NY has Albany to blame for its failed manufacturing sector – By George J. Marlin
The following appears in the April 9-15, 2010 issue of the Long Island Business News:
In the post-World War II era, New York was truly the Empire State, indeed the leading industrial state in the nation. Twenty-five of America’s top 50 companies were headquartered in New York and nearly 2 million people were employed in manufacturing. The state’s industrial base was diverse, both in terms of size and importance: apparel and textiles topped the list followed by printing, food production, machinery of various kinds, sundry chemicals, fabricated metals and transportation equipment.
But beginning in the 1960s, New York began to experience a manufacturing collapse which continues to this day. In 1990, New York’s total manufacturing jobs dropped below 1 million – the lowest number since 1906. Upstate New York, traditionally dependent on blue-collar employment, has been enduring large job losses and the accompanying decline in population and revenues. As a result, today a majority of jobs north of Putnam County are government or health-care related.
Buffalo, for example, once the largest flour milling city in the western world and America’s fourth largest manufacturing city, is now on the edge of bankruptcy. It has lost 48 percent of its population since 1960, lost its heavy industry and manufacturing base, and has 35,000 abandoned single-family homes. In 2006, Buffalo’s mayor even called for the dissolution of his city.
Between 1990 and 2009, manufacturing employment in the United States declined by 33 percent, 17.7 million jobs versus 11.8 million. New York’s numbers for the same period are even more depressing, 911,000 versus 471,000, a 51 percent decline. Long Island fared almost as poorly: 139,000 manufacturing jobs in 1990 versus 75,000 today, a 46 percent decline.
Economists are all over the map as to why New York has been losing the manufacturing battle in both economic downturns and booms. Some point to cheap labor overseas, others to bad research and development decisions. Eastman Kodak, for instance, having missed the digital camera revolution, was forced to downsize its Rochester work force from 60,000 in 1981 to 18,000 today. In my judgment, however, the state government bears the bulk of the blame for years of overtaxing, overspending and overregulating.
In survey after survey, New York’s business climate is rated the worst in the nation. The U.S. Economic Freedom Index listed the state in last place. Compared to the other 49 states, New York’s combined state and local taxes are the highest; state and local government spending per capita, second highest; cost of doing business, second worst; average cost of workmen’s compensation cases, second highest; average retail price of electricity, second most expensive.
Manufacturers have moved to the South, to Europe and to India at an alarming rate to escape New York’s taxes, worker comp costs and burdensome regulations. As a result Buffalo, Rochester, Syracuse, Schenectady and Long Island – one-time centers of commerce, industry and technology – are facing financial and economic doom.
While top-tier research institutions in places like Long Island and Buffalo produce cutting-edge research and development, the state and Long Island in particular have done a dismal job in holding on to the companies created from that research. State economic development programs have spent billions over the last 20 years with little to show for it. Those subsidy programs have proved once again that government programs selecting business winners and losers don’t work but do burden the taxpayers with the cost of assisting the politically favored.
Until Albany potentates take responsibility for the cumulative consequences of the bad decisions made during the past 20 years and take steps to lighten the burden on taxpayers and to improve the climate for job producing businesses, expect the state and Long Island manufacturers to continue fleeing to employer-friendly states.