The March revision of Current Employment Survey data from the New York State Department of Labor is out, and official 2006 annual average data is out with it, so I have decided to see how different parts of New York State have fared (see spreadsheet). In the decade from 1996 to 2006, New York City gained 286,800 private sector jobs (10.2%), leaving it about 142,000 below the city’s employment peak in 1969, a pre-fiscal crisis year when the city’s poverty rate was actually below the national average. It is far above the rest of the nation, and the rest of the state, today. The rest of the state, which was close to all time employment highs in the mid-to-late 1990s, gained 300,400 jobs (8.1%) during the period. But those gains were not shared evenly. The Downstate Suburbs and Hudson Valley, feeding off Manhattan’s growth but without the local taxes associated with New York City’s poor, gained 262,000 private jobs (13.8%), the fastest growth anywhere in the state, while metro areas elsewhere upstate gained only 20,400 private jobs (1.5%). Removing job gains the Health Care and Social Assistance sectors, many of those metro areas lost private jobs. Even so, virtually every part of the state had a local government boom — except New York City. Back in your father’s economic decline, New York City has forced to swallow a substantial decline in public services and soaring taxes due to the need for “personal responsibility” when its private economy declined. Many of those public services are still more limited, and taxes higher, than in 1969. But this is not your father’s economic decline, and this time “society is to blame.”
A couple of notes before I go further. For those of you not familiar with it, the Current Employment Survey is based on a survey of business and other establishments. Later, the unemployment insurance tax returns come in, and the state finds out how many jobs (and new companies) there actually were. Once a year the data is adjusted; this year the adjustment showed NYC gained 60,000 private jobs in 2006 rather than 50,000, a happy outcome. One of the typical dishonest political manipulations of statistics is to compare years that are very different — the peak of a boom to the bottom of a bust, for example, or vice versa. So which year could be fairly compared with 2006? Should 2000, the peak of the 1900s boom, be used, since 2006 was also a peak and we are going into recession? A bad year like 1993, because Rochester is already in recession? Some year in between, because we are in the middle of a boom, with more years of job gains to come? After thinking about it, I decided to go with simple 10-year trend.
From 1996 to 2006, New York City gained 20,800 local government jobs (4.8%), all of them in the public schools: other local government jobs have decreased. At the start of this period, New York City’s public school spending was at a very low level relative to other places. If it were a separate state, its public school spending as a share of its residents’ personal income would have been second to last in the United States. Moreover, enrollment in the city’s schools was soaring, as the children of the baby boomers flooded in. Yet with 37% of the public school students, a large share of them needy, the city received only 29% of state school aid, and that was its share of state public school employment. The state, it seems, was paying for jobs, not paying for children, and most of those jobs were elsewhere.
The rest of the state had very high public school spending in 1996, relative to the national average, but it wanted more jobs as well. So while New York City gained 21,100 public school jobs (16.5%), the rest of the state gained 46,800 public school jobs (15.2%), leaving the city’s share of public school employment the same. All this time the state increased education funding equally for the City and the Rest of the State, fighting the Campaign for Fiscal Equity Lawsuit to keep the educational gap between them the same. And, thanks to the STAR program, New York City residents were increasingly taxed to fund rising public school expenditures elsewhere. But was not enough, as local taxes in other parts of the state rose even so. . If, beginning in 1996, the state had implemented a tolerably fair allocation of state school aid, rather than the STAR program, and if school districts in the rest of the state were forced to find efficiencies as enrollments grew rather than getting more money to keep the gap over New York City the same, education funding would be more equal, and there would not be a property tax crisis in the rest of the state right now. That is not what happened.
Looking at local government other than public schools, New York City’s employment fell from early 1990s fiscal crisis levels, while employment in the rest of the state rose by 38,600 (15.0%). That is as fast a gain as that for public schools. New York City’s local government employment, excluding education, exceeds that of the rest of the state mostly because of New York City transit, public housing, and other services that are less common elsewhere. Looking at local government as a whole, only in the Elmira MSA did local government employment rise more slowly than in New York City. This is the part of the state with the lowest local taxes as a share of income, according to data I have compiled in the past.
