If New York State was a student, it would probably be held back for poor grades.
A recently released index from the Business Council of New York State gives New York “D” for dismal economic growth compared to the rest of the nation.
But Dutchess nearly went to the head of the class among the 62 counties in the state with a “B” grade.
The index from the Business Council of New York State Inc. compared New York’s economic growth from 1995 to 2005 to the national average in five areas: jobs, average wage per job, total personal income, per capita personal income and population.
Dutchess got high marks for performing better than the national average in growth of jobs, per-capita personal income and population. It fell behind the nation in average wage per job and total personal income growth. Only two other counties, Putnam and Saratoga, scored ahead of Dutchess by earning an “A.”
Upstate – defined in the study as all counties outside of New York City, Long Island, Westchester, Putnam and Rockland – got an “F” for scoring below the nation in all five categories.
The Albany-based Business Council, the state’s largest lobby for business interests, undertook the study as part of ongoing efforts to document economic outlook. Its in-house think tank, the Public Policy Institute, collected the data used in the index from the U.S. Department of Commerce.
The Business Council has its own explanations for New York State’s failures. “We know jobs and people and property-owners leave New York State because costs are too high,” said Matthew Maguire, spokesperson for the Business Council: “We know this from other studies and many different organizations and anecdotes we hear daily.” Maguire cited health insurance, taxes, electricity and workers compensation as high costs that drive New Yorkers out of the Empire state.
Fixing New York’s problems requires help from Albany, according to Maguire. “Every spending decision must be made with this economic crisis utmost in mind,” he said. The council said one victory came this year in the form of a workers’ compensation reform law.
“The historic workers’ compensation reform law increases benefits for injured workers and decreases cost for employers,” he said. Now, the Business Council is pushing for other reforms.
Dutchess bucks trend
Anne Conroy, executive director of the Dutchess County Economic Development Corporation, said she was not surprised that Dutchess bucked the statewide trend of poor growth.
In 1995, the start-point for the index, the county was bruising from IBM layoffs, according to Conroy, but county officials were also determined to make a comeback. “That was the year when the county determined that economic development was a priority. There was an enormous, countywide consistent and collaborative effort for economic development. Over a 10-year period, we see results,” said Conroy.
The turnaround after 1995 was attributable partly to IBM. Conroy said the company made a reinvestment “that led to job growth and that, in turn, had a multiplier effect” in generating business for suppliers, vendors and construction companies.
Conroy had another explanation for Dutchess County’s poor performance in average wages per job – one of the two categories where it scored below the nation. Dutchess had suffered when all its economic eggs were in one basket – namely before 1990, when a greater percentage of residents worked for IBM.
Conroy said efforts were made to diversify the economy, but many of those jobs didn’t pay as well. “Now there are other growth clusters like health care and hospitality. The economy is broader and more diversified, but the average wage per job is not as high,” she said.
All told, Conroy saw the 10-year results as a “tremendous success – a tribute to the leadership in Dutchess County that has been able to stay focused. The County Executive (William Steinhaus) has made economic development a priority for 10 years,” she said.
Conroy’s take on job growth and lower wages is mirrored by Christy Caridi’s work. Caridi, the director of the Bureau of Economic Research at Marist College, has found job growth in low-paying industries in Dutchess County. Three of the top four sectors for growth – forestry and fishing, education and administrative and waste services – are below the county average for compensation. Only one sector, management of companies and enterprises, provides above-average wages to workers, according to Caridi.
Caridi has also studied population growth, another strong suit for Dutchess in the index. From July 2005 to July 2006, she saw a 637-person increase in county residents.
“There has been quite a bit of movement into Dutchess County from the southernmost counties of Westchester, Rockland, Putnam and Orange,” she said.
Caridi questioned the rigor of the Business Council’s index, though she said it provided “a good first approximation” for comparisons. Grades are assigned by a tally of categories where the county or state exceeded national averages, but one of those categories – per capita income – appeared to be a relationship between two other categories: total personal income and population.
“These numbers sort of feed on themselves,” she said. She also said median was the preferred statistic when evaluating income levels.
No big changes
The index’s 2005 cut-off point is another potential drawback. A new study from the Fiscal Policy Institute, a labor-backed think tank, shows modest increases in worker’s wages for 2006. But Maguire said he did not think the big picture has changed since 2005.
“We think the small set of data highlighted Fiscal Policy Institute does not meaningfully change the big picture,” he said. “I don’t think any substantial change will be shown in our data once it’s available for 2006,” he added.