Policy changes are needed for New York economic woes

03/18/04

ITHACA, N.Y. -- A new study of upstate New York's economy by three Cornell University faculty members confirms that the region continues to lag behind much of the rest of the nation and, as a result, is losing its best and brightest young people to regions with more better-paying jobs in vibrant urban centers. The only bright spots in the otherwise bleak report are higher education and health care.

The report quantifies how the region has never fully rebounded from the deindustrialization that began in the 1970s and continues to the present. Today, upstate remains far behind the national average in income and job growth, with average wages rising little more than 2 percent from 1980 to 2000, compared with 15 percent in the rest of the nation. However, the report also shows that jobs in the region are beginning to diversify -- a positive change. The researchers call for concerted state policy efforts backed by federal support to spur further economic health.

The report, "Transition and Renewal: The Emergence of a Diverse Upstate Economy," is by Rolf Pendall, Matthew P. Drennan and Susan Christopherson. All three are faculty members in Cornell's Department of Urban Planning in the College of Architecture, Art and Planning. The report was done for the Brookings Institution in Washington, D.C. The third in a series of five reports on the region by Cornell for Brookings, a nonprofit public policy group, it is posted on this Web site: http://www.brookings.edu/es/urban/publications/200401_pendall.htm .

There are 206 active two- and four-year colleges and universities in upstate New York, more per capita than in downstate or the nation as a whole, the researchers report. The sector contributes to the region both directly and indirectly in these ways: It employs 3.7 percent of those with jobs in the region, which, while small, is a much higher percentage than elsewhere. There also are spinoffs, such as attracting students and dollars from downstate and out of state, training much of the region's workforce and forming consortiums between researchers and industry that may lead to businesses and startups that require well-paid, high-skilled workers. But while more upstate residents have college educations now than two decades ago, too many young, educated working-age adults continue to leave the region in search of better jobs in other places, the authors assert. "Upstate is losing its young workers," said Drennan.

The researchers also look to health care -- the fastest-growing job sector in the region -- to stimulate growth. Jobs in teaching hospitals, major medical centers, cancer centers and other specialized-care facilities grew by 75 percent from 1980 to 2000, they report. The sector now employs about 9 percent of those with jobs in the region, a larger share than in the nation on average. However, average wage growth in the health-care sector is only three-quarters of the national average, a disincentive to economic development.

Manufacturing jobs are still essential to the region and need to be part of job diversification, Christopherson stresses. In addition, she said, "the state can do more" to encourage economic growth. "We need to discourage intermunicipal competition for businesses and instead use tax incentives and economic development funds to build home-grown businesses." She also called for an urban policy that would allow upstate to reclaim its cities, which, while small, manageable and community-minded, aren't vibrant enough nor do they offer wages or job opportunities that are competitive enough to keep young people from moving away.

The authors conclude with this advice to Albany: "State policy should focus relentlessly and strategically on export industries," taking advantage of educational institutions like Cornell and others as "centers for innovation." The state, backed by the federal government, also needs to "continue to invest, and invest more, in social and physical infrastructure systems" -- good schools and child care, good roads, services and access to air transportation -- "that enable economic growth." As part of those efforts, it may need to reform how it finances local governments, they write.

The report offers a job and economic growth analysis of upstate New York's six regions: Western, Rochester/Finger Lakes, Southern Tier (including Ithaca), Central, North Country and Hudson. It also shows that in places like Buffalo, where unions remain relatively strong, wages for blue-collar jobs remain competitive with wages for similar jobs in the rest of the nation. However, in places where unions are weak, such as Rochester -- and there are fewer similar jobs in other parts of the country -- wages are declining.

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