Charting highs, lows, losses and gains, Frank Surdey sounds like a weatherman when he speaks. But Surdey instead follows the often stormy state economy.
As managing economist at the state Department of Labor”™s division of research and statistics, he not only analyzes the dynamics of the economy but tries to foster collaboration among the agencies dealing with economic development, workforce initiatives and business.
The numbers are favorable for the Hudson Valley, he told a recent gathering of the Institute for Business Innovation, a networking group, at The Astor Home for Children in Rhinebeck.
In October, the Hudson Valley had the state”™s lowest unemployment rate, 3.6 percent, compared with 4.4 percent for the state and nation. The region has a total labor force of 1.2 million people.
A downside to the low number is the lack of quality workers, making it difficult for firms to fulfill their workforce needs, Surdey said.
The largest employment sector in the valley in 2006 was health care and social assistance, which accounted for almost 15 percent of the total jobs and had an average salary of almost $41,000. Local government, including public school workers, was second, with 13.4 percent of the total and an average salary of $52,000, followed by retail trade, with an average salary of $27,500; manufacturing, with a salary of $74,000; and accommodation and food service, with a salary of $18,000.
From 2003 to 2006, the sectors that grew the most were health care and social assistance; construction; finance and insurance; retail trade; and transportation and warehousing.
During the same period, the leading sectors in decline were manufacturing, information, federal government, utilities, wholesale trade, and arts, entertainment and recreation. Manufacturing now accounts for about 60,000 jobs, a steep decline from the 104,000 jobs in the sector in 1990. Manufacturing has been declining in the region, state and nation for the past 17 years, with the trend expected to continue, albeit at a slower pace, Surdey said. Within manufacturing, the computer and semiconductor industries were projected to lead in job creation, with high average salaries.
The most important sector is professional business services, which “has had a tremendous ripple effect in respect to subcontractors,” Surdey said. Finance and insurance is another high-wage sector, which is growing but accounts for only 3.9 percent of total jobs in the region.
Taking the longer view, over the past 15 years government jobs in the Hudson Valley have grown slightly, from 149,000 in 1992 to 172,000 in 2007. Goods-producing jobs remained flat and were at 114,000 jobs in 2007, while service jobs have grown, from 525,000 in 1992 to 649,000 in 2007. Surdey said the declines in manufacturing in the goods-producing sector were overshadowed by the gains in construction-related jobs.
OUTS AND INS
Surdey offered a view on the valley”™s bedroom communities. Putnam County had the highest percentage ”“ 71 percent ”“ of residents who work outside the county. It was followed by Rockland with 45 percent; Greene, 43 percent; Westchester, 37 percent; Columbia, 36 percent; Orange, 34 percent; Sullivan and Ulster at 33 percent; and Dutchess the lowest with 30 percent.
Looking at the net commutation, Rockland had the highest level of out-commutation, at 31,300. Orange, Putnam and Westchester were in the 24,000 to 25,000 range. Ulster had a net of 17,000 people traveling outside the county to work and Dutchess slightly fewer, at 14,000 people. Greene, Columbia and Sullivan had fewer than 6,000 people commuting outside the county.
Comparative average wages ranged from a high of $74,000 in New York City to a low of approximately $32,000 in Greene, Sullivan and Columbia. Not surprisingly, Westchester had the highest average wage in the region, at $58,500, compared with $45,000 in Rockland, $43,000 in Dutchess, $42,000 in Putnam, $36,000 in Orange and $34,000 in Ulster.
As for the numbers and size of businesses, the vast majority are small. Of the region”™s 69,600 firms in 2005, 91 percent employed less than 20. Eight percent employed from 20 to 99 people and only 1 percent employed more than 100. However, that 1 percent accounted for 39 percent of the total number of jobs. Mid-sized firms accounted for 28 percent of the overall jobs and small businesses 32 percent.
Between 2000 and 2005, each category of business in terms of size experienced similar growth rates, with small businesses expanding the fastest, at 39 percent. That compares with 31 percent for large companies. Businesses with more than 500 jobs showed a decline in employment levels, while those with 100 to 500 employees had significant growth, Surdey said.
CLUSTERS ON RISE
Clusters, groups of similar businesses in a concentrated area that export or sell their products or services outside the region and have a ripple effect in bringing wealth to the area, are an important contributor to the state”™s economy, Surdey said. Empire State Development Corp. has identified 60 clusters in the state, which account for a third of all jobs.
