For Release — Wednesday, September 16, 1998
NEW YORK'S ECONOMY IS MAKING A COMEBACK, REPORT SAYS
ALBANY New York State is gaining on the rest of the country in the race for new business and job growth, but must become still more competitive to close the gap completely, a new report by The Public Policy Institute says.
After finishing 47th among the states for private-sector job growth from 1992 through 1994, New York ranked 28th for the year ending in June 1998, according to U.S. Bureau of Labor Statistics data analyzed by the Institute, the research affiliate of The Business Council of New York State Inc. The report's release came as hundreds of business leaders gathered for The Council's Annual Meeting at The Sagamore in Bolton Landing.
The report, The Comeback Trail: 1998, offers "three basic truths" about the state of New York State's economy.
"Our job growth now is significantly better than it was a few years ago. And it's better relative to the national rate of growth than it was a few years ago--meaning we're not just riding on other states' coattails," the report says. However, it adds: "While we are closer to the national pace than we've been in years, we still haven't caught up."
The Institute attributed New York's improved economy to major changes in state government's policies affecting private employers. Further improvements in the business climate will pay off in further job growth, according to the report.
The report is a follow-up to the Institute's 1994 book, The Comeback State, which said: "New York needs to make a comeback. And we can." The book detailed the state's long-term economic woes and identified ways to turn New York around. Many of its proposals have been enacted by Governor Pataki and the Legislature. The new report is being circulated to both incumbents and challengers for key statewide and national offices.
"There were plenty of doubters when we said New York could make a comeback," said Daniel B. Walsh, president of The Business Council and CEO of the Institute. "Our strong faith in New Yorkers, and in the state's new generation of leadership, has been proven absolutely well-founded."
The report says New York's economic recovery has been "broad-based," both geographically and across industry sectors.
"It's well-known, of course, that the financial sector centered around Wall Street has enjoyed a sustained boom in activity," the report says. However, it adds: "Finance is decidedly not the only area where things are better. Our manufacturing economy is on the rebound." Manufacturing saw net job growth in 1997 for the first time in more than a decade, a "stunning turnaround" from annual losses of 32,000 or more just a few years earlier, the report says. (See Table 1, "Private-Sector Job Growth, By State," page 4; and Table 2, "Job Growth By Sector: New York and the Nation," page 9.)
Newfound growth is "taking place both upstate and downstate, though in differing proportions," according to the Institute. Upstate as a whole--all counties north of Putnam and Rockland--added 18,700 jobs from June 1997 to June 1998, for growth of 0.8 percent. (See Table 3, "Private-Sector Employment Growth: Regions of New York State," page 11.)
"On the other hand, the three largest urban centers upstate--those around Buffalo, Rochester and Syracuse--are struggling," the report says. "We're still feeling the hangover from long years of decline." Those areas may be suffering the lingering economic effects of population losses over the past several years, which in turn were caused largely by massive job losses earlier in the 1990s, it says.
The Institute said New York has made "major progress" in cutting taxes and other business costs. Most noticeably, it said, "Every major state tax has been cut sharply." (See Table 4, "State-only Taxes Per Capita, By State," page 19.)
Local government taxes are now the state's "biggest cost problem," the report says. Local taxes impose a total burden of $25 billion in extra costs on New Yorkers, compared to local tax levels in other states. That extra burden is more than those created by our high energy costs, health-care costs and liability costs, all combined. Property taxes in New York were $1,256 per person in 1995, fully $518 or 70 percent higher than the national average. (See Table 5, "1995 Taxes Per Capita, By Category," page 21; Table 6, "Major Cost Disparities, New York State vs. the Nation," page 22; and Table 7, "Total Property Taxes Per Capita," page 23.)
To make costs competitive, the report says, government in New York must reduce both state and local taxes; continue to cut job-related costs such as workers' compensation; make health coverage more affordable; and cut energy costs. (See Table 8, "Selected Costs For Employers Who Create Jobs, 50 States," page 28.)
State leaders should build on all the progress New York's economy has made by resisting lingering calls for new business-bashing policies, and by letting the world know about the state's tax cuts and other positive changes, the report says.
It also calls on state leaders to "institutionalize a stronger New York" by attacking three major, long-term issues. Those are:
- Reforming the state's outmoded liability system, to make it more fair for employers, non-profit organizations, local governments and others (see pages 29-30);
- Reducing the costs and inefficiencies that state mandates impose on local governments and public schools (see Table 9, "Percentage Change in State-Funded Welfare Spending, FY 1996-98," page 31; and discussion, pages 30-32); and
- Creating a better workforce by giving every child the opportunity to attend a good school, and by improving the state's job training system (see Table 10, "Sixth-Grade Reading Performance," page 34; and discussion, pages 32-35).
"We've made a lot of progress. We need much more," the report says in its conclusion. "It's up to our elected leaders, and the people, to see that it happens."
The Business Council is New York's largest broad-based business group, representing over 3,000 member companies large and small across the state. Based in Albany, it lobbies for a better business climate, and offers cost-cutting services to its members.