Regional economic distinctions are essential in better understanding New York’s economic challenges

As we enter the 4th year of recovery nationally, New York has not yet recovered the jobs lost in the last recession.

Employment First half of 2001

Employment First half of 2006

Change – Absolute

Change - Percentage

US 131,882,300

134,490,300

+2,608,000 +2.0%

NYS 8,615,100 8,539,800 -75,300 -.9%

NYC 3,717,100 3,628,200 -88,900 -2.4%

Eastern NY 2,622,900 2,684,200 +103,800 +2.3%

Western and Northern NY

2,275,700 2,230,300 -45,400 -2.0%

New York’s economic performance in recent years has fallen considerably short of its potential

Since 2000, the average annual rate of employment growth, real per capita income growth and real wages for New York State as a whole have all been close to ZERO

Only region with growth in employment and real wages was Eastern New York

Western and Northern NY experienced declines in employment and real wages, slight increase in per capita income only due to population decline

NYC declined on all three indicators

Western and Northern NY economies are particularly distressed

Population has been declining, particularly suffered loss of young adults aged 20-34

This region did not benefit from the “boom” of the late 1990s – job growth less than half the state average

Not hit as hard by the recession but employment has not recovered

Upstate metropolitan areas (Binghamton, Buffalo, Elmire, Ithaca, Rochester, Syracuse and Utica-Rome) have lost 42,000 jobs since 2001

NYC was hit hard by the recession but seems to be recovering.

Between the first half of 2003 and the first half of 2006 payroll employment grew by 2.9% - 104,000 jobs

For the first half of 2006, NYC’s job growth was 1.6%, more than twice the national job gain

New York City lost 193,000 jobs during the recession --- still 89,000 below level for the first half of 2001

Eastern NY has done better than the nation as a whole.

Eastern NY includes the Hudson Valley, the Capital District and downstate suburbs – Long Island, Westchester, Rockland and Putnam Counties

This region has seen a growth in payroll employment – since 2000 has done better than the nation as a whole 2.3% growth vs. 2.0% growth nationally 63,000 jobs in the past three years – only

lost 1,700 in the recession

Manufacturing employment continues to be the predominant economic driver in

Western NY

Many of NY’s manufacturing industries are among the most productive in the nation.

The current recovery has not seen an increase in median real wages. Even in NYC – real median wages are still below the 2002 level.

While NYS output per worker increased by 9.3% between 2000 and 2005, the average real wage is only 1.6% higher in 2005 than in 2000.

NY has the widest top-bottom income gap among all states

Average income of families in the top quintile 8.1 times greater than average income of families in bottom

Sixth widest gap between rich and middle quintile

Only in the 1990s did the middle and lower quintile families experience real income gains.

Evidence suggests that during this recovery, the gap is widening.

For 2005, New York’s 14.5% poverty rate was almost two percentage points higher than than the national poverty rate.

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Poverty rates in Syracuse, Rochester, Buffalo, Albany and NYC are even higher.

Health care coverage and rising health care costs are major cost challenges facing NY

The share of the population in NY without health insurance coverage has fallen thanks to expanded public coverage but 2.6 million people are still have no health insurance.

State fiscal actions have compounded local fiscal stress and hindered economic recovery

$0.47

$1.44

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$8.97

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$12.77$13.23

$14.08

$15.43$15.82

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Revenue impact, in billions of tax cuts enacted in 1994-95 through 2005-06.

The tax cuts enacted since 1994 will reduce state revenues by almost $16 billion during the 2006-2007 fiscal year.

One bright spot – the increase in the minimum wage did not dampen job growth among low-wage workers

NYS minimum wage went up from $5.15 an hour to $6.00 an hour on January 1, 2005. Will increase to $6.75 in 2006 and $7.15 in 2007

No evidence of job losses in retail trade or food services --- NY grew faster than other states in region and as fast or faster than nation as a whole

No decrease in hours worked either

Figure 2.14

First half of 2004 First half of 2005 ChangeNew York State

All non-farm 8,383 8,463 1.0%

Retail trade 849 864 1.8%Food service 441 453 2.7%

Four neighboring states (NJ, PA, MA, CT)All non-farm 14,365 14,532 1.2%

Retail trade 1,655 1,679 1.5%Food service 841 863 2.7%

United StatesAll non-farm 130,518 132,708 1.7%

Retail trade 14,866 14,998 0.9%Food service 8,741 8,993 2.9%

Note: Retail trade and food services are the largest employers of minimum-wage workers.

Source: Bureau of Labor Statistics

Employment (000s)

Employment in New York, four neighboring states, and the U.S.Before and after January, 2005, New York minimum wage change