Unfortunately, there is always a lag between programs and their impact as evidenced last week by U.S. Department of Labor release of disappointing unemployment statistics that have thus far passed with nary a notice from the media at large. While the rest of the nation is enjoying an anemic but stubbornly persistent jobs recovery, New York State is actually moving backward with higher unemployment.
According to the U.S. Department of Labor – only 32 of 372 metropolitan areas in the United States reported year-over-year higher unemployment from June 2011 to June 2012, but all 12 of NY’s reporting areas are among them. Not one or two – every single one of our metro areas are faring worse than they did last year. Only five metro areas in the country reported unemployment increases of over one percent and three of those were in New York, with Elmira, just across the border from Pennsylvania’s shale boom, leading the way with 1.4% increase.
Yogurt summits aside, the administration’s scorecard on jobs and the economy is incomplete with important decisions yet to be made on a host of issues most notably the Tappan Zee Bridge and hydrofracking. But Governor Cuomo has done the most important thing necessary for the business community and that is restoring a sense of confidence that government can play an active, productive and most importantly consistent role in shaping economic conditions.
Wild uncertainty is the greatest enemy of business planning and it’s impacts reverberate today.
The chaos of the four years between Pataki and Cuomo, coupled with the two years in the desert spent by the Senate Republicans, while entertaining political theater and a lobbyists nocturnal fantasy, was an unmitigated disaster for the business climate. It was Hurricane Katrina style government most everyday – thankfully without the hurricane. Governor Cuomo’s partnership with Senate Republicans has substantially righted a ship that was foundering but a battleship doesn’t turn on a dime and there are other forces beyond the state’s control at work that are undermining New York’s recovery.
While New York is “Open for Business,” Washington is out to lunch.
The federal government continues to use New York as a piggy bank with state taxpayers sending billions more to Washington than we get back. According to the NYS Division of Budget, in 2008 alone, New York sent $55.6 billion more to the federal government in taxes than we received back in aid. Between 2000 and 2010, the balance of payments deficit totaled more than $600 billion on a cumulative basis. Ironically, these funds are overwhelmingly sent to red states like Mississippi and even Sarah Palin’s Alaska, you would think that would get the goat of every liberal New York Democrat in Washington.
Further, the expiration of the Bush tax cuts will only exacerbate the problem and have a devastating impact on New York, which has a greater percentage of “relatively wealthy” taxpayers than the rest of the nation. “Relatively wealthy” of course because higher wages are reflective of the high cost of living in downstate New York.
Even Senator Schumer has the good sense to recognize that $250,000 a year is a two income working middle class family in Long Island or Westchester, while the President and Senator Gillibrand are happy to further tap New York’s tax base. Millionaire taxes on the state and federal level poll great — the federal version also costs New York more than almost every other state in America.
Even more pernicious and devastating to New York’s economic climate is Dodd-Frank. In Dodd-Frank, Washington has managed to do to Wall Street what the Great Depression and suicide lunatics couldn’t, causing it to decentralize and shrink, eliminating entry and mid-level jobs. They have done this at the expense of smaller banks and lending while not adequately addressing the central threat of too big to fail. Most importantly though, Dodd-Frank has fundamentally altered Wall Street’s compensation system gutting New York’s most robust revenue stream. Or in other words, smaller bonuses for traders and investment bankers equals less revenue for the state.
All politics and most businesses are still local.
Finally, the lack of resources, the paucity of professional capacity and the pure hijinks that exists with too many local governments is a real detriment to economic growth. Take the story of Nick Wallenda who ignited international interest by risking his life walking over Niagara Falls on a cable. Wallenda, who agreed to end his walk on the U.S. side, the side that needs the most help, might be regretting his decision now that the city is going after him to pay for public safety overtime costs.
In the dispute between Wallenda and Niagara Falls who is right? Does it matter? Either way the loser is the already lackluster reputation of the City of Niagara Falls and by association New York State. The public squabbling sends a ridiculous message to the business community and would be investors about partnering with government in New York State. After all, if risking your life on prime time doesn’t buy some good will and cooperation, what will?
New York is on a better course, but sometimes “Open for Business,” is only as open as your partners will allow.