In 2005, 16 clusters were identified in the Hudson Valley. The five largest in terms of number of jobs were front office and producer services, travel and tourism, financial services, distribution, and communication, software and media services. The average wage for these ranged from $94,000 for front office to $31,000 for tourism, with distribution falling in the middle at $58,000. The cluster with the highest wage was electronics and imaging, at 109,000 jobs, which accounted for 18,000 jobs.
Back office and outsourcing was the fastest growing sector in the valley, with employment rates increasing 36.5 percent between 2000 and 2005. The other cluster with significant growth in the same time frame was biomedical, with 12.5 percent growth. Other clusters experienced rather dramatic declines in employment. Fashion, apparel and textiles declined 33 percent, industrial machinery and services and IT services each about 23 percent, and material processing 27 percent.
Surdey presented statistics on the green and clean tech cluster for 2006, which showed a total of 816 firms and 13,000 jobs in the state overall, with an average wage of $77,000. Within the cluster, subsets such as renewable energy and green building showed a surprising decline in jobs between 2003 and 2006, although energy and environmental systems consulting services grew by 100 jobs. Despite the underwhelming numbers, the cluster “has enormous potential for revenue and job growth if we understand what we have and change our policies to assure growth,” Surdey said. “Upstate New York is ideal for green technology production.”
FAST GROWTH
The overall population of the region is 2.38 million, with Westchester accounting for nearly 1 million, Orange about 376,000, Dutchess and Rockland each having about 295,000 and Ulster 182,000 people. Orange was the fastest growing of the state”™s 62 counties, with its population increasing more than 10 percent between 2000 and 2006. In contrast, Dutchess, the next fastest growing county in the region, grew by 5.4 percent and was the fourth fastest growing in the state overall. Surdey noted that all of the counties in the Hudson Valley are among the state”™s top 20 in terms of population growth.
In terms of share of the adult population holding college degrees, Westchester, Rockland and Putnam rated the highest, with approximately 40 percent in the latter two counties and 44.5 percent in Westchester. They also rated higher than the state average of 31 percent. The other counties rated below the state average, with Dutchess and Ulster having similar rates of approximately 30 percent.
Surdey said the so-called brain drain of educated youth outside the area isn”™t unusual. “A lot (of young people) like to move somewhere else. Out-migration is not different from what it ever was.” However, what is a concern is that the out-migration of youth isn”™t balanced by an in-migration of other workers. Plus, the reason for the higher rates of out-migration varies, depending on the region: for example, while young people are leaving the Rochester-Buffalo area because of lack of quality jobs, in Westchester the out-migration is due to the high cost of housing.
The number of minorities as a share of the overall population was highest in Westchester, at 39 percent ”“ slightly below the 40 percent share in the state overall. “The workforce is changing,” Surdey said. Due to the aging of the baby boomers, the number of women in the workforce is projected to decline. The workforce is also becoming more ethically diverse: he noted that one in every five workers in the state is foreign born. More than 30 percent of the workforce in Westchester and Rockland counties speak another language.
And the overall population in the region is getting older: by 2020, the largest segment will consist of people age 55 or over. “A huge amount of the intelligence will be at retirement age,” Surdey said.
NEW JOBS
In terms of industry sector, what does the future look like? Nationwide, the U.S. Department of Labor projects that the largest employment growth through 2014 will be in professional business services, health care/social assistance, leisure/hospitality, state/local government and retail trade. The fastest growth in expected to occur in private education services, 32 percent from 2004 through 2014; health care/social assistance, 30 percent; professional business services, 28 percent; leisure/hospitality, 18 percent; and transportation/warehousing,12 percent.
Manufacturing, agriculture, mining and utilities are expected to decline over the same period. In terms of the educational requirements for new jobs, 36 percent will require a college degree, 28 percent some college, and 37 percent a high school diploma or less. When factoring in these jobs that will open up due to a replacement need, which Surdey said constituted 76 percent of all jobs, the numbers go up for people with less education and decline to 25 percent for those with college degrees.
In the Hudson Valley, 32,000 new jobs are projected annually between 2004 and 2014, with sales expected to grow by 13.8 percent; administrative support by 11.8 percent; food preparation and serving by 10.4 percent; construction, transportation and materials moving, and health practitioner and technician by approximately 6 percent; and personal care by 5 percent.
Surdey said that a unique feature of the Hudson Valley is that “the local government jobs are well paying.” He also said that there is a shortage of engineers in the state, which creates challenges for businesses and represents a “tremendous opportunity” for young people ”“ although communicating that fact in a meaningful way remains a challenge. In addition, he said research shows “existing workers are more interested in benefits and the value of the work, rather than earnings.”
