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David Robinson: Area job growth steady, but trailing national rates

David Robinson

As recoveries go, the rebound from the Great Recession has gone pretty well for the Buffalo Niagara region.

Our job growth since the recession ended in 2009 has averaged 0.7 percent a year. That’s not tremendous by any stretch of the imagination, but the prolonged expansion has pushed the number of jobs in the Buffalo Niagara region to an all-time high and driven the local unemployment rate below 5 percent.

“We’re pushing full employment,” said John Slenker, the state Labor Department’s regional economist in Buffalo. “We’re down in that area where we don’t have a lot of excess labor.”

That’s the good news.

The bad news is that our rebound has been less than half as strong as the recovery across the United States, where job growth has been a full percentage point stronger at 1.7 percent annually. Had the Buffalo Niagara region been growing at the same pace as the rest of the country, we would have been adding an extra 5,000 jobs during each year of the recovery.

The Great Recession was different for the Buffalo Niagara region than other recent downturns. We didn’t fall into the recession first. We didn’t fall harder. And we didn’t start our recovery later than the rest of the country. All of that was good for the region.

But one thing hasn’t changed. The pace of our recovery has been much slower than the rest of the country. “It’s the natural path we’ve been on,” said Canisius College economist George Palumbo.

Recent trends are even more concerning. Over the past three months, the pace of job growth across the region has slowed markedly. After a strong start in January and February, the pace of hiring since March has been only about half as it was during 2015 and 2016.

Before we panic, consider this caveat. The 2017 data is based on a set of job numbers that have been uncomfortably volatile over the past couple of years, leading to significant revisions later on as more detailed information becomes available. That initial data significantly overstated the pace of job growth locally in 2015, and understated it last year. And a slowdown lasting three months does not necessarily signal a longer-term trend.

“I’m still scratching my head a little bit,” said Gary Keith, M&T Bank’s regional economist in Buffalo. “We shouldn’t think we’re going back into the soup now. I don’t think we are.”

Even so, it’s clear that the recovery here – while good by Buffalo Niagara standards – is tepid compared with the rest of the country. Since the recovery began in 2010, job growth in the Buffalo Niagara region has averaged 0.7 percent a year. That’s 60 percent less than the national growth rate.

“This is not to be a Debbie Downer, but it’s important that we put these things in context,” said Dottie Gallagher-Cohen, the president of the Buffalo Niagara Partnership. “We still have a lot of work to do.”

Local economists aren’t sure why the pace of hiring has slowed this year, but they have some theories.

  • With unemployment down to 4.8 percent in May, it’s getting harder to find qualified workers.

“The economy is doing pretty well. Right now is a good time for job seekers,” Slenker said.

Nearly 42,000 workers across the Buffalo Niagara region have dropped out of the labor pool since the Great Recession began – a 7 percent drop. Economists say that’s largely because older baby boomers have been retiring, coupled with the region’s shrinking population.

“One of the challenges we have is how we’re going to replace those baby boomers who are retiring,” Slenker said. “We’re bumping up against the supply of labor.”

  • Employers are being cautious about hiring.

Keith thinks some employers may have held back on hiring while they waited to see how the Trump administration took shape and how its policies affected their businesses.

He also thinks the smaller pool of unemployed workers, which has shrunk by more than 20,000 people – or 44 percent – since 2010 also has made it harder for companies to fill their openings.

“Where it may have taken three months to fill a spot, now it maybe takes four or five,” Keith said.

  • The skills gap remains wide.

While economists say this is a good time to be looking for a job, that’s true only for workers who have the skills that employers are seeking, Keith said. Factory work now requires computer and technical skills to operate sophisticated production equipment. Growing sectors, such as back office financial services and health care, have specific skill requirements.

Other workers face additional hurdles. Those who don’t have a car are limited to jobs that are accessible by public transportation or on foot. Some face child-care or family issues.

“We still have a lot of people who are needing jobs, but they’re facing barriers, like education or transportation,” Slenker said. “We need to get people who have been disadvantaged in the labor market to get back in there.”

That’s where job training programs come into play. They’re now the focus of renewed attention from state officials, including projects like the Buffalo Billion’s Northland Avenue complex, but Slenker said it’s essential that the region’s training programs be tailored so they teach skills that match the needs of employers.

“There is no bigger concern for our community than creating a workforce for tomorrow today,” Gallagher-Cohen said.

The Partnership this spring launched an initiative to identify the skills that are in demand and help tailor job training efforts across the region to meet those needs.

The stakes are high.

“If we don’t have the workforce, the jobs will leave the area,” Gallagher-Cohen said.

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