The economic recovery in the Hudson Valley continues to be slow, with job market analysts blaming the reduction of private sector jobs and layoffs on Wall Street for the overall malaise.
According to job numbers released by the state Department of Labor, the private sector labor force in the Hudson Valley increased by 0.8 percent in 2012, adding 5,600 jobs.
In the Putnam-Rockland-Westchester region, 4,200 jobs were added in the private sector, a 0.9 increase.
Putnam County and Rockland County have the second and third lowest unemployment rates in the state at 6.3 percent and 6.6 percent, respectively. Westchester is fifth at 7 percent.
The tricounty area’s 6.8 unemployment rate is below the state’s 8.2 percent rate and the country’s 7.6 percent rate.
From month to month, the unemployment rate in the Hudson Valley increased from 7 to 7.3 percent. There are 82,700 people unemployed in the Hudson Valley, an increase from 79,000 in November 2012 and 77,200 in December 2011.
The construction industry continues to shed jobs. From November to December, construction jobs in the tricounty region decreased 3.1 percent, while year to year, the industry shed 2,500 jobs, a decrease of 8 percent. Manufacturing jobs decreased 3.6 percent year to year.
Professional and business services increased 3.1 percent year to year, while education and health services increased 2.3 percent. The public sector lost 1,600 jobs, a decrease of 0.7 percent.
Christy Caridi, an assistant professor of economics and director of the Marist Bureau of Economic Research, said that while the region is holding its own, it’s not the numbers one would like to see in a recovery. Caridi blames the sluggish job market on the contraction of the public sector.
“The public sector is very large in New York and provides a great deal of spending power in the region,” Caridi said. “There’s a cutback of the demand for locally produced goods and services. Employers will hold back on hiring people until they are convinced the public sector is finished contracting.”
Caridi said that the jobs created in the Hudson Valley are lower wage jobs and that the area has not recovered the higher paying jobs that were lost.
“We are starting to rebuild,” Caridi said. “We have people working again and employers are hiring, but the pay scale has plummeted. There is not as much disposable income as there was before the recession.”
While Caridi does not expect stronger job growth in 2013, she doesn’t see the job market sliding backward. While many people have blamed the fiscal cliff, the 2012 election or the Affordable Care Act for a slow job market, Caridi said that smaller firms will only hire people if the demand for their product is there.
“If a restaurant sees more people coming into the restaurant and they need more people, they will hire them,” Caridi said. “They don’t want to turn away customers. In this recession, many people changed the way they view their lives. They don’t spend the way they used to.”
Caridi said that there is an issue of highly skilled people not wanting to take these low wage jobs.
“There are some manufacturing plants that are having trouble filling positions,” Caridi said.
Caridi said she doesn’t expect to see the construction industry ever return to pre-recession levels, and that developers have become more conscious about the cost of building single-family homes.
“We were building houses almost on spec,” Caridi said. “The market has dried up and I don’t anticipate it coming back soon.”
Matthew Carey, director of financial market studies at Iona College’s Hagan School of Business said he was puzzled that construction continued to fall in December, noting the many repairs needed after Hurricane Sandy. He thinks a lag in insurance payments is to blame and the construction industry will eventually pick up, particularly with federal funding for Sandy just approved.
Carey also noted that there aren’t a lot of new projects in the area, with construction at the World Trade Center mostly complete. He said that the rebuilding of the Tappan Zee Bridge will also spur the industry.
In his role at the Hagan School of Business, Carey has seen that Wall Street has yet to recover from the recession, with the banking and security industries continuing to shed jobs.
“I think they are still trying to figure out what their business model is going forward,” Carey said. “When Wall Street was hitting on all cylinders, you had that trickle down effect where all businesses benefit. There was more money to spend on restaurants, cabs, cars. All that money is missing from the recovery.”