Share this article

print logo

WNY REMAINS MIRED IN 'GOOD NEWS, BAD NEWS' CYCLE OF JOB CREATION

While the nation enjoys what soon will be its longest expansion ever, Western New York continues to be mired in a good news, bad news economy.

The good news is that the Buffalo area continues to add jobs, creating 1,100 new positions during the 12 months that ended in November and expanding its jobs base by 0.2 percent.

The bad news is that the growth locally is just a fraction of what the rest of the state and the country as a whole are enjoying. The state grew its jobs base 10 times faster during that same period, expanding by 2 percent, while the growth nationally was even faster at 2.1 percent.

The good news is that unemployment rates remain close to historical lows, hitting 4.7 percent in November. That means that an unusually high percentage of people who want to work are able to find a job.

What's more, some of the global economic forces that hurt Western New York in recent years also appear to be easing, especially as Asian economies rebound and the firming of the Canadian dollar eases the stiff competition from Canadian firms.

But the competition from other areas, especially other states, remains intense. While efforts are under way to cut taxes at the state and county levels, the tax burden remains higher locally than it is in many other places.

At the same time, though, lower real estate costs and an ample pool of productive workers are an asset for the region, helping to lure companies like e-commerce order processor Skulogix Inc. to the area, where it hopes to create as many as 800 jobs.

Yet other companies are struggling, including Euro United Corp., which has laid off 300 workers because of financial problems, while old-line manufacturer F.N. Burt Co. Inc. closed its doors, throwing 100 employees out of work.

Put it together, and the result is a plodding local economy that is growing, but at such a slow pace that it has missed out on much of the steady growth that has characterized the nation's nine-year-old economic expansion.

Andrew Rudnick, the president of the Buffalo-Niagara Partnership, described the state of the local economy as "marginally positive" in and of itself. "But compared with everywhere else, it's far, far behind."

State economists paint a rosier picture of the Western New York economy. They stress that the region's total wages, salary and employment should grow to record levels this year. And they are hopeful that proposed cuts in the state gross receipts tax on energy, combined with strengthening Asian markets and a firming Canadian dollar will give a boost to local manufacturers.

"The important thing is for manufacturing to catch fire," said Stephen Kagann, Gov. George E. Pataki's chief economist. "Manufacturing in upstate New York has unusual power. The health of manufacturing is the key."

But factory jobs have been disappearing in Western New York. Roughly 1,500 manufacturing jobs in Erie and Niagara counties were lost during the 12 months that ended in November, according to state Labor Department statistics.

"You guys had the bad fortune of being on the wrong side of the Asian crisis," which decimated the key Asian currencies and drove up the price of American goods that are sold in Far Eastern markets, Kagann said.

At the same time, the state economists think the local job market will remain healthy, with unemployment rates expected to average 5.3 percent this year, matching the average jobless rate for 1999, said George P. Smyntek, the labor department's regional economist in Buffalo. That's just slightly higher than the record-low average rate of 5.1 percent that was set in 1996.

"We expect continued job growth," Smyntek said.

The local real estate market, despite mortgage rates that rose from less than 7 percent in January 1999 to the low 8 percent range today, remained robust for the second straight year.

Single-family home sales in Erie County, coming off a 12 percent rise in 1998, rose another 4 percent last year, although housing prices in most neighborhoods were fairly stagnant, according to the Greater Buffalo Board of Realtors.

It was a good year for the home-building business, too, with the number of building permits soaring by 30 percent through November, fueled by a boom in new housing starts in Clarence and Lancaster. That building activity also helped the region add 400 construction jobs during the 12 months that ended in November, the state Labor Department said.

But the commercial construction market slowed last year, which led to a 1 percent drop in the value of all building contracts in Erie and Niagara counties through November after gaining 8 percent in 1998 and 6 percent in 1997, according to the F.W. Dodge division of McGraw-Hill Cos.

On the political front, the region is beginning to make some progress in its push to relieve the tax burden on its residents and businesses. Erie County plans to cut taxes by 18 percent this year, while the Pataki administration wants to phase out the 3.25 percent gross receipts tax on utility bills.

Kagann said energy taxes are particularly painful for upstate New York because that's where most of the manufacturers and other big electricity and natural gas users are located. "Relative to the economy, the energy taxes fall disproportionately on upstate," he said.

At the same time, Erie County's plan to use its share of the process from the tobacco antitrust lawsuit settlement to pay off debt and reduce its interest expenses went up in smoke when the added costs from the state's new health care reform program ate up the local share of that windfall.

"I'm the least clear on where the local economy is going to go in the next 12 months than I've ever been," Rudnick said. "If we lower taxes and make upstate more competitive, I think we'll do better."

But Rudnick worries that the local economy could be stung if inflation heats up or the economic recovery in Asia and South America begins to sputter.

On the job front, it shouldn't be too hard to find a job in Western New York this year, but it might be a bit harder if you insist on a high salary.

With the unemployment rate hovering around its lowest level in more than 25 years and the region adding new jobs at a sluggish pace, economists and development officials say the Western New York job market is in decent shape.

But the job market in the rest of the country is doing considerably better, and many of the jobs that are being created in the Western New York aren't the type that are highly sought after by workers because they don't pay high wages.

The result is a job market that local experts say is in balance. Smyntek sees further growth in local services and retail businesses. And there is plenty of demand for workers with all types of technical skills.

Experts also think there will be plenty of turnover in the area's higher-paying factory jobs and other occupations as older employees retire and their employers need to find new workers to replace them.

"Pretty much all areas where people have technical expertise are in demand," he said. "We keep adding new technology to every occupation."

Smyntek said businesses in Western New York will need to hire new workers to replace retiring craftsmen, such as tool and die makers and machinists.

And the service sector, which provides more jobs than any other part of the local economy, continues to grow. Smyntek said the demand for entry-level service jobs is making the lower end of the job market particularly tight in the suburbs, which explains why some fast-food restaurants and supermarkets have been forced to put big help wanted signs in front of their stores.

In addition, the local call center industry continues to boom, as the industry takes advantage of the region's ample labor pool and its strong telecommunications infrastructure.

"We continue to get lots of interest and inquiries about telecommunications areas, such as call centers," Rudnick said.

There are no comments - be the first to comment