As milestones go, this one was a long time coming.
It took 15 years, but we finally have recovered all of the jobs that the Buffalo Niagara region lost during the 2001 recession.
In other words, we’re back to where we were two recessions ago.
It’s a big deal, because it shows that the region’s job market has finally scratched and clawed its way out of the hole that the downturn created more than a decade ago.
And it’s a big deal because it’s something that still hasn’t happened in Rochester, which has 2 percent fewer jobs than it did at its prerecession peak in 2000. It still hasn’t happened in Syracuse, which has almost 3 percent fewer jobs than it did in 2000. And it still hasn’t happened in Utica, which has almost 7 percent fewer jobs than it did before the 2001 downturn.
What pushed the recovery over the top was the pickup in the pace of job growth during the first four months of this year. The Buffalo Niagara region has been adding jobs at a pace that has averaged 1.4 percent through the first four months of this year, almost double the growth rate from all of 2014.
That growth spurt pushed the local job market over its peak from before the 2001 recession for the first time in February. It happened again in March, and again in April.
That prompted John Slenker, the state Labor Department’s regional economist in Buffalo, to recall something that his predecessor, the late George Smyntek, used to say.
“My old boss used to say that one month does not make a trend,” Slenker said. “But when you start getting three or four ...”
So it seems that the recovery is starting to become a trend, although it will take job growth of around 1 percent in May and June to extend the recovery from the 2001 recession for another two months. Still, that may be within reach since it still could happen even with a slowdown in job growth from the pace so far in 2015.
“I wouldn’t be surprised to see our growth rate slow down a little, but we’re at the point where it can and we’re still growing,” Slenker said.
In other words, we have a bit of a cushion now – and that’s something that we haven’t had in the past.
Of course, while we can pat ourselves on the back for finally pulling out of the hole we dug in 2001, it really isn’t anything to brag about. The nation’s recovery was completed a decade ago – in 2005. Even on the other side of New York, in Albany, with the state government providing a nice safety net, the recovery was complete by 2004.
That’s why, if you look back at the local job market – as Canisius College economists George Palumbo and Mark Zaporowski have – you’d find that our job market was essentially stagnant for almost a quarter century.
From 1990 to 2014, our job market grew at an average annual pace of just 0.04 percent, while the country was growing by about 1 percent a year. That stagnation had consequences for the region. Because we were stuck in the mud for so long, our young people kept moving away, simply because they had better chances of finding good jobs someplace else than they did by staying here.
But something else happened along the way. As the steel plants closed, our auto parts factories downsized and other manufacturers moved low-skilled production work to cheap overseas countries, the shape of our economy changed.
Instead of being heavily dependent on cyclical manufacturers, our service sector gained importance. Today, the composition of our economy is pretty similar to the rest of the country.
That’s important because it has helped make the Buffalo Niagara economy less cyclical and less volatile. We saw that in the last recession, which started in 2007.
Instead of following our normal pattern of falling into a recession before the rest of the country, falling deeper and taking longer to recover, the downturn hit later here and wasn’t nearly as severe as it was elsewhere.
The only thing that held to form was that our recovery hasn’t been as robust as the rest of the country, but even that hasn’t been as much of a negative since the economic hole that the Great Recession dug here wasn’t as deep as it was in other places, especially those with red-hot housing markets that went bust.
From 2010 through 2014, our job market grew by 0.6 percent annually, which was still less than the 1.6 percent growth rate nationally, but markedly better than the average over the previous 24 years.
“This suggests that while local employment growth still lags the U.S. trend, the gap was reduced during the post-Great Recession recovery,” Palumbo and Zaporowski wrote in a recent report. “This is pretty good news when placed in the context of the failed local recovery from the 2001 recession.”
And now that recovery seems to be taking hold. Private sector employment is at an all-time high.
Construction jobs are at their highest point since 1990 thanks to the boom in high-profile projects at Riverbend and the Buffalo Niagara Medical Campus, along with the seasonal uptick in road work.
The region’s finance sector, which took a big hit from the recession and HSBC USA’s downsizing here, has been growing for five years. Hiring for professional and business services jobs is at a 24-year high.
“Every single major sector, with the exception of government, is up,” Slenker said.
Frederick Floss, a SUNY Buffalo State economist, said the recovery from the last downturn, because it was centered in the financial sector, likely will take an unusually long time, possibly as much as 10 years.
“We’re at a point where we’re still at the beginning of the increase in jobs,” he said.
And that’s the stuff that recoveries are made from.