For a decade or more the status and needs of Upstate New York’s economy has been the number one issue in virtually every statewide political campaign. In 1994, Republican George Pataki unseated his predecessor as Governor, Democrat Mario Cuomo, in part by blaming Cuomo for Upstate’s economic decline. In 1998, Democrat Chuck Schumer unseated his predecessor as Senator, Republican Al D’Amato, by blaming the Republicans for failing to revive the Upstate economy; meanwhile, Governor Pataki criticized his opponent, New York City Council Speaker Peter Vallone, for not caring enough about Upstate New York. In 2000, future Senator Hillary Clinton scored points by “listening” to Upstate New York while her opponent, Republican Rick Lazio, committed a “gaffe” by claiming that Upstate New York was improving. And one of the few risks in George Pataki’s 2002 re-election campaign was potential Upstate resentment at his “unjustified” attention to New York City in the wake of a minor incident with a couple of airplanes. In this election, Eliot Spitzer compared Upstate to Appalachia, Tom Suozzi said upstate needs jobs, and John Faso is running in the tradition of candidates who believe lazy, undeserving New York City needs to be cut off to help hard working, deserving Upstate.
There is no doubt Upstate New York has its problems. I’ve thought about them quite a bit, having gone to school there, as have many of my colleagues over the years, and having friends and relatives there. I will try to offer suggestions in a later essay. Even so, I believe Upstate’s woes have been exaggerated, and the focus has been on a phony issue to the exclusion of the real issues.
According to data from the 2000 Census of Population, in Summary File 4 (SF 4), even at the peak of the 1990s boom the economic status of New York City residents was not as strong relative to Upstate New York as many believed. In 2000 only 52.2% of New York City residents age 16 or more were employed, compared with 58.7% Upstate. And 9.6% of city residents were unemployed (the census definition of unemployment is more liberal) compared with 6.4% Upstate. Whereas the census reported that 21.2% of New York City residents were poor, based on their 1999 incomes, it found that only 11.8% of Upstate New York residents were poor. Nor did the city have fewer people just above poverty. In 1999 51.5% of the city’s households earned less than $40,000 per year, compared with more than the 51.0% in Upstate New York. And 28% of New York City residents age 25 or more had not completed high school, compared with only 17% of Upstaters. New York City’s per capita income ($22,402) was below the average for New York State ($23,389). Meanwhile, Upstaters were clearly more likely to own their homes and have cars than New York City residents. And due in part to state school aid policy, their children attended better schools.
Well surely Upstate has done worse since 2000? Not exactly. From 2000 to 2005, according to Current Employment Survey data from the New York State Department of Labor, Upstate New York lost 21,300 payroll jobs, but New York City, with a slightly larger job base, lost 123,700 (the Downstate Suburbs gained jobs). Moreover, in 2000 the Upstate metros were at their all-time employment highs, while New York City was below the 1969 peak – although the city is doing much better, based on other data series, if the self-employed are included.
So why does Upstate feel so poor? If one uses 2000 census data for non-Hispanic Whites only (hereafter referred to simply as Whites), a radically different pattern emerges, particularly if one focuses on the native born. In 2000, 5.3% of New York City’s Whites were unemployed, compared with 5.7% Upstate. Just 26.7% of New York City households headed by Whites had incomes of less than $40,000 per year, compared with 49% Upstate. The per capita income for New York City’s Whites ($36,800) was above the New York State average ($28,391). The poverty rate for New York City’s Whites (11.5%) was just slightly higher than that of Whites Upstate (9.3%). Of the 316,000 White New York City residents living in poverty, however, 105,000 were foreign born, and many more were presumably the native born children of the foreign born. Virtually all of Upstate’s poor White people, 477,000 in all, were native born, so the number of native-born White families living in poverty Upstate may thus exceed the number living in New York City by three or four to one. And New York City has just a few places with both a high percentage White and a high percentage living in poverty. The largest of these, Borough Park and Williamsburg, are characterized by moderate rather than low incomes, with poverty status typically the result of relatively large families.
High educational attainment, in part, explains the affluence of New York City’s Whites. In 2000, 42% of those aged 25 of older had received a college degree, a far higher share than for Whites in Upstate New York (24%) or even, surprisingly, in the Downstate Suburbs (35%). There is a well-documented pattern of young college graduates moving to New York City, staying a few years, and then moving to the suburbs when their children reach school age – and they reach their peak earning years. Despite this, the per capita income of New York City’s Whites was actually higher than the average for Whites in the New York State portion of the New York CMSA as a whole ($34,986), and therefore in the Downstate Suburbs.
So if you are a White person, associating primarily with other White people, comparing yourself to other White people, and basing your anecdotal impressions of the relative economic strength of different places on the people you know, then New York indeed appears to be a rich city compared with Upstate New York. But if you look at the entire picture, the relative disadvantage of Upstate is exaggerated.
Most comments on Upstate New York’s problems focus on plant closings, and the decline of the industrial base, but this is a phony issue. Businesses are always opening and closing, moving, growing and shrinking, due to conditions in particular industries, the relative success of individual firms, and technological and social change. According to a special tabulation of New York State Department of Labor data (produced at my request), about one-third of the people working in New York State’s private-sector are employed by establishments that did not exist five years before. New York State needs 60,000 new businesses creating more than 450,000 new jobs every year just to break even. Everyone loses jobs, and there is nothing, for example, that the State of New York could have done to prevent a shift to digital photography, which generated job losses at Kodak.
Back in the 1970s, when New York City was hemorrhaging jobs, the Port Authority of New York and New Jersey predicted a turnaround. How? They found that New York City was losing jobs there was no way for it to keep, like apparel manufacturing, even as other sectors were growing. Taking the two together, the city’s economy looked weak. Meanwhile, newer, growing Sunbelt regions which never had any older economic base to lose had the growth without the decline, making the total look more prosperous. While Upstate New York continues to lose jobs in declining sectors, other older industrial regions in the interior Northeast and Midwest are in fact faring even worse. Even so, Upstate could do better by attracting more new businesses and new types of business, something it hasn’t been very good at in the past 100 years. It isn’t the losses that determine which regions are more dynamic, it is the rate of gain.
Back in the 1800s, Upstate was one of the most dynamic and forward-looking regions in the United States, as the superior access provided by the Erie Canal made its rural regions rich and turned its cities into boomtowns. It is no accident that abolitionists like Fredrick Douglas, women’s rights leaders like Susan B. Anthony, and others with new ideas made their homes there. Many Downstate New Yorkers attend college Upstate even today, at the many colleges and universities founded in the region’s heyday. Around 1900, when electricity rather than electronics was the height of high technology, Upstate New York was the equivalent of Silicon Valley.
But today, Upstate is a backward looking region seeking to preserve the past, and feeling depressed as it ebbs away. This outlook will never turn Upstate New York around. And given the high level of turnover in the economy, massively subsidizing a few branch plants selected by the brilliant businesspeople at the State of New York, like the computer chip plants recently attracted at great cost, will not make much of a dent either. Upstate New York’s economic problems have been exaggerated. And it the long run, plant closings and job losses are not the most important among them.