out of line with those in other states than are the taxes imposed by Albany. And the biggest single part of our local taxes is the property tax, which totals some $25 billion on businesses and homeowners statewide. Property taxes in New York are more than $500 per capita above those in our neighboring state of Pennsylvania, and far above those in almost every other state. School property taxes account for some 55% of the total in New York State, while those imposed by cities add up to 18%, and county property taxes 14%. The STAR program created by Governor Pataki and the Legislature will ease the burden on homeowners, but not for businesses. High spending by local governments and schools, which drives local taxes so high, is partly the result of decisions local officials make. It's also, in large part, the result of costly mandates imposed by state officials in Albany. For a look at how our property taxes compare to those of all other states, see Table 23.  

Property Taxes Per Capita, 10 Largest States 1996
1 New Jersey $1,604 7 Pennsylvania $721
2 NEW YORK $1,279 8 California 715
3 Illinois 1,056 9 Ohio 713
4 Florida 820 10 Georgia 652
5 Texas 797 Avg., other 9 states $827
6 Michigan 740 N.Y.S. % Above avg. 54.7%
Public Policy Institute calculations from US Census Bureau data

In addition to taxes, other costs such as those for labor and energy play and important role in shaping a state's business climate. Regional Financial Associates, a consulting firm based in Pennsylvania, calculates a "relative cost of doing business" for each state. The index includes labor and energy costs, in addition to tax burdens.Labor represents the largest share of the overall index. Labor costs are measured as earnings per dollar of output. the tax measure includes total taxes and fees, as well as business contributions to unemployment and workers' compensation funds. Energy costs are measured as average kilowatt-hour charges to industrial and commercial users.

New York's relative cost of doing business is higher than those in most of our key competitor states, as shown below. And our cost of doing business is even further out of line with those in most other states, as shown in Table 30.

Relative Cost of Doing Business, 1997
Rank State Amt. Rank State Amt.
1 New Jersey 113.0 7 Florida 101.1
2 NEW YORK 112.9 8 Ohio 97.5
3 Michigan 110.5 9 Georgia 96.1
4 California 109.4 10 Texas 92.1
5 Illinois 102.6
Avg., other 9 states
6 Pennsylvania 101.6
N.Y.S. % Above avg.
Source: Regional Financial Associates

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