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Richard Deitz, Officer and Senior EconomistFederal Reserve Bank of New York, Buffalo [email protected]
Economic Outlook for Upstate New YorkCan Upstate Cities Save Themselves?Manhattan Institute Policy Forum
June 6, 2007
• Economic conditions in the region
• Forces shaping the economic outlook–Restructuring: continuing to move to a service economy
–Workforce upgrading: becoming higher skilled
• Long-term issues–Population loss
–An aging population
OUTLINE
130
120
110
100
90
Job growth upstate has been sluggish
JOB GROWTH
Source: U.S. Department of Labor
1990 1992 1994 1996 1998 2000 2002 2004 2006
Upstate NY
U.S.Index (1990 = 100) Total Employment Levels
Albany
JOB GROWTH
U.S. Upstate NY
1990 – 2000 21% 5%
2000 – 2003 -2% -3%
2003 – 2006 5% 1%
Expansion was slow and recession was not severe, but recovery has been weak
Source: U.S. Department of Labor
JOB GROWTH Recovery has been slow in most areas
Employment Growth, 2002-20064%
3%
2%
1%
0%
-1%
-2%
-3%
Binghamton Buffalo Rochester Utica Syracuse Albany U.S.
Source: U.S. Department of Labor
4.5%
1.7%
0.5%0.4%
-0.4%
0.1%
-1.6%
Unemployment rates are low
Rochester
Buffalo
Albany
Source: U.S. Department of Labor
7.0
6.0
5.0
4.0
3.02000 2002 2004 2006
U.S.
JOB GROWTH
JOB GROWTH Despite little net growth, some sectors growing
Source: U.S. Department of Labor
6%
3%
8%
3%
2%
-3%
-2%
1%
-4%
-16%
-19%
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Government
Wholesale Trade
Retail Trade
Other Services
Manufacturing
Transportation and Utilities
Information
Employment Change in Upstate, 2001 - 2006
Average Wage per Worker as a Percent of the U.S.
WAGES Losing ground relative to the nation
120%
100%
80%
60%
40%
20%
0%
Albany
Roches
ter
Bingha
mton
Syracu
seElm
ira
Glens
Falls
Buffal
oIth
aca
Utica-
Rome
20051990
Source: U.S. Department of Labor
U.S. Wage Level
Forces Shapingthe Upstate Economy
RESTRUCTURING
Source: U.S. Department of Labor
25.3%
-26.0%
5.7%
0.0%
18.9%Producer Services
Consumer Services
Goods Production and Distribution
Locally Consumed Goods and Services
Government
Traded Goods and Services
Percent Change in Employment, 1990 – 2005
48.7%
Upstate
Growth in services offsetting a large manufacturing decline
RESTRUCTURING
Source: U.S. Department of Labor
Percent Change in Employment, 1990 – 2005
39.4%
48.7%
-8.4%
21.6%
18.4%
U.S.Upstate
Growth in services offsetting a large manufacturing decline
25.3%
-26.0%
5.7%
0.0%
18.9%Producer Services
Consumer Services
Goods Production and Distribution
Locally Consumed Goods and Services
Government
Traded Goods and Services
• Declining demand for lower-skilled labor, particularly in manufacturing
• Increasing demand for higher-skilled labor
• More workers needed in jobs that service an aging population- Healthcare, travel & tourism
• More workers needed to supply consumer services through personal contact
WORKFORCE CHANGES
(> $50,000)High-Wage
($40-50,000)Mid-High
($30-40,000)Mid-Wage
($20 -30,000)Mid-Low
(< $20,000)Low-Wage
There is a shift toward high-skill jobs
Percent Change in Employment by Occupational Wage Class, 1990 – 200035
30
25
20
15
10
5
0
-5
-10
-15
U.S.Albany
WORKFORCE CHANGES
Source: U.S. Department of Labor, Buffalo Branch, Federal Reserve Bank of New York
Index: 1900 = 100
Source: U.S. Bureau of the Census
POPULATIONUpstate population growth stopped in the 1970s
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
400
300
200
100
Upstate NY
U.S.
Eastern New York growing the most
Population Change: 1980 – 2005(U.S. = +30.5%)
17.1%
9.9%
6.8%
1.4%
-5.8%
-7.6%
-7.0%
Syracuse
Albany
Glens Falls
Rochester
Binghamton
Utica
Buffalo
POPULATION
Source: U.S. Bureau of the Census
Migration of the Population Aged 30-64, 1995 - 2000
Notes: Rank is of 51, if upstate New York were a separate state from downstate New York; Age group examined tends to eliminate college students who may have moved to the region only to attend school.
Out-migration 255,851 8.7% 27
In-migration 193,090 6.6% 50
Net -62,761 -2.2% 48
Number Percent Rank
OUT-MIGRATION A net outflow of the working-age population
Source: U.S. Bureau of the Census
Out-migration
Net
In-migration
14
12
10
8
6
4
2
04 or more years of college Less than 4 years of college
Out-migration In-migration
Rank: 29
Rank: 51
Rank: 27Rank: 48
13.4%
9.3%
7.0%
5.6%
Migration Rate of Population Between 1995 and 2000
Aged 30 – 64 in Upstate NY
Source: U.S. Bureau of the Census
OUT-MIGRATION Out-migration is typical, but little in-migration
The elderly population is growingThe non-elderly population is flat
1970 1980 1990 2000 2010 2020 2030
200
150
100
50Age Index (1970 = 100)
65+
<65
Source: U.S. Bureau of the Census and NY Statistical Information System, Cornell University
Note: Post 2000 data are projected
Upstate New York
AN AGING POPULATION
The elderly share of the population is rising
1970 1980 1990 2000 2010 2020 2030
20%
15%
10%
5%
Share of Population 65+
Upstate NY
U.S.1 in 10
1 in 7
1 in 5
Note: Post 2000 data are projected
Source: U.S. Bureau of the Census and Economy.com
AN AGING POPULATION
AN AGING POPULATION
Buffalo8th*
15.8%
*Ranked out of 81 metro areas with 500,000+ population Source: U.S. Bureau of the Census
Share of Population 65+, 2000
Upstate metro areas among oldest in nation(U.S. large metro median is 11.6%)
Albany12th*
14.3%
Upstate metro areas among oldest in nation(U.S. large metro median is 11.6%)
AN AGING POPULATION
15.8%
*Ranked out of 81 metro areas with 500,000+ population Source: U.S. Bureau of the Census
Share of Population 65+, 2000
14.3%
Syracuse21st*
13.3%
Upstate metro areas among oldest in nation(U.S. large metro median is 11.6%)
AN AGING POPULATION
15.8%
*Ranked out of 81 metro areas with 500,000+ population Source: U.S. Bureau of the Census
Share of Population 65+, 2000
14.3%13.3%
Rochester22nd*
12.9%
Upstate metro areas among oldest in nation(U.S. large metro median is 11.6%)
AN AGING POPULATION
15.8%
*Ranked out of 81 metro areas with 500,000+ population Source: U.S. Bureau of the Census
Share of Population 65+, 2000
• Growth has been sluggish across upstate NY, but Albany & Glens Falls are bright spots
• Manufacturing continues to shed workers, while finance, health care, and education are key growth industries
• Boomer retirements are likely to create many new jobs to fill
• Finding and retaining workers is likely to become increasingly important
CONCLUSIONS