Is the Western New York economy heading for an economic downturn the likes we haven't seen since Bethlehem Steel and company shuttered operations in the early 1980s?
Maybe yes, maybe no, but the latest newsletter released by two sharp economic professors from Canisius College gives reason for P-A-U-S-E.
For starters, George Palumbo and Mark Zaporowski essentially say we should stop this semi-happy talk rooted in the misbelief (Dubya spoken here) that our regional economy, including housing, is somehow weathering the financial storm better than the nation as a whole. Palumbo and Zaporowski write:
Those who claim that the local economy will not decline as much as the nation obviously have not noticed that the local economy has not yet fully recovered from the 2001 recession.
Here's a depressing set of numbers to back up that point:
547,500: non-farm employment in WNY in 1990.
548,000: non-farm employment the first 11 months of 2008.
That's right, folks. In 18 years, we've added a net total of 500 jobs. And since 2000, we've dropped more than 10,000 jobs, as employment was close to 560,000 back then.
The bad news doesn't end there.
When you consider only "goods-producing employment," that is, good-paying manufacturing jobs, we're down from about 115,000 jobs in 1990 to some 105,000 in 2000 and about 80,000 in 2006, the latest year that subset of numbers is available. In other words, we're down some 25,000 jobs this decade alone.
To put that in perspective, when the Bethlehem and Republic Steel plants closed in the 1980s, we lost 9,400 jobs. So, we've suffered the equivalent of two or three Bethlehem-Republic shutdowns this decade.
And as bad as that is, it could get worse. In fact, the professors say it probably will.
The tenuous position of the American-based automobile industry places Western New York in its most perilous position since the demise of the local primary metals industry more than 30 years ago. The future employment of many of the 35,000 durable goods workers in Western New York will be determined on the floor of Congress rather than on the production floor. If the perception that total compensation packages for auto workers in the Great Lakes region is substantially higher than for the workers of transplanted auto producers in the South is correct, it is hard to imagine that the status quo will be preserved.
Oh, great. You professors have any more bad news?
Well, actually, yes.
Banking, another pillar of the regional economy, isn't exactly rock solid, they say.
The strength and future security of the region’s financial services firms may be just one startling revelation away from weakness.
Palumbo and Zaporowski say local government has to get serious about steamlining and otherwise economizing operations because the money isn't going to be there to sustain business as usual. The feds and state can't be expected to prop up local government to the degree they have in the past, and local taxes are at the breaking point.
Something has to give, which could be a good thing if we weren't governed by politicians whose favorite phrase is "status quo."
Which leads us to a most-salient point -- the effectiveness, or lack thereof, of local and state economic development programs to generate the jobs and tax base we need to thrive as a community. The authors raise the prospect of ...
... an informed discussion about the true economic development impacts of many publicly subsidized projects that to some observers have been a tale told by an idiot, full of sound and fury but signifying nothing.
And you readers think I'm harsh.
But the profs are right.
The public sector in this region has invested billions over the years to subsidize business in the name of economic growth. These days it's more than $300 million a year when you add up tax breaks granted under the IDA and Empire Zone programs and deep discounts on hydro-electricity produced by the New York Power Authority.
Yet we have fewer jobs than we did a decade ago and we're losing good-paying jobs at a dizzying pace.
Hey, guys, it's not working. I mean, it's really not working.
But the loudest voices we hear -- from the business community, anyway -- are protests over proposed reforms in these failed programs.
As for the politicians, well, I'm not hearing much of anything, aside from what's in the governor's proposed budget, unless you count changes in legal counsel to give IDA business to campaign contributors with the right party ties.
That's not change we can believe in.
(Now that you're through reading this post, read the report, as it's only seven pages and loaded with details and recommendations beyond what I've touched on here.)
taggedEconomic Development | Economics