N.Y. Job Growth Likely To Slow, Pataki Says
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ALBANY – New York’s job growth this year is expected to slow down slightly from 2005 and again trail the national average, according to Governor Pataki’s executive state budget released last week.
In 2005, private-sector jobs grew about 1.1%, following three years of jobs losses from 2001 to 2003 and meager growth of 0.8% in 2004, according to budget documents. Budget officials said economic indicators show the number of private-sector jobs will rise in New York through 2006, but the rate of growth will likely slow to 0.9%, just over half of the 1.6% projected growth rate for the rest of the country.
Richard Dietz, a senior economist at the Federal Reserve Bank of New York’s Buffalo branch, said that is not surprising, given New York’s decades long track record of trailing the nation in job growth.
“Things are pretty flat,” he said. “The Northeast has a more mature economy and the rapid growth is occurring in the South and West. For upstate New York there is going to be almost no growth at all. There hasn’t been for the past 15 years or so.”
Mr. Pataki’s $110.7 billion executive budget includes $1.1 billion in business tax cuts to spur job growth. The cuts will be phased in over the next few years. He also has proposed reforms to the state workers’ compensation program, which carries costs about 70% higher than the nationwide average, according to the Business Council of New York State.
Still, analysts say the results from any cuts to business costs in New York will not be seen overnight.
“Although the governor has proposed putting a dent in the difference between New York and other states, even if workers’ comp reform and tax cuts were enacted tomorrow, it’s going to take time for the benefits to flow,” a spokesman for the Business Council, Matthew Maguire, said. “Unfortunately, a job-growth projection behind the nation’s rate seems realistic.”
While business leaders have long blamed a stagnant job market on New York’s high taxes and its high costs for electricity, unemployment insurance, and workers’ compensation, Mr. Dietz said many companies are choosing to expand where there are fewer unions and the land is cheaper.
The population shift to the South and West over the past 30 years has also led companies to create more jobs there, he said. “It’s not just New York, it’s also Ohio, western Pennsylvania, and New Jersey,” he said.
Mr. Dietz predicts most of the growth in New York’s job market this year is likely to come in the New York metropolitan area, where Wall Street led the way in the late 1990s and early 2000s.
The Pataki administration expects the state to lose another 6,200 manufacturing jobs this year.
That would be an improvement from recent years. From 1990 to 2004, the state lost about 35% of its manufacturing jobs while the nation as a whole lost 20%, Mr. Dietz said.