The following appears in the July 18-24 2014 issue of the Long Island Business News:
If one listens to elected officials, especially Gov. Andrew Cuomo, one would think New York’s economy and job market are chugging along at high speed.
Sadly, this is not the case. In 2013, New York’s GDP ranked 46th among the 50 states, growing only 0.7 percent, the smallest rate of increase in four years. In 2010, the rate of growth was 2.7 percent; in 2011, it was 1.2 percent and in 2012 it was 1.7 percent.
And 2013’s anemic economic results also include billions of dollars in post-Sandy reconstruction spending, particularly on Long Island.
While the median income in the metropolitan region, which includes Long Island, is about $63,000, the Fiscal Policy Institute reported in December that median family income adjusting for inflation declined slightly in 2012 and is $3,800, or 6.5 percent, below the 2008 level. Wages for the state’s 9 million workers, after factoring inflation, declined 4.4 percent between 2010 and 2013.
Forbes economist Joel Kotkin has observed that while Wall Street and the investor class have been on a bull run, “the economy has been, at best, torpid for the vast majority of the population.”
The fact is that since the recovery began, a larger-than-usual portion of New York job growth has been in low-paying service sectors where annual salaries average $25,000. Higher-paying middle-class jobs, particularly in the finance sector, aren’t coming back to pre-2008 levels.
The Economic Policy Institute reported earlier this year that one in 10 New York City workers are now in low-wage jobs, with 37 percent of all wage-earners earning less than $15 an hour.
Nassau and Suffolk counties are, fundamentally, in the same employment boat.
Now, it’s true that Long Island’s recovery has been outpacing the rest of the state, and that this region has not only gained back all the jobs it lost in 2008 but has added about 40,000 more. Nevertheless, almost half the 30,000-plus jobs created on Long Island in 2013 were in the low-wage retail and dining sectors.
“The manufacturing and defense jobs that once defined the region,” according to The Wall Street Journal, “aren’t likely to return after being trimmed during the most recent recession.”
According to the L.I. Index, since 2008, the largest losses in employment are occurring in sectors with the highest average wages. Long Island has lost 10 percent of its manufacturing jobs and 16 percent of its construction jobs. During the same period, finance employment has dropped 4.3 percent, insurance employment has fallen 7 percent and communication service jobs have also declined 7 percent.
Another indication that all is not well is the 9 percent decline in Nassau’s sales tax revenues versus the first six months of 2013. If this trend continues, it could mean layoffs in the retail sector and severe cutbacks in county services and employment – not to mention significant tax increases.
Why do the best-paying jobs continue to decline? The president of the Business Council of New York State blames the state’s tax climate – universally recognized as a problem, but always contentious whenever someone suggests tax reform.
Brian McMahon, executive director of the state’s Economic Development Council, agrees.
“New Yorkers shoulder the highest state and local tax burden in the country,” McMahon says. “The states that are growing fastest are those states with relatively low taxes.”
Yes, contrary to the happy talk of our political class, New York’s economy, particularly on Long Island, remains very fragile. And the fault lays at the feet of these pols. Study after study indicates that high taxes, onerous regulations and other mandates they’ve imposed have frightened away industries that create higher-paying middle-class jobs.