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September 14, 2004

Upstate economy falling behind at high, low ends of income scale, report finds

The Upstate New York economy is increasingly marked by dependence on aging and poor residents' income from Social Security, pensions, Medicare and Medicaid, a new report finds.

More than half the Upstate growth in per-capita personal income during the 1990s came from such "transfer payments," according to the report by the Brookings Institution.

Partly because thousands of working-age residents moved out during the 1990s, those over 65 -- whose income is mainly from transfer payments -- totaled 14 percent of Upstate residents in 2000, compared to 12 percent nationwide. In addition, younger residents in the region received a higher-than-average proportion of their income from welfare, unemployment insurance and related benefit programs.

At the higher end of the income scale, skilled workers in Upstate New York earned lower wages than their counterparts in most other states, the study found.

Despite lower housing costs, Upstate's overall cost of living "does not make up for these low incomes," according to the report. It blamed high taxes, along with higher prices for food, utilities, gasoline and auto insurance.

In addition, "property tax rates that are among the highest in the country" reduce property values, so that homeowners typically do not enjoy as much return on their investment as those nationwide, the report said.

"These problems will not be resolved soon," said the report, authored by Cornell University professors Rolf Pendall and Susan Christopherson. "At the upper level of the income scale, Upstate's new economy pays too little for the best-educated workers, meaning that low per capita incomes will likely continue into the future."

The report offered no suggestions for reducing Upstate's high taxes or otherwise improving the state's business climate.

It recommended changing economic-development programs to discourage inter-regional competition for jobs; capitalizing on "Upstate's rich endowment of educational and health-care institutions"; restructuring college aid programs to encourage graduates to remain in New York; raising the minimum wage; and expanding the federal and state earned-income tax credits.