In New York City, of course, the primarily government-funded Health Care and Social Assistance industries have been booming, with an increase of 94,700 jobs (21.1%) from 1996 to 2006. That includes a slight increase in the Hospitals industry, by 800 (0.1%), following a surge from 100,000 to 150,000 jobs in the previous 15 years. But the Health and Social Services industries are booming in the rest of the state as well, with a gain of 106,800 jobs (19.0%), including a gain of 4,800 jobs (2.8%) in the Hospitals industry. The only part of the state where employment growth has been restrained in this case has been the Buffalo MSA. Some people have told me that one reason New York City spends so much on Hospitals and home health and personal care aides is that it is a jobs program as much as a service for the recipients. Well, the rest of the state wants jobs too. New York City’s share of New York State employment in the Health Care and Social Assistance category is about the same as its share of New York State population, even though people from elsewhere come to the city for healthcare.
The part of the state that has fared the best economically in the past decade is the base of former Governor Pataki — the Downstate Suburbs and Hudson Valley. But to the extent that state government jobs are also a form of patronage, it cannot be said that the former administration favored those places. State jobs increased in metro Binghamton, Buffalo and Syracuse, the most economically depressed urban regions of the state, and in rural area. Overall, state employment fell in the Hudson Valley and Downstate Suburbs, and in New York City. In fact, unlike Local Government and Health and Social Services employment, state employment fell statewide, though some of that may have been offset by increased use of private consultants.
In summary, there are clearly some parts of the state that have greater needs than New York City at this time. And most people in New York City don’t seem to object to doing what is required to turn those areas around, even if that means sacrificing the city’s budget. Perhaps Bloomberg’s $400 check, and the proposed sales tax exemption for clothing, can be cancelled to mitigate the damage.
In those now declining parts of the state, however, you find state politicians who sneered at New York City when it was down, and who opposed having the city even get back the state education dollars its residents paid in, let alone what the needs of its children would have dictated. And you have local governments, including school districts, that continue to spend more and more and expect New York City to sacrifice to make up the difference rather than finding the efficiencies the city has been forced to find, let alone experiencing the service collapse the city experienced in the 1970s and again in the early 1990s.
How many people are benefiting from rising local government spending upstate, and how will this affect the region’s future? There needs to be some accountability, not only for future increases but for past increases. For decades, city dwellers have paid higher taxes and higher food prices due to federal policies to raise agriculture prices, with the program sold as helping the family farmer. Meanwhile, most of the money goes to agribusiness. Is it the same here?
At the same time, state legislators from the most prosperous parts of the state, such as Dean Skelos and Steve Sarland, are still sneering at New York City, still opposed to even keeping the city’s share of state education funding at the level it was last year, which is all that Governor Spitzer has proposed. And no one dares to suggest that perhaps soaring local government spending is in part responsible for the high local taxes in these areas. Instead, fiscal restraint has been focused exclusively on Medicaid spending, two-thirds of which is in New York City. As justified as those restraints may be, the net outflow of state funds from New York City is set to increase, and still Skelos and Sarland are claiming that the proposed budget unfairly favors the city, and the city’s share of state school aid should be cut. More spending in other parts of the state that are not New York City? Unquestioned by these two “conservatives,” and others like them. And as for Bruno, he seems determined to preserve a de facto deal in which unusually high spending on Medicaid in the city is exchanged for a raw deal for the city on everything else. Perhaps he is prepared to compromise on the high spending on Medicaid, as long as the city keeps the raw deal on everything else.
The abuse should stop, and someone should say it wasn’t deserved. Someone — perhaps Mayor Bloomberg, since Governor Spitzer like Sheldon Silver has apparently decided the best way for a Democrat to get ahead is at the expense of the part of the state Democrats can take for granted — needs to say that efficiencies need to be found in every part of the state, but in particular in the parts outside New York City, where spending has been unrestrained for a decade.
New York City has both substantial resources and substantial needs. The Downstate Suburbs and Hudson Valley have as greater or greater resources, but fewer needs. The rest of the state has fewer resources and substantial needs. There could have been a right-wing alliance between the City and the Downstate Suburbs, based on keeping those resources at home. And there could have been a left wing alliance between New York City and declining areas of the state, based on need. What there has been, in fact, has been an alliance between the Downstate Suburbs and Upstate New York, based on some people’s needs mattering more than others. Even becoming “one state” in the future means those who were behind, stay behind, and for legislators from the rest of the state to object even to that is just outrageous.