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January 6, 2005

Council: New York must make costs competitive, raise workers' skills to attract high-paying jobs

New York State can win the competition for jobs in information technology and other high-paid industries by making the state a better place to invest and by helping New York’s workforce attain the world-class skills that are increasingly important worldwide, The Business Council told a state Labor Department forum.

Robert Ward, director of research for The Council’s research affiliate, the Public Policy Institute, spoke at a Labor Department forum on "offshoring" of information-technology jobs on Friday, January 7.

"This country, and New York in particular, are blessed to have a dynamic private sector," Ward said. "Experience shows that’s the best route to economic growth, more and better jobs, and an improved quality of life. In a dynamic economy, jobs come and jobs go. The goal is always to make sure the jobs we gain are more plentiful, and more valuable, than the jobs we inevitably will lose."

Today, the nation and the state are gaining IT jobs, Ward testified. But New York, in the technology sector as in most others, is not keeping pace in creating good new jobs.

“During the year ending in November, sector employment nationwide rose by nearly 50,000, or 4.5 percent,” Ward said. “New York gained an estimated 1,800 jobs in the sector. We’re very glad to have those new jobs, but our gain was only 2.9 percent. That was significantly lower than the national increase.”

Over the past 10 years, the disparity between New York and the nation is even more stark, Ward said. Computer systems design and related services was one of the fastest-growing sectors, and here in New York State employment rose 40 percent. Nationally, employment in that sector more than doubled.

“If we had gained jobs in this high-paid sector at the same rate as the nation over the decade, we’d have another 30,000 very good jobs statewide," Ward said. "As you know, that’s a significant number even in a state as large as New York. And the discouraging picture is the same in our overall private-sector economy. “

Clearly, the difference between New York and other states is not an issue of offshoring, Ward testified. Lawmakers should ask the state Labor Department, or their own staffs, to analyze why the state consistently lags behind the nation in creating jobs, he suggested.

“As The Business Council has pointed out repeatedly, it’s more expensive to do business in New York than in most other states because of our taxes and other costs,” Ward said. “Those higher costs bear directly on our ability to keep and create good jobs in every sector, including information technology.”

It is possible for New York to become a leader in these job sectors, Ward said. The Governor’s announcement, during his 2005 state of the state address, that IBM and other companies will invest almost $2 billion in a next-generation computer chip plant is an encouraging sign.

“More to the point of today’s forum, the corporations making these major new investments include leading-edge technology companies based not in New York but around the world,” Ward said. “Sony, Toshiba and Samsung are among them. These companies are making investments and creating jobs in New York in large part because Governor Pataki and the Legislature have created the right policies to attract them, including the Centers of Excellence and Empire Zones.”

Lawmakers should do their best to ensure that these, and future, information technology jobs stay in New York. We can make that happen by making our economic environment and our business climate more competitive, Ward said.

“One factor affecting IT employment is the location of IT hardware. More than ever, of course, IT work can be done remotely,” Ward said. “But it’s still the case that where a major company places its mainframes, cluster servers and other computers will determine the location of at least some of its employees. The same is true of other major capital investments, whether used in cutting-edge telecommunications, modern manufacturing, digital broadcasting, or other industries.”

For that reason, the Business Council has urged Governor Pataki and the Legislature to enact single-sales factor taxation, Ward said. Our current corporate tax code imposes a tax increase on corporate employers when they create new jobs in New York.

Ward also urged lawmakers to meet rising demand for electricity and to lower New York’s above-average electricity costs, as well as work to raise the skills of workers in the state.

“Some companies tell us that they are simply not aware of what training opportunities are available to them," Ward said. "One simple but useful step might be simply to expand outreach to employers who might take advantage of the very good training opportunities provided in New York.”

The complete testimony is available here.