State, counties fare poorly in Economic Growth Index

In school a “C” grade is usually viewed as signifying mediocre performance, but when it comes to measuring economic development in the state of New York, it”™s not so bad. At least that”™s the feedback from business leaders in Westchester and Orange counties, both of which rated a C in The Business Council of New York State”™s first-ever Economic Growth Index.

A C is pretty good considering that “only four counties in the state did better,” said Paul Vitale, vice president of government and community relations at The Business Council of Westchester County in White Plains.

Indeed, New York state as a whole rated a D. Only two counties, Putnam and Saratoga, earned grades of A, while only two others, Suffolk and Dutchess, earned grades of B. The rest of the counties rated a C or lower. Thirty-one counties, including Ulster, rated an F, and the upstate region as a whole earned an F.

 

Tracking growth

Released at the end of August, the index uses five core measures of growth to track the economic performance of the state”™s 62 counties as well as other states over the past 10 years. The measures, tracked from 1995 to 2005, are growth in number of jobs, average wage per job, total personal income, per-capita personal income and population. The data came from the U.S. Bureau of Economic Analysis and were compiled by the council”™s research arm, the Public Policy Institute.

New York state got a D because its economic growth over the past decade matched or exceeded the national average in only one category, average wage per job. In contrast, 10 states ”“ Arizona, California, Colorado, Delaware, Florida, New Hampshire, Texas, Virginia, Washington, and Wyoming ”“ rated A+ and three other  states ”“ Georgia, Maryland and New Mexico ”“ earned an A. A total of 27 states got grades better than New York state.

“When you consider that New York is such a tough state to do business in, I don”™t think a C is bad. The glass is half full, not half empty,” said John D”™Ambrosio, president of the Orange County Chamber of Commerce in Montgomery. Orange County, which is one of the fastest-growing counties in the state, was “above the national average in jobs and population. We still have a lot of rural areas. And we still have quality of life. What you see in Orange County is growth that is intelligent, not just growth.”

Lance Matteson, president of the Ulster County Development Corp. in the town of Ulster, concurred, characterizing the index as “narrow” since it addresses just “quantitative growth, without an analysis of what that growth looks like. It doesn”™t tell you how good the jobs are.”

Having visited business-friendly parts of Florida, Delaware and Virginia ”“ all A+ states ”“and witnessed the rampant sprawl, traffic and destruction of the natural environment, a reporter asked Ken Adams, president and CEO of The Business Council of New York State, the value of simply measuring growth without balancing it against other factors, such as quality of life. Adams acknowledged the measure was limited, but nonetheless useful in “making an apples to apples comparison” of economic activity.

“It paints a picture of the brutal facts of the state”™s economy,” he said. “With 31 counties getting an F, it”™s really bad. In some parts of the state the only new job creation is government-derived, such as prisons, higher education and health care.”

That raises the question of “who pays for the $120 billion that is the annual state budget,” added Adams. “We”™re spending more per capita for our 19 million people than any state in the country except Alaska, which has the advantage of a lot of oil money and low population. We spend more per resident, but our economic performance is 28^th in the nation.”

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9/11, other factors

Matteson said Ulster”™s failing grade also reflected the fact that the economic growth index was “skewed toward the bedroom communities. If people are getting great jobs in the city or another county and coming back home, the per capita income will look terrific, but their community may be mostly retail. It weighs disproportionately to income, regardless of the source of income.”

But what then would account for Westchester, a wealthy county by any measure, getting only a C? Adams, who said he was surprised himself at the preponderance of low scores in the state, pointed out that the index”™s 10-year time frame encompasses the severe economic downturn that occurred as the result of 9/11. That disaster, he said, “affected all the commuters, with 30,000 people losing their jobs.”

Because the cutoff period for the study was 2005, it doesn”™t reflect the county”™s subsequent recovery in the last two years, Vitale said. Recently, “we”™ve gotten a lot of companies from the city that have established satellite offices here. Our vacancy rates are way down, as opposed to four or five years ago.”

New York City”™s overall grade was a C, with the remaining suburban counties of Suffolk getting a B and Nassau and Rockland each a D.

What accounts for Putnam”™s A? Adams theorized that it might reflect another trend, the substantial migration of New York City commuters into a region that was formerly rural.

Dutchess County also benefited from the transformation of its southern region into a bedroom community for city commuters, as reflected in its grade of B. Unlike Ulster, it also has the advantage of IBM, a major employer with relatively high-wage jobs, as well as being home to several private colleges, noted Matteson.

 

”˜Wake-up call”™

The state”™s job growth as a whole was 12.2 percent, well below the national average of 17 percent, according to the index. The A+ states had job growth rates of 20 percent or more. New York”™s average annual wages per job grew 48.3 percent, driven by the 53.2 percent increase in New York City, which helped catapult the state ahead of the national average of 46.3 percent. In upstate and suburban areas, the wages per job rate was below average.

New York state”™s total personal income grew 53.9 percent, behind the national average of 66.3 percent. Per-capita personal income in the state grew 47.6 percent, behind the national average of 49.4 percent. Population growth rate was 4.3 percent, well behind the national growth rate of 11.4 percent. Eight of the state”™s counties ”“ Bronx, Dutchess, Orange, Putnam, Queens, Richmond, Saratoga and Suffolk ”“ had population growth rates that exceeded the national average. But as a whole, the state outpaced the population growth rates of only six other states.

Vitale said the findings are a wake-up call to the state”™s politicians. “Our political leaders in Albany get the message they need to create an environment with positive incentives for businesses to make us competitive with other states.”

He said the state”™s high taxes and numerous unfunded mandates, coupled with the high costs of housing and electricity, were major detriments.