Contrary to Cuomo Claim, Upstate Economy Faltered this Century, Not Last

Governor Cuomo described the Upstate New York economy as suffering from a “ bad fifty years “ as he tried to explain why it was hard to stimulate rapid growth in the region’s economy, which has grown far more slowly than the rest of the State and nation (See Gotham Gazette Opinion, Upstate New York is Home to Heavy Voter Turnout, Major State Investment, and Minimal Job Growth, Nov. 21,2017). He said also that his administration had changed the trajectory upward. Residents of the state should be concerned about how successful these efforts are: Upstate York has more than a third of the State’s residents and is nearly fifty percent of the vote in Gubernatorial elections; the State has enacted intensive programming to uplift that region’s economy, and the State must make major decisions about the allocations of its resources and assets every year and set policy directions.

When I wrote the earlier column, I assumed the Governor’s description of Upstate’s economic decline was generally true. But in the course of verifying the accuracy of the fifty-year decline statement in order to elaborate on the issue for this column, I learned that it was not true that the region’s economy has been going downhill for fifty years.

Upstate New York’s Economy only slowed to a crawl in the years after 2000-  alongside the two recessions that occurred between 2000 and 2010. This major slowdown did, of course, occur before Andrew Cuomo became Governor in January 2011.  But a detailed look at the history of the State’s economy and employment growth shows that Upstate New York’s employment growth actually outpaced the rest of the State in the 1980s, and continued a moderate climb forward in the 1990s, although both regions grew more slowly than the rest of the nation. Employment grew 20% in each decade across the U.S.

New York State Labor Department figures show Upstate employment growing at 17% in the eighties, vs. 12% Downstate (1). Downstate consists of New York City, Nassau, Suffolk, Westchester, Rockland, and Orange counties (2). Upstate is the remainder of the State.

 

NYS EMPLOYMENT GROWTH, 1980-90, NY AND REGIONS (000)
	1980	1990	% Growth
NYS	7113	8098	13.8%
Downstate	4645	5206	12.1%
Upstate	2468	2892	17.2%

 

Governor Cuomo seemingly was expressing a public perception that manufacturing job loss broke the back of the Upstate economy decades ago. Manufacturing job loss has in fact been relentless, both in Upstate New York and Downstate New York, and the nation as a whole. In 1979 the United States reached its peak manufacturing employment with 19.5 million jobs. Here is New York’s manufacturing employment history since then, divided between the regions.

NYS MANUFACTURING EMPLOYMENT, 1979-90(1),1990-2010(1)
	1979	1990	1990	2000	2010
Upstate(000)	707	574	513	421	276
Downstate(000)	787	557	468	328	181

 

In 1979-80, manufacturing jobs were 29% of Upstate New York employment, and 17% Downstate. Manufacturing job losses were seriously affecting employment in New York, but in the fifty-year lookback to the late sixties and seventies, it was New York City’s economy that was in freefall in the early seventies. New York City lost 600,000 jobs, including 300,000 manufacturing jobs, from 1969 to 1976 (Federal Reserve Board of New York, quarterly review, summer 1977). But the City economy recovered in 1977 and beyond. Two recessions, in 1980 and 81-82, hit the steel and auto industries in Western New York hard. The huge Bethlehem Steel plant in Erie County closed in 1982. Erie and Niagara Counties lost 41,000 manufacturing jobs from 1979-85. IBM and Kodak began their manufacturing job declines in the mid-to-late eighties and continued through the nineties. Despite these cutbacks, the Upstate economy as a whole still continued to expand once the recessions were over and grew by more than 400,000 jobs in the eighties.

In the 1990s, both regions saw their employment grow at a pace of about 5% during the decade, including the severe recession of the early nineties. In 1990, manufacturing was still 18% of Upstate employment but had fallen to 9% Downstate, meaning its transformation to a service-based economy had effectively been completed. After the recession was over, the Downstate area did grow more rapidly, but Upstate employment growth still gained over 200,000 jobs and had 7.4% growth over a seven-year period.

	NYS EMPLOYMENT GROWTH, 1990-93-2000, NY AND REGIONS
	1990	1993	2000	90-00	93-2000
NYS	8203	7750	8624	5.10%	11.30%
Downstate	5319	4941	5606	5.40%	13.50%
Upstate	2884	2809	3018	4.60%	7.40%

 

Foreign immigration, especially into New York City, began to make a major difference in population growth in the two regions in the 1990s. According to New York City Planning reports, the City gained 800,000 foreign immigrants in the nineties .This gain in the City, where 2/3 of the population Downstate lives, roughly mirrored the 800,000 person growth in population in that decade for the Downstate region. Between 2000 and 2015 the City had gained another 340,000 foreign immigrants and Downstate gained another 425,000 persons. Between 1990 and 2016 Downstate gained more than 1.6 million people and more than 14% increase in population. Upstate New York gained only 2% in population. With population growth comes new demand for goods and services and employment gains.

By 2000 manufacturing employment was 14% of employment in Upstate New York and only 6% Downstate. The United States entered another recession in 2001 and employment actually declined for two years, including a loss of 2 million manufacturing jobs. The terrorist attack that destroyed the Twin Towers and killed thousands also had significant effects on employment in New York beyond the impact of the recession. After the recession ended employment in the Downstate region grew rapidly until 2008. But the growth rates of the two regions differed sharply, with Upstate growing only 1.7% in the five years vs. 6.1% in the Downstate region, when the Great Recession hit New York and the nation. New York City’s economy took off after the Recession, but Upstate New York had lost another 145,000 manufacturing jobs in the decade, more than a third of its remaining factory jobs from 2000 (See Manufacturing Jobs Table). By 2010, Upstate New York had fewer jobs than it did in 2000. The Upstate economy had a very bad ten years, from 2000 to 2010, and the manufacturing and other job losses during this period truly shook the base of the Upstate economy.

	2000	2003	2008	2010	Growth 2003-2008		Growth 2000-2010
NYS	8624	8395	8777	8544	4.6%		-0.9%
Downstate	5606	5434	5765	5622	6.1%		0.3%
Upstate	3018	2961	3012	2922	1.7%		-3.2%

 

The past column reported that Upstate private sector economic growth from 2010 to 2016 was 5.8%, with slightly faster growth in the bigger metro areas like Albany, Buffalo, and Rochester, but weak to no growth in other areas. How and where the State government is allocating its resources and assets will be the subject of the next column, along with a continued look at its economic development polices and overall strategic efforts to leverage meaningful improvement in the Upstate economy.

 

 

 

 

• Older historical employment data contained different employment classification systems, that mixed proprietors and payroll together, among other differences, so the series used for 1980-1990, and for manufacturing from 1979 to 1990, is not comparable to a later 1990 base that uses only payroll employment coming forward from that time.
• The New York State Labor Department metro area employment data places Orange County in a Westchester-Rockland-Orange region, so Orange County is counted in Downstate employment.