Job creation in New York State under Gov. Cuomo is akin to a tale of two cities. There is New York City — and everyplace else.
New York City added some 600,000 jobs since Cuomo took office in 2011. That’s a 16% jump, well above the national average of 11% and better than all but five states.
Job growth is more modest elsewhere in the Empire State — and downright anemic upstate.
Between December 2010, the month before Cuomo took office, and December 2016, job growth upstate was only 2.7% — a quarter of the national average. What’s more, four of upstate’s 12 major metropolitan centers lost jobs under Cuomo’s watch.
If it were a state, upstate New York’s job growth would rank fourth worst in the nation, below, among others, Mississippi.
Furthermore, 88% of the net jobs added upstate during the Cuomo years have been in low-wage sectors, led by restaurants and bars, employment data shows.
The jobs data contradicts Cuomo’s claims that upstate has rebounded under his tenure.
“Economic success is shared all across the state. It’s not just New York City that’s doing well, it’s the entire state,” the governor declared in his 2017 State of the State address in Syracuse.
Ron Deutsch, executive director of the Fiscal Policy Institute, which produced the job and wage analysis used by Investigative Post, offered a different take on what’s happening.
“Poor job creation, poor return on investment,” he said.
The failure of Cuomo’s economic development initiatives in upstate are among the key findings of an investigation done by Investigative Post in collaboration with ProPublica and the Columbia University Graduate School of Journalism.
Investigative Post also found state and local subsidy programs have grown since Cuomo took office in 2011. Subsidies handed out last fiscal year totalled a record $8.6 billion.
Furthermore, several of the governor’s key economic development programs, including one headed by the now-indicted Alain Kaloyeros, have failed and mired his administration in scandal and controversy.
“The policies Cuomo says are focused on upstate, and he claims have improved upstate, were not the right policies and have not worked,” said E.J. McMahon, research director of the Empire Center for Public Policy, a fiscally conservative watchdog group.
Cuomo’s office did not respond to a request for an interview or statement in response to Investigative Post’s reporting.
ESD President and CEO Howard Zemsky issued a statement that declared: “By every measure — jobs, wages, housing, GDP, investment, unemployment, population, and so on — Upstate New York is doing remarkably well relative to how it was doing.”
Both state and local economic development agencies have ramped up spending on subsidy programs since Cuomo took office. New York’s share of the total statewide tab last has grown from $3.7 billion to $4 billion since 2010.
The state’s plethora of subsidy programs helps explain the spending. Tax Reform and Fairness Commission empaneled by Cuomo reported that the number of state tax credit programs had grown from nine in 1994 to 50 in 2013, the year it issued its report. The commission noted that relatively few companies reap most of the benefits from these programs, just 4% of firms by one accounting.
New York’s job growth of 9.6% ranked 21st among the states, between December 2010 and December 2016. The surge in hiring in New York City, which buoyed that increase, does not surprise Greg LeRoy, executive director of Good Jobs First, a national subsidy watchdog organization.
“New York City’s strong performance is typical of large coastal metro areas — think Boston, think San Francisco. They are the stars of the U.S. economy. It’s the second- and third-tier markets, like those in upstate New York, that are really hurting,” LeRoy said.
The jobs picture is gloomier upstate despite what Cuomo has said is a $25 billion investment by New York since he took office. Not only is job growth sluggish, but most of the net gain in jobs is in low-wage sectors.
“The economy in the last decade has tended to create low-wage jobs. What’s missing upstate is growth in middle- and high-wage jobs — professional services, manufacturing and government,” said James Parrott, deputy director and chief economist of the Fiscal Policy Institute.
Only 45% of the net jobs added in New York City during the Cuomo years were in low-wage industries. What’s more, New York City accounted for 98% of the 152,000 jobs created statewide in the high-wage sectors, employment data shows.
The state has long turned to large, costly projects in an effort to retain or recruit companies to New York, especially upstate. In fact, no state has earmarked more for so-called “megadeals” than New York, according to a database maintained by Good Jobs First of projects that received at least $50 million in public subsidies since 2000.
The Empire State committed $11.8 billion for 24 megadeals, followed by Michigan ($9.9 billion) and Louisiana ($9.6 billion).
Only a half-dozen of New York’s megadeals are located downstate. The six costliest deals benefitted businesses located upstate, lead by Alcoa in Massena, GlobalFoundries near Albany, and SolarCity in Buffalo.
LeRoy, of Good Jobs First, said megadeals are “guaranteed losers for taxpayers.” The deals cost more than the government can ever hope to recoup through increased tax revenues, he said. As a result, the tax burden for public services is shifted to other taxpayers.
Cuomo’s boldest initiative saw the state go even harder after megadeals. Instead of extending subsidies to individual companies, Cuomo sought to replicate a variation of a model used by Alain Kaloyeros, president of the SUNY Polytechnic Institute, to develop a nanotechnology sector in the Albany region.
It’s an unusual approach that involves taxpayers shouldering the cost of building and equipping advanced manufacturing facilities for a company recruited in exchange for job guarantees. In theory, this facility would in turn attract smaller firms and help establish an industry cluster.
The task of exporting the Albany model across upstate was entrusted to Kaloyeros and two state-affiliated nonprofit corporations he controlled. Problems soon ensued, starting with a lack of transparency in how Kaloyeros and his development agencies conducted business.
Developers who were major Cuomo campaign contributors were awarded lucrative contracts with hardly any competition. Last September, Kaloyeros, top Cuomo aide Joseph Percoco, longtime Cuomo associate Todd Howe and developers in Buffalo, Syracuse and Albany were indicted on bribery and bid-rigging charges.
As a result, projects in Rochester, Utica and Dunkirk have been delayed, scaled back or shelved altogether.
Start-Up New York, another of the governor’s marquee initiatives, has also floundered. State officials said the program, which allows companies to operate tax free for 10 years by locating near university campuses, would lure businesses to upstate.
But Start-Up New York produced just 408 jobs in its first two years of operation, despite the state spending more than $53 million dollars to advertise it. The governor has proposed overhauling the program.
Another of Cuomo’s initiatives, a system of 10 regional economic development councils that compete for state funding, has played to mixed reviews.
Watchdog groups, the state comptroller’s office and the governor’s own tax reform commission have said for years that state and local development agencies need to be more transparent and assess programs for their cost effectiveness.
“There are no real measures to determine if taxpayers are getting their bang for the buck,” said Andrea Miller, a policy analyst with state Controller Thomas DiNapoli.
Investigative Post is a nonprofit investigative reporting center based in Buffalo.
