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More Progress on State's Economy Needed

11:49 AM, Feb 4, 2013   |    comments
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By: Joseph Spector
Albany Bureau Chief

ALBANY, N.Y. - No area of New York saw its unemployment rate drop between 2011 and 2012, and the rate outpaces the national average.

Meanwhile, New York ranks last in the nation for its business climate, the Tax Foundation said last fall, and the state has 279,000 fewer people employed than it did in 2008, down 3 percent, state records show.

WEB EXTRA: View a database of unemployment figures for Erie, Niagara, and other New York Counties back to 1990 from our news partners at the Rochester Democrat and Chronicle.

As the nation slowly rebounds from the Great Recession, New York may still be in an economic malaise, particularly upstate.

Gov. Andrew Cuomo has made the economy a priority, creating 10 regional economic development councils to boost cooperation and drive state aid to projects. But while Cuomo has built a record of accomplishments at the state Capitol, the economy remains a formidable challenge.

And as the Democratic governor gains national attention as a potential presidential candidate in 2016, the state's economy is already starting to dog him.

"The economic climate that has allowed (Texas) to grow and create jobs - he'd dearly love to be able to stand up and say, 'We did this in New York.' But he can't," said Texas Gov. Rick Perry, a GOP presidential candidate in 2012, at a forum in January about Cuomo.

Cuomo is also under pressure from business groups in the Southern Tier to allow hydrofracking, the controversial drilling technique that advocates say would be a boon for the economy. Environmentalists have fought the measure, and Cuomo is expected to decide on the issue by mid-February.

Over the past year, the national unemployment rate fell from 8.5 percent to 7.8 percent. New York's rate stayed flat at 8.2 percent. It was 8.4 percent in upstate, up from 7.9 percent in December 2011.

Cuomo's office and some economists said the unemployment rate is not a good gauge of the state's economic growth. The unemployment rates for the state are calculated by the state Labor Department through a telephone survey.

The state Labor Department said New York has recovered all of its lost private-sector jobs - about 348,000 in total - since November 2009. It is one of only five states to do so, and the only one in the Northeast.

"I tend to not focus just on the unemployment rate," said Richard Deitz, an assistant vice president and senior economist at the Federal Reserve Bank of New York. "I think a better indicator to look at is total employment."

In that measure, New York has outpaced the nation, Deitz found. New York didn't dip as low during the recession as other states, and so it didn't have as far back to climb.

The duration of the national unemployment downturn lasted about 25 months; it lasted about 20 months in New York, Dietz said.

Kevin Jack, the statewide market analyst at the Labor Department, said even the unemployment rate has shifted downward. It fell from 9.1 percent in August to 8.2 percent last month - the state's biggest drop over a four-month period since the 1980s.

Because the state economy is improving, more people are re-entering the workforce. "When the job numbers start looking decent, a lot of people who have been on the sidelines, decide to jump into the labor force," Jack explained. "Oftentimes what happens is there is a temporary bump up in the unemployment rate."

Cuomo and economic development officials said they've seen strong regional growth.

The Rochester area has a booming optics sector. Buffalo has focused on biomedical research. The Albany area has the burgeoning nanotechnology industry. The Hudson Valley has a promising biotechnology corridor.

"There is no real upstate economy. It's the metropolitan areas that have their unique abilities to do things," said Gary Keith, a regional economist for M&T Bank in Buffalo.

Cuomo has hosted two annual award ceremonies to promote the regional economic councils and dole more than $1.5 billion in state aid to thousands of projects.

In his State of the State address Jan. 9, the governor hailed the achievements and recognized that it hasn't been enough.

He pointed out that over the past 10 years, jobs grew upstate at 5 percent, while New York City grew at 16 percent, and the nation grew at 9 percent. "When you look at the job growth in upstate New York, frankly it is sad, and it is troubling," Cuomo said. "The nation's growth led upstate New York's growth."

Cuomo is proposing additional tax-free zones to promote businesses and expansions. He wants to better market upstate and build three privately owned resort casinos.

"I believe if they visit, they will come back and they will stay, but we have to get them there," Cuomo said. "And I believe casinos in upstate New York could be a great magnet to bring the New York City traffic up."

The state is also grappling with struggling local governments, despite smaller state deficits. A report in May from state Comptroller Thomas DiNapoli found that while private-sector jobs have returned, it's been partly offset by the loss of 23,200 government jobs between December 2009 and last April.

"Unemployment is still too high," DiNapoli said. "The challenge for us is that we are not certainly going in the negative, but we are not moving forward in the kind of leaps and bounds people would like to see."

Includes reporting by Rochester Democrat and Chronicle staff writer Gregory Fox.

 